Opportunities and challenges for the office market
Although the office sector is struggling with the social and economic consequences of the pandemic, it still has very good conditions for development. The chance for the long-term development of the office market is the progressive process of population migration to cities. It is estimated that by 2050, 70% of the population will live in them. With the increase in demand for employment in cities, in the long-term perspective, the demand for offices will remain at a satisfactory level, even with the adoption by employers of a hybrid system of work. Together with the migration movements, changes in the office map of Poland should be expected – the tendency to invest in the regions will be maintained, as well as relations between the office and residential sectors will become more visible. Offices will be created more often in the vicinity of housing estates to reduce car transport and provide maximum comfort for employees.
A balance between remote and stationary work
According to recent declarations, up to 55 percent of employers may stay with remote work, but even in these cases, having a representative office will still be an important part of the company’s identity. It is worth noting that except for representatives of the so-called liberal professions or the IT industry, where remote work has long enjoyed popularity, by switching to a part-time mode most employees found themselves in a completely new role for themselves. It will not suit everyone for years. According to a recent HRlink survey, as many as 75 percent of employees prefer a mixed work mode, which will drive further digitization. Even before the pandemic, the Owl Labs State of Remote Work report indicated that remote workers were working longer hours than those staying in offices – by an average of about 49 minutes, according to calculations by the National Bureau of Economic Research. Thus, the data indicates that there have been difficulties with work-life balance, which the pandemic may have exacerbated. This relationship will translate into the design of office space, where the trends of work-life balance, wellbeing, and activity-based working will evolve anew.
A return to activity-based tenants
From the beginning of 2021, the forecast for a recovery of the rental market is realistic, as fixed-term contracts come to an end and tenants will be required to decide on their future. In the second half of last year, due to the uncertain macroeconomic situation, many companies postponed taking decisive development steps. At the same time, as part of savings, a trend of subleasing premises developed – from 100 to even approx. 5000 sqm. Such offers were addressed both to small entrepreneurs and large corporations in Warsaw, Krakow, Wroclaw, or Tri-City. We have seen how quickly the market responded to the new needs of tenants. In 2020, the model of renting traditional offices for shorter periods also became widespread. Presumably, some corporations will stay with this solution, at least for the time when they return to the financial condition from before the pandemic.
New expectations of the market
But whether it’s coworking space or traditional offices for short or long-term rental, designers, owners, and managers need to meet the new expectations of tenants and employees. Today, hygiene and sanitary safety, sustainability, digitalization of the working environment and building services, as well as flexible lease terms and flex solutions are key. The direction in which the office industry is heading is also largely determined by new environmental regulations. As of January 2021, there is a plastic tax for goods that have not been recycled in EU countries. Also, the European Parliament’s Directive on the Energy Performance of Buildings obliges member states to realize near-zero energy buildings. Many countries and companies have also adopted policies in line with the sustainable development goals of the UN 2030 Agenda.
Tightening regulations will affect the everyday life of the office industry. Soon, employees will be in offices designed according to the idea of less waste, i.e. using recycled materials, and using natural resources more sparingly. Ecological awareness will translate not only into design and behavior but also into management strategies. All services connected with change management will develop on a larger scale, and managers will be required to have even broader competencies concerning the adaptation of office spaces following ecological certification criteria. The construction of so-called green lease contracts, containing pro-environmental obligations, may become a leading market trend.
Also, managers are already expected to specialize in sanitation, optimization to reduce financial risks, modernization, and conversion of traditional offices into co-working or office space as well as complex mixed-use developments. As managers, we always focus on a multi-faceted approach that takes into account the current market and legal environment and different points of view. Owners, for whom effective space management is important. Tenants who want to create a good atmosphere in the workplace and employees who expect the best possible experience. All these elements are present in “The Space, The Place, The People” office property management program which Apsys Polska implements in cooperation with Apsys Lab think tank.
Commented by:
Magdalena Błądek – Office Management Department Director, Apsys Polska
Last Updated on March 3, 2021 by Karolina Ampulska