As remote working continues, what about the commercial property sector?

Office buildings in cities across Ireland and around the world have stood empty and largely lifeless for much of the Covid-19 pandemic. Views on the persistence of home and remote working and their potential impact on the commercial property sector have varied as time has gone on.

Predictions of the demise of the traditional office have waned somewhat in the face of a growing consensus which foresees the adoption of a hybrid model where people will work partly at home or in remote working hubs and the rest of the time in centralised offices.

There is also the not-so-small matter of employers wanting to bring staff back to work in offices while they are still paying rent for them.

"Employee surveys across organisations and public sentiment seem to point towards a near certainty of a hybrid model of remote working and in-office duties," says KPMG Future Analytics director and co-head Stephen Purcell. "On that basis, space requirements may become more efficient, and there may be a case for a strong mix in urban environments at the block level – a more fluid interface between various uses rather than a very singular usage pattern – the key here is that such evolution is in a sustainable manner and would not give rise to unforeseen negative impacts such as undue noise burden from types of commercial or social uses and residential units overhead, and so on."

He doesn’t believe space requirements will diminish dramatically, in the near term at least. “Practically speaking, I think tenants will, in the main, keep their existing spaces in the foreseeable, with a wider range of workspace formats likely to prevail.”

But some change is coming, according to Grant Thornton’s chief economist Andrew Webb. “It depends on who you ask. Developers will tell you deals are going through and that there is a good pipeline. And organisations that are tied into leases obviously want to get people back into the office.”

He believes the change in sentiment from a position from one extreme to the other in relation to the future of the office is akin to the effects of a hangover. “It’s like the morning after the night before, you say never again but then you’re planning the next night out by Thursday. We do get the sense there is an appetite to move back to the office. Employers see the benefit of having people together in terms of connections, collaboration and building culture.”

Social distancing

There will be issues to deal with during the move back, however. “Does the space they have present a social distancing issue?” Webb asks. “The hybrid model may look after social distancing by freeing up space. Maybe offices will become more of a meeting place with lots of collaboration areas and so on.”

Dublin city planning officer John O’Hara also believes the traditional office is far from obsolete. “There are a couple of issues there. One is whether hybrid working means working from home or hubs. If we are serious about upgrading public transport networks, then we have got to get people to and from places in [the] city centre much faster. But there are a lot of things interplaying there if public transport is improved. People will want to get together in offices for proximity to share ideas and so on. And you can’t really do that remotely.”

And then there is the question of foreign direct investment (FDI). “For as long as we continue to sell Dublin as an attractive place for FDI investment we will be okay, but we can’t be complacent about that.”

And even if there is a fall off in demand for offices and commercial property generally, there are other options for the space that might become available. “We have to think about reimagining buildings and their use,” says Property Industry Ireland chair David O’Connor. “We could bring life back to Henry Street again. It’s an absolute desert at night. Offices are really interesting. Some configurations are very amenable for conversion to different kinds of uses. We could allow buildings to be used for things we might not have contemplated before now. These include leisure, culture and entertainment uses.”