Global office markets: Glastonbury sets the tone
The songs of music legends, old and new, serve to shine some light on changing attitudes to work and workplace.
6 minutes to read
The Glastonbury Festival returned in late June for its 50th staging following a two-year COVID-induced hiatus. Two hundred thousand people descended on the 800-acre Worthy Farm site in Somerset, England in what is arguably one of the strongest signals that normal service is being resumed (or at the very least we are becoming more adept at living with the virus and its mutations). As I tuned in to the coverage on the BBC, three songs from three acts resonated with current debates and dynamics in global office markets.
Get Back
Around 11pm on the second night of the festival, recent octogenarian and former Beatle Sir Paul McCartney belted out the opening lines of The Fab Four classic, ‘Get Back’. Around the same time billionaire businessman cum reality TV star, Lord Alan Sugar, was ensconced on his luxury yacht off the Amalfi Coast. Whether he was tuned in to Macca is unclear, but he was most certainly aligned to the sentiments being sung. Getting back to where you once belonged has been the central thrust of Sir Alan’s most recent musings about the world of work (and by association the workplace). The flexibility of the where and when of work necessitated by the pandemic are, in his eyes, temporary aberrations.
In this reading of events, it is time to get back to work and to get back to the office. This is not a unique perspective amongst business leaders. Indeed, stateside Elon Musk has gone on the attack in respect of flexible and remote working arguing that those seeking such arrangements should ‘go off and pretend to work for someone else’.
What such perspectives do illustrate, however, is the increasing disconnect between employers and employees in relation to future workstyles. From the perspective of prospective employees, flexibility is key. An astonishing 23% of recent UK based survey respondents said they would quit if their employer announced that all employees must return to the worksite five plus days per week, while in continental Europe the average equivalent was in the mid-teens. The figures are more startling still in America, where a whopping 50% of US workers would rather resign than be forced back to the office full-time.
Emotions run high on both sides of the employment equation and this debate will be key in shaping office market dynamics over the next cycle. In our view, the genie has been let out of the remote working bottle by the pandemic and is unlikely to ever return. Employees are demanding more flexible working arrangements; many employers are subsequently adopting hybrid arrangements which combine formal office presence with remote working to attract and retain staff.
This is influencing the speed of office re-occupancy across the world. Although offices are becoming more occupied progress could at best be described as glacial. According to May’s Freespace Index, 67% of the offices they track globally have seen some degree of re-occupancy – a 4% increase on the previous month – with the majority of those offices being more than one third full.
With the genie staying out of the bottle it is surely fanciful to think of a return to pre-pandemic levels of occupancy of circa two thirds full.
This is not to argue in any way against the office. Indeed, in Europe, our quarterly dashboards show a robust office market with strong demand from occupiers in select sectors for prime office space . One such sector, the legal sector, is driving office demand in the UK.
According to our latest legal sector report law firms accounted for 13% of all take-up across the UK in Q1 2022 – well ahead of the five-year average of 9%.
What these dynamics point to is a case for better offices, with a stronger, clearer purpose. The office will remain a key strategic device for occupiers but the role it performs will be around creating connection and galvanising culture rather than administering email. Nor does the flight towards hybrid workstyles negate the need for the office. Instead, a world with a more transitory workforce challenges the view that the office is the only workplace in town. Perhaps even luxury yachts have a role to play, for some.
I’m Still Waiting
In a festival that confirmed that we are typically living and working longer than ever before, 78-year-old diva Dianna Ross occupied the traditional legends slot of Sunday afternoon. Amid a mix of Motown and Disco classics, came the chart topping 1970 soul classic ‘I’m Still Waiting’ – a title that perhaps best articulates the current occupier mind-set.
We have long argued that the pandemic experience should be seen as a great global workplace experiment. We have emphasised that rather than bringing about knee-jerk reactions, the pandemic has led to a more considered approach to an occupier’s future real estate needs. In adopting and in many cases retaining new workstyles, business leaders have been patiently taking soundings and signals from their workforce about what works and what doesn’t. This, in turn, is informing both the quantity and qualities of office space they will require going forward.
These requirements will emerge in the market, most likely predicated by a lease event rather than any strong expansionary intent.
We may also be waiting longer for occupational activity owing to the emerging challenges from the macro-economic and operating environment around the world. Cost sensitivity is on the rise and the brakes may well be applied to corporate capital expenditure before the year is out.
The Art of Peer Pressure
Only 24 hours after Sir Paul had struck his last chord, esteemed American rapper Kendrick Lamar took to the Pyramid Stage to close out the festival. Far removed from the former Beatle in both age and style, Lamar’s set was full of symbolism, particularly in relation to the very live issue of women’s rights in the United States. A third of the way through came ‘The Art of Peer Pressure’ a song about growing up a teenager in Los Angeles amid the influence of others.
In a very different context, peer pressure may well shape future dynamics within global office markets in one of two ways. First, with the office being viewed strategically as a means of securing competitive advantage many of those who have taken a flight to better quality space in the last two years will be followed by the peers. Tight global labour market conditions and the continuing war for talent will require those not offering best in class space to staff to do so.
Second, and conversely, if the macro-economic environment leads to labour market distress, we may well see human nature generate greater presenteeism and visibility in the formal workplace. The return to the office sought by some business leaders might in fact emerge through an understandable and keenly felt peer pressure.
Read more of get in contact: Lee Elliott, commercial research
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Photo by James Genchi on Unsplash