By Yaron Rosenblum, Co-founder and CEO of Canvas Offices
When the Covid-19 pandemic first struck, nobody working in the UK’s commercial property sector could have predicted the impact the crisis would have on it.
Not long after the virus reached our shores, businesses of all types and sizes were ordered to temporarily shut up shop and revert to remote working in an effort to control the spread. Because of this, commercial real estate rents and values fell dramatically, with figures from the Royal Institution of Chartered Surveyors showing that these dropped by as much as 50% in some towns.
With the pandemic seemingly now behind us, and with many organisations having resumed some semblance of normality in their day-to-day operations, the commercial property sector is performing more strongly than it was a couple of years ago. According to global real estate firm Cushman & Wakefield, take up of office space is strengthening across all UK regions, with the country having experienced the highest rental growth year-on-year in Europe in 2021.
However, as traditional commercial property firms aim to rebuild from the heavy losses they incurred during the pandemic, there is a fresh challenge that poses a serious threat to the industry’s recovery.
Where are we now?
Although many businesses have indeed moved back to their normal places of work, many others have declared their intention to retain remote or hybrid working practices on a permanent basis. After all, figures from the Office for National Statistics [ONS] show that, in February 2022, 84% of workers who had to work from home during the pandemic said they planned to continue mixing working at home and in their place of work in the future.
As a consequence of this, the traditional commercial rental model is showing signs of decline, with the Alliance Fund predicting that commercial real estate transactions are expected to dip again by 20.1% in 2022 versus 2021. Despite the downturn of the traditional commercial rental model, the flexible office space market is on the rise.
Not only have flexible offices enabled businesses to make considerable savings at a time when they are still trying to recover from the financial losses of the pandemic, they are also very popular with workers. This is because the flexibility that they offer enables employees to feel more independent, working in a comfortable and relaxed setting where they can connect with colleagues whenever they need to. As such, while the rise of home working has left a negative mark on the traditional model, the industry has certainly responded to the shift, with flexible offices set to become the norm.
Companies like Canvas who were already providing flexible offices prior to the pandemic have taken time to reflect on the crisis, and have worked hard to fine tune their offering to the current working landscape. This has led to an exciting new office experience for organisations that is built around delivering genuine value, rather than an exhaustive range of trivial add-ons that offer very little in real worth. As such, the flexible model is empowering firms to not only choose how, where, and when they work, but also to tailor the services that they get to their individual needs. At a time when company budgets are stretched so thinly by the cost-of-living crisis, getting real value from their office services is absolutely vital for many organisations.
What will 2023 – and beyond – hold for the industry?
With financial concerns set to endure well into 2023, revenue expectations for the year remain mixed for the traditional commercial property sector. This is illustrated by a recent Deloitte survey, in which 40% of those surveyed anticipated that revenues will increase in 2023, compared with a further 48% who expected to see revenues decreasing.
In response to the challenges it faces, the industry must now seek new ways of cutting costs, as well as maintaining and building upon revenues. Flexible offices are providing a more affordable option to business that want to retain some level of physical cohesion between teams, and is also providing real value to them via a service that is tailor made for them. Furthermore, the flexible model is throwing a much-needed lifeline to landlords who would see their lease renewals badly affected otherwise.
With so much having changed over the last few years, who knows exactly what the future will bring for the commercial real estate industry? One thing is certain though: the sector must be ready to adapt to whatever might be around the corner.
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.