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The crown crisis hits the office market twice: it triggered a recession and boosted work from home. In a new survey, nearly a third of companies say they need less space.
Today many offices are still understaffed.
The Covid-19 pandemic has swept the world of work at a rate and intensity that has rarely been seen before. Home office or general office work became a reality virtually overnight for most desk workers.
And it looks like there won’t be a full return to the traditional five-day office week. Not for now anyway, because the virus has not yet been defeated and working from home is still associated with security. But not even in the long term, because the home office has been shown not only to be suitable as an emergency solution, but sensibly combined with office work, in many cases it can be a benefit to employers and employees.
Businesses are planning to share more desktop
According to a recently published survey by real estate service provider JLL of 318 companies in German and French-speaking Switzerland, around half of companies will increasingly rely on home offices in the future. At least 50% of the workforce should be able to work from home for one or more days. Only one in ten of the companies surveyed cannot or do not want this option to be available.
Of course, this also affects the demand for offices. Despite social distancing, less office space will likely be needed. In the JLL survey, 29% of surveyed companies say they need less space.
On the one hand, it is about reducing the amount of space used per employee. 46% of the companies surveyed intend to reduce this thanks to the shared desktop, while, conversely, only 6% of companies want to provide their employees with more space (including more common areas). Added to this is the bad economic situation, which is also depressing the demand for offices.
Resilient Swiss office market
But even if several companies want to save space: the net effect on the Swiss office market is not as great as one might think. JLL concludes that, in theory, the need for office space will be reduced by 5-10% over the next three years. But not all of these spaces will hit the market, either because companies are bound by rental contracts or because moving would be too expensive (and subletting is not possible) and the business is supposed to grow again at some point.
Therefore, a real decline in the office market is not expected despite the recession and the rise in home offices. This assessment is plausible for several reasons:
- The real estate market as a “late cycle”: Adjustments to the real estate market do not happen overnight, because most of the market is regulated by long-term contracts. Office leases in Switzerland generally have a duration of five years with an extension option. 70% of the companies surveyed by JLL are not even considering moving in the next three years.
- Home office as a supplement, not a replacement: Some big tech companies may have given the impression that the office era ended because they sent their employees to the central office as a precautionary measure, probably also out of fear of liability claims, until 2021. But now it’s clear: even Companies like Google see the future not only in remote work, but in a hybrid model that combines the advantages of the “quiet room” (efficient processing of tasks) with those of the office (creative exchange).
“Personal exchange between employees is a success factor,” Google Switzerland boss Patrick Warnking tells NZZ. Therefore, he anticipates that the Zurich offices, which are currently only 20% occupied, will be filled again next year. If health conditions allowed it again, Google employees in Zurich “would like to go back to the office regularly and sit together in groups and exchange ideas,” says Warnking.
- Missing megacities in Switzerland: Even if remote work were to become more prevalent than is assumed, there are some arguments against the fact that Switzerland, of all places, will become the country of head office. Working from home is particularly attractive when employees are struggling to get to the office. “Anyone who has to spend an hour and a half in a dilapidated premises to get to their office in Canary Wharf and then wait another half hour for the elevator, which is sparsely packed due to the Crown, gains a lot of quality of life with the home office, “says Jan Eckert, CEO of JLL Switzerland. The commuter routes in this country are short in comparison.
- Well distributed economic activity: According to Eckert, short commuter routes are not only related to the small size of the country, but also to the fact that Switzerland is relatively decentralized. Many businesses are located outside of metropolitan areas. “In the more peripheral regions there are already a lot more people in the office than in the cities,” says Eckert, which also has to do with the fact that less space is saved in cheaper locations.
- Swiss office buildings are not huge: Not only does Switzerland not have “megacities”; she also knows some “mega buildings”. The typical Swiss office building in the city center is medium in size and has five floors. If you don’t want to take the elevator, you can use the staircase to keep the flow of people working well even in Corona times. According to Eckert, this also turns out to be an advantage in the crisis. What is most questioned is the metropolitan tower, which in this crisis, as in 9/11, shows a certain vulnerability.
Steep slope between the center and the agglomeration
But even if there is no real drop in demand: regions that already have many office vacancies will suffer even more in the future, especially if there is even more space under construction. First of all, it’s the crowds, in Zurich, for example, the airport region, where, according to the latest CBRE office market report, 17.4% of the space is looking for tenants.
Inland cities, on the other hand, are holding up well. According to CBRE, the availability of office space in Zurich even decreased again in the last six months and is now a modest 2.5%. And the prospects in Zurich are good, which has to do with the fact that the city no longer lives only off the (shrinking) financial industry, but is increasingly establishing itself as a place for the rapidly growing tech industry. increase.
Make office buildings Corona Compliant
Swiss real estate company PSP Swiss Property has for years relied on city center locations in major Swiss centers. And CEO Giacomo Balzarini has no plans to change anything in this strategy, because he is convinced that these locations will maintain their appeal, especially for the reasons mentioned above.
In his opinion, it is also important that the properties can be reached by many different modes of transport, which is often the case with own buildings. “What we are also doing now is making the properties ourselves as ‘Corona compatible’ as possible,” explains Balzarini. This may mean, for example, improving access by turning the last two into large entrances in a building that has a main entrance and two small side entrances. Or you can use new technology so that employees don’t have to touch a single door handle on the way from the front door to the workplace.
