By GEMMA FOORD
Office tenants endured a rollercoaster 2020, from lockdown to reopening, only to go into a consecutive national lockdown. Many have questioned whether London and other major cities will be less popular places to work in a post-COVID context. Therefore, it comes as no surprise that businesses committing to new office space, whether by leasehold or licence have continued to be low in numbers throughout the UK. Battling against the ongoing uncertainty has seen many occupiers continue to defer their searches, yet the desire and often the need to secure space remains. This phenomenon has not gone unnoticed, with some flexible office providers cranking flexibility up a notch, by offering, for want of a better term, a COVID-clause.
The first wave of the COVID-19 pandemic resulted in a total lockdown, rendering office space obsolete for months. Businesses faced the burden of office costs without the benefit of the space. Even when restrictions were lifted, workplaces remained mostly empty, whether through social distancing measures or workforce fears. This situation prompted some businesses to look at flexible arrangements with fully serviced office solutions, either as a stopgap or a permanent shift.
Despite the variety of solutions available that offer flexibility, uncertainty has remained and impacted decision-making. Sensing the uncertainty, some flexible office providers are now offering something extra in their contracts, linked to the use of the space – almost like a pause button on a contract. Whether that is through government–mandated closure or an outbreak that shuts down the building, a pause can be given on monthly licence fees for the period of closure. The time is accrued and added to the end of your contract.
This additional benefit has been designed to enable businesses to commit to space that they need without the fear of obsolescence and wasted costs just days or weeks into a contract. Safeguarding cash-flow is imperative for most companies, and this move could help support that. From the providers’ perspective, this is an initiative that enables them to not only secure a client in their centre but also garners a level of loyalty and goodwill from the outset.
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With the UK currently rolling out multiple COVID-19 vaccines, there is increasingly a glimmer of hope for the future and a return to ‘normality’ at some point in 2021. However, while a vaccine(s) is welcome news, it is apparent that there are still several months ahead where clouds of uncertainty will remain. Immunising the population will be a lengthy process, and the current national lockdown measures will continue to hinder property decisions. Nonetheless, the wheels of real estate keep on turning, and businesses will need to decide their next move.
As we slowly begin to emerge from the COVID-19 pandemic, many businesses remain unsure of how to approach their real estate strategy. At DeVono, we understand that this is a difficult time for businesses and that COVID has made commercial real estate decision–making incredibly complex. As a result, we have created a Commercial Real Estate Roadmap based on our ‘Return, Revitalise, and Transform’ model to help guide businesses during this period. Regardless of whether you are currently leasing a co-working space, or are an incumbent in a traditionally leased office, our roadmap can help you navigate these challenging times and craft an effective real estate strategy.
Find out more about DeVono’s Return-to-the-Office Risk Assessment’s here.
While additional flexible benefits could be a means to capture new business, it should also be viewed as another step in the office market’s evolution. An example of this is WeWork. One of the largest co-working space providers, WeWork, has announced a £15m fund to subsidise SME tenant rents. Further measures enacted by WeWork include an “all–access” pass allowing member businesses to work in any location within the WeWork portfolio. WeWork is also redesigning some of its own offices to increase the amount of collaboration space. Gestures such as these are a positive and necessary step as we emerge from the COVID-19 pandemic. We expect to see other flexible space providers announcing similar packages in the coming months as they seek to hold on to and expand their client base.
Flexibility has been much sought after when it comes to the office. Whether that is through leasing terms, duration, size, or even cost and that sought–after flexibility is now being realised, not just in the serviced office world but across the wider industry. The slow pace of change has been supercharged, and the fruits of which will be seen throughout 2021 as businesses seek out the best way to re-engage with the workplace.
Gemma Foord is the Director of Flexible Leasing and Consulting and leads DeVono’s serviced office offering.
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