Should We Be Back In The Office?
A shift in working practices sees a cautious approach in returning to the workplace, will this rebound?
The return to the office has certainly not been as quick as the speed at which they were vacated in March 2020. The gradual easing of the lockdown restrictions in Q2 2020 gave people greater freedom to move around. Yet, the continuing battle against COVID-19 and the arrival of the summer dampened any enthusiasm to rush back to the office.
Despite government guidelines to make workplaces ‘COVID-19 secure’ and lifting of travel restrictions, it is apparent that businesses and workers remain cautious about a swift return. According to a recent study by Morgan Stanley, only 34% of UK office workers were back at their normal place of work. This contrasts with our European neighbours who range between 70-83% being back in their offices. So, when do we expect more workers to return to the office?
BACK TO SCHOOL…AND UNI
The start of a new academic year will, for most parents, alleviate the pressure of juggling homeschooling, childcare, and working remotely and allow for a greater number of workers to head back into the office.
Scotland and Northern Ireland have opened their schools in August, with England and Wales following suit in September. Likewise, universities will open their doors for the new academic year. According to a survey by Universities UK, 97% of universities have confirmed that they are preparing for in-person teaching. This resumption of normality within the education system will indeed filter through into flexibility for parents and workers. Although the pandemic and the wider health security of workers and their families are high priorities in most decisions being made, we should not underestimate the impact of new working practices adopted over the past six months, which are now influencing the way in which we want to work.
EMBRACING WORK FROM HOME
An increase in people returning to the office will be curtailed by the continuation of social distancing measures, limiting the capacity in most spaces, and forcing many to remain working remotely or a part of a rota system. Returning to our old working patterns looks less likely in the short-term as the path of the pandemic proves unpredictable. As such, a significant number of office workers will have to embrace the home office for a while longer. A situation that businesses, and the wider workforce, seem to have taken in their stride.
In 2019, according to the Office for National Statistics, only 5% of the UK labour force worked from home. When lockdown measures were enacted, this sky-rocketed to 46.6% of workers. Whilst this shift was unavoidable due to the government mandate, the positive response by companies to adopt remote working on a more permanent basis has dramatically transformed the working landscape.
In recent weeks, large firms such as PwC have announced they are allowing the majority of their employees to work from home. Whilst they hope to be at 50% capacity in their offices in September, attendance is voluntary. Similarly, investment firm Schroders has said that they will be overhauling their working patterns with a new approach to flexible working, now and after the pandemic. Global technology giant, Google, is also allowing their staff to work from home, which could be until at least July 2021. These are significant shifts in corporate attitudes, which will have implications not just on how physical space is used and acquired but on the wider London economy.
London Wakes Up!
In the short-term, continued flexible and remote working will noticeably impact business districts across London. Despite a government push to kick start the economy, it has not led to a significant return of office workers back to London. Whilst over the past couple of months the traffic has started to build again, and retail, bars, and hotels are welcoming people back, this is not the case for all areas of the capital. This is not surprising – according to a Morgan Stanley study 69%, of London office staff are still working from home.
The City of London remains devoid of the usual throngs of commuters. Pre-pandemic, the City was home to just over 1 million workers, with suggestions that less than a third of this level of footfall is occurring at present. The reduced number of office workers has led to other businesses such as coffee shops and pubs not to reopen. The City is also home to some of the largest global firms, with some indicating that only between 20% and 50% of staff could return in 2020, with September being the month the pace of return picks up.
Although the majority of businesses have made their office space ‘COVID-19 secure’, commuting to and from the office remains an issue for employers and workers alike. DeVono Cresa’s recent Return-To-The-Office risk assessments show that 83% of people have commutes of over 30 minutes. The aversion to travel on public transport, especially for those with longer commutes, has and will heavily influence people’s decisions to return to the office – reducing the volume of returning workers.
A NEW MINDSET
The autumn months will be an important period for businesses. There is an opportunity to instil some elements of normality after more than six months of upheaval. It will be a time when many firms will commit to new working practices and introduce policies to guide employees in the ‘new’ world of work.
There are areas of working life that will remain reduced, interacting with clients and colleagues in person being the main area. Employers will continue to adapt to the constraints that the pandemic throws at them, and they will do so knowing that the teams around them have developed a new mindset and approach to work.
Technology - The Saviour of Lockdown
Adoption of workplace tech to bolster technology firms in London
If COVID-19 had struck ten years ago, would businesses have been able to quickly adapt and operate remotely
on such a mass scale as they did in March 2020 without the required technology at their disposal today? Even just a short five-years ago, some businesses would still struggle due to low levels of adoption. Technology, whether it be the hardware or software, has certainly enabled millions of businesses around the world to function whilst in lockdown, but with economic distress now kicking in could future investment be a cost too much, and could London’s tech base suffer?
HEAD IN THE CLOUDS
One of the greatest enablers of the near-seamless switch from the office to homeworking has been the use of cloud-based technologies, data storage, and applications. At the time of the Global Financial Crisis (GFC) this technology was in its infancy, and its adoption rate was low. Over the past couple of years, there has been a growing drive to migrate legacy systems onto the cloud – to gain greater efficiencies, introduce more automation, increase digital tools, and improve data and cybersecurity.
While the motivation for businesses to move to such a platform varies from company-to-company, there will be many that have done so before the pandemic breathing a sigh of relief. However, there are many more who have not and their reliance on older technologies will have had an impact on their response to the shift in working practices.
Cloud-based technologies used in the workplace applies to all applications that can be accessed by the internet. Whether it is retrieving your emails, access to your company server, hosting the firm’s customer relationship management system, or the use of the ‘now’ all-important collaboration tools such as Zoom or Teams, the applications are vast. The growth of the global market for such technology is estimated to grow at a rate of 17.5% (CAGR) over the next five years, according to MarketsandMarkets and with a COVID induced need for such technology, will push adoption rates higher.
Investing in technology during an economic crisis for some would seem frivolous, but if one thing the pandemic has taught us so far is that the agility to respond and quickly, is key to survival. However, during a downturn, companies will have weaker balance sheets resulting in a greater focus on cash preservation which often will usurp commencing grand IT projects. For many, the financial layout for new technologies will be a high-risk strategy. Yet, as the COVID-19 crisis is far from over and several challenges still lay ahead, the reliance on technology to keep us connected and operational will be paramount.
ECONOMIC TURBULENCE BREEDS INNOVATION
Out of economic hardship comes a natural instinct to strive to do better; it is also a time that allows people to develop new ideas. This has very much been the case for the technology industry. Twenty years ago, the dot-com
crash occurred, and overnight internet successes were left worthless. Investors flocked to be a part of a revolution
in the future of business. But overpromising and under-performance meant that these firms started losing money, and fast. Valuable lessons were learnt from this period, and as such, the technical talent behind such successes
was not beaten and the entrepreneurial spirit kicked in. Some of these firms include household names such as Apple, Amazon, and Adobe, who all suffered in some way in 1999-2000.
Not quite ten years on and crisis hit once more with the GFC. The failure of banks around the globe did not just impact the financial industry; it rocked political institutions, caused a global economic downturn that was felt by most people. Job losses, home repossessions, and significant bailouts for the banks were all synonymous with the times. There was a huge amount of distrust in the banking sector and taking on these goliaths of the industry would be a daunting task for anyone. Yet the same spirit and drive that had seen tech entrepreneurs persevere in the early part of the 2000s was now driving the birth of a new breed of finance and banking, fintech.
According to information service Beauhurst, of the 1,139 fintech firms that they track 87% have secured investment since 2011, three-quarters of which are based in London. Whilst the majority remain at the relatively early stages of their evolution, they are proving that there is room for growth and scale. Many of these firms were borne out of the banking ruins of the GFC. These online newbies are challenging the very banks that contributed to the crash. Now firms such as OakNorth, Revolut, Monzo, Transferwise, and WorldRemit, to name a few, have fast become a pivotal part of the financial sector, and also key tenants for office space.
TECH IN LONDON
The technology sector, which was in a high-growth phase following the GFC, quickly grew its office presence in London. In 2011, the volume of office space leased by technology companies increased by 241% on the previous year, breaking the 1 million sq ft level for the first time. This was fuelled by the very firms that had faced difficulty ten years previously – Google, Apple, and the new kid on the block Facebook. But it was also the smaller fledgeling software businesses that were now committing to central London office space. Spurred on by investment and the need to attract talent into their businesses to grow, the sector was now on a par with other traditional office occupier sectors such as financial, corporate and professional.
London’s technology sector has evolved over the years, not just attracting global talent and brands but nurturing homegrown businesses and people. Much of the sector thrives on social interaction, growing their businesses close to their clients and peers, being part of the wider ecosystems that have developed. As such, the sector has continued to be a substantial holder of office space across the capital. Not just in areas like the Silicon Roundabout, Shoreditch, and King’s Cross but in the core areas of the City, West End, Midtown, and the Docklands.
Whilst the current crisis has kept most of our offices closed and forced us to adopt new ways of working and collaborating with each other, it has also led businesses to have a newfound appreciation of technology. The benefits of adopting new technologies can far outweigh the cost and contribute immensely to support business goals and the wider workforce. The economic downturn will no doubt lead to some low points for some, but as history shows us, our desire to do things better coupled with enthusiastic and entrepreneurial ‘techs’, will maintain the successful technology industry in London and the UK. What the GFC did for fintech, it remains to be seen if COVID-19 will do that for other sectors?