As the work from home or office debate continues, many bosses are scratching their heads, wondering how they will entice workers back to their offices, and the outcome will have knock on effects for both commercial and residential landlords.
Commercial landlords are still pondering on how the pandemic and its after effects will affect the demand for commercial space. We’ve already seen its dramatic affect on retail space, with home deliveries driving many retailers on-line, some giving up on their high street presence entirely.
For residential landlords, there will almost certainly be change: change in demand patterns both in the type of properties required and the changes in demand across locations.
Although some business leaders with large offices and thousands of office-based employees have come out stating they will revert back to normal working, Goldman Sachs is one example, it would seem that by far the majority have accepted that work patterns will never be the same again.
Many of these are already working on their spaces, preparing them for a return to the office that will be much different from before. For example, in many offices the big desk will be gone forever, with break-out spaces, conference and meeting spaces, training facilities and even sleeping pods becoming the new norm for the office.
Tom Roberts of L&G Investment Management says that people might not need such big desks, but require more spaces to be able to breakout and collaborate.
“For me the concept that you go to work to get your head down, is something that will change quite significantly in the coming years, and again be accelerated by the pandemic,” he adds.
“When you need to talk to people and have meetings, that’s when you need to be in the office for that interaction where you can share ideas. So I think there will be a flexible approach going forward and many employees will adopt it.
“If you are facing one of those days to write and various sets of numbers to go through, the reality, in my opinion, is that you are better doing that at home, providing you have the space and the environment to do so, where you can get your head down and concentrate without distraction.”
Of course, this style of working will not suite everyone or every type of occupation, but there’s a significant number that will be in this category, and that last point Mr Roberts makes has big implications for residential landlords in the future.
Providing suitable space becomes an issue. Working on the kitchen table or in a bedroom is no longer an option for long-term comfortable living. Separate and peaceful workspaces, free from family background sounds, whether this is a completely separate study/office in the property or a garage / garden shed office, will become major attractions for many renters.
The changes will also have implications for where rental properties are located. If people are in the offices for just two or three days per week, then longer commutes become acceptable.
Overnight stays in the cities, where workers are commuting long distances, will have implications for transport authorities, hotel operators, and Airbnb style short-let landlords. At the same time, the exodus from the cities to the suburbs, and even the rural countryside, will affect the demand patterns for rental property.
Commuter belts around our major cities could easily double in size as workers adapt to longer commutes and long-term hybrid working, allowing millions to dramatically change their lifestyles from city living to everyone’s dream of the rural idyll.
Commuting to a big city just two or three days a week will make it feasible to live on the coast, near the lakes, near other national parks, without adding overmuch to the hours already spent on the roads in a car or on the public transport commute.
Landlords need to think very carefully about how these likely trends will pan out in reality when considering new investments, or adapting their current properties to home-friendly working.