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The global office real estate markets are remobilizing after a dramatic year, which besides having caused significant and severe financial losses has also totally changed the conditions for landlords' future earnings.
Right now, office companies around the world are undergoing cautious reopening, but landlords anxiously await the extent to which their tenants' employees will end up returning to their office environments after getting used and relaxed to working from home for the recent 16 months.
For the MatchOffice Industry Survey 2021, four out of five office providers emphasize that the pandemic has changed the tenants' office workflows so drastically that it has had consequences for business and income.
The new annual report, based on current reporting from 1.317 office operators in 55 countries, thus shows that almost a third of them anticipate a strong and even severe decline in leased office square meters in 2021.
"Undoubtedly, a significant part of the changes to the office environments triggered by the coronavirus lockdowns will become long-lasting - some of them with certainty even permanent.
However, many landlords have foresightedly been using the lockdown to upgrade their office spaces and designs to be ready to match the current changes of the office workflow," MatchOffice CEO Jakob Dalhoff comments.
Even if the covid lockdowns are cautiously loosening, several of the office workflow
changes caused by the pandemic are expected to become long-lasting - many with
great certainty permanent. Photos: iStock
The post-corona pessimism and the anxiety are still evident in the new annual office operator survey by MatchOffice. Thus, 60% of the office providers respond that they are expecting lower or much lower rental occupancy in 2021.
In particular, the operators' are currently concerned that newly concluded leases are turning considerably shorter, and this change cannot avoid affecting their finances within a very short time.
"In addition, no one still knows to which degree office employees will end up working from home after the pandemic. That is the still unknown factor," Jakob Dalhoff underlines.
"If the 5-7% estimated to have been working from home before the Covid-19 crisis double to 10-15%, it could have serious consequences for office providers. If even more office people will continue to work from their home offices the challenges will just grow worse."
According to the new MatchOffice Industry Survey 2021, the corona has changed
workflows in virtually all office workplaces - to a significant extent in half of them,
radically in a further 20%. MatchOffice Graphics
According to a recent analysis by X-Chair, a market-leading manufacturer of ergonomic office chairs, as many as 85% of 2,500 responding US office employees are still working from home: 61.4% full-time, 23.4% hybrid and only 15.2% have returned to the office full time.
In the next summer months, 41.4% of employers will implement hybrid models, while 36.9% will introduce WFH schemes as new normal. The office environment has changed character definitely and forever, the study concludes.
The international office operators, interviewed for the MatchOffice Industry Survey 2021 in early May, seem to express greater concern about the market results for 2021 than they did similarly last year shortly after the Covid-19 outbreak.
Thus, 68.6% of them report lower respectively much lower occupancies so far in 2021 - at the same time in 2020, the percentage was just 42.
"With the global covid vaccine rollouts and the introduction of new hybrid ways of
working, there should be legitimate hope for the revival of our flexible workspace
industry," MatchOffice CEO Jakob Dalhoff says.
On the other hand, the office providers look optimistic about the possibilities for improved occupancies during the upcoming six months: 65% expect higher rates respectively much higher occupancies compared to only 2% last year.
Consequently, 45.2% of European office operators are so keen on the situation that they predict rising rents in the upcoming second half of 2021. Conversely, there is almost as much agreement that the length of leases entered into this year will become shorter.
Back on feet
"In these still unresolved times, tenants are currently looking for flexibility and for options to replace their existing office leases with new ones on short-term contracts.
All in all, however, we see a trend towards positive prospects among our respondents. With the global covid vaccine rollouts and the introduction of new hybrid ways of working, there will be legitimate hope for the revival of the flexible workspace industry," MatchOffice CEO Jakob Dalhoff says. ●