Brown and Co shares its view on the evolution of the office market

8:30 a.m. June 1, 2022

Anna Smith, Trade Expert at Brun & Co. in Norwich, discusses the changing landscape of office work in the wake of the pandemic.

One of the biggest impacts of the Covid-19 pandemic has been the change in work behavior and the shift to working from home for much of the workforce.

This change has become a necessity promoted by the government to deal with the increase in the number of Covid-19 patients. The question is whether this working model will continue and, if so, what will be the impact on the office space market?

Recent figures from the Office for National Statistics (ONS) show that 84% of employees want to maintain the “hybrid” system of working from home and in the office. The ONS surveyed over 500 UK adults in February 2022. Some 78% of those working from home to some degree said it provided a better work-life balance, while almost half said it improved their well-being.

The Norwich office market felt the impact of the pandemic and the sudden need to work from home first, with a significant reduction in transactional activity in the first six months of 2020.

Since then, the situation has improved and the position for the first quarter of 2022 has seen an acceleration in the take-up of grade A offices. This, coupled with the scarcity of available office stock, has meant that headline rents more or less remained at pre-pandemic levels.

Anna Smith, commercial surveyor at Brown & Co in Norwich
– Credit: Brown & Co

That said, Norwich’s office market is fragile and has shrunk by 30% in recent years due to conversions being implemented or granted to residential use through permitted development rights.

Occupants like to have choice and variety, which is difficult to offer in a market where inventory is tight. Landlords have addressed this issue by offering incentives, such as more generous rent-free periods or graduated rents in some cases.

Local businesses are now faced with the task of encouraging employees to return to the office, possibly by creating more collaborative space, better access to services and providing a lifestyle that suits the employee.

As businesses adopt more agile approaches, offices will become “less generic” and move away from a single-use space. They will need to redouble their efforts to provide choice and flexibility. We can still see the ‘flight to quality’ trend where occupants make a conscious decision to move from older office stock to newer or refurbished offices that provide a higher quality working environment.

This is an interesting period for the office market; a period of change is underway. However, there is always a need for office space, whether it is a hub or a traditional office.

We may see more transactional activity as tenants move into rental events and choose to reconfigure their existing space or expand or shrink their footprint.

Either way, we look forward to the increase in transactional activity that changing work behaviors will present.

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Jose C. Birney