Hybrid Workspaces: A Workspace Solution Here to Stay
Covid-19 and its Impacts on Conventional Workspaces
Over the past year, Covid-19 has transformed the way we live, learn and work. Faced with Safe Management Measures (SMM) and constant adjustments to government restrictions, businesses have had little choice but to shift a good majority of their employees to remote work in adherence to new pandemic regulations. Indeed, Covid-19 has dramatically recast the conventional nine to five workday. In 2020, ‘more than 80% of the Singaporean workforce’ relied on telecommuting (CNA). This trend towards remote work has been reflected in the growing number of businesses openly acknowledging the long-term prospects of hybrid workspace solution. Some businesses have even chosen to decisively make the switch towards remote work permanently. As declared by Tobias Lütke, Shopify’s CEO, ‘office centricity is over’.
The sheer speed of these changes has drastically increased office vacancies throughout Singapore. According to CNA (2020) ‘office rents dipped by 0.8 per cent, while prices fell by 4 per cent, as the island-wide vacancy rate of office space rose to 11 percent’. This phenomenon is not unique to Singapore. JLL reported that in 2021, the ‘first quarter global leasing volumes are 31% lower than in Q1 2020… the fourth consecutive quarter of constrained activity’. Hence, given the continued uncertainty surrounding the pandemic situation, it is likely that the office space leasing market will be embattled with slow recovery in the long run.
Fewer tenants and lower rental rates mean that empty offices are a concerning cost to commercial real estate (CRE) owners. Aside from seeking to increase the flexibility and adaptability of their workforce to sudden changes, businesses are also recognising the cost savings brought about by reduced office capacity and increased reliance on completely remote or hybrid-work systems. Additionally, employees worldwide have already indicated a strong preference for flexible work arrangements prior to Covid-19, and even more so in current times. Therefore, a growing proportion of CRE tenants are less incentivised to renew expensive, hard-to-scale, long-term leases.
Hybrid Workforce – A lasting solution for CREs
While fixed workweeks and conventional office spaces may not be here to stay, remote working comes with its difficulties as well. From unconducive home environments to poor team synergy caused by a lack of overall social interaction, businesses and working professionals are looking for workspace solutions that fit comfortably between home and large-scale office spaces.
Flexible workspaces present a fitting and lasting solution to the difficulties faced not only by businesses and working professionals, but to CREs as well. Making the move towards flexible work systems helps CREs to supplement the drastic downturn in tenancy and more crucially, create opportunities for increased revenue. Lane’s ‘Going Flex: A Guide for CRE’ report succinctly outlines the potential benefits of flexible workspaces for CREs.
Highlights from Lane’s Flex Report: Opportunities for CREs
1. A 5 per cent or more Decrease in Overall Real Estate Costs
A growing number of businesses are ‘shying away from long-term leases’ and optimising their remote working capabilities. This has presented CREs with the option of recalibrating conventional workspaces into flexible spaces. The shift towards flexible workspaces has been established to have a markedly lower real estate cost – ‘According to Cushman & Wakefield, overall real estate costs decreased by 5% or more for 34% of firms surveyed when activating coworking space’. However, most notably, flexible workspaces have the potential to increase revenue given the right strategies.
2. Use the Power of Tech and Data
Lane correctly identifies how most flexible workspace offerings are based on ‘smart workplace experience technology’ which offer valuable customer insights that can help CREs to finetune their offerings and pricing strategies. According to McKinsey, ‘More than 20 percent of the workforce could work remotely three to five days a week as effectively as they could if working from an office. If remote work took hold at that level, that would mean three to four times as many people working from home than before the pandemic’. Hence, it is crucial for CREs to understand the core needs and concerns faced by the remote workforce.
By using user data to build a clearer picture of the target market, CREs are better positioned to craft effective strategies for promoting their workspaces. Google estimates that, ‘Nearly 90% of marketers, across all types of organizations, agree that understanding user journeys across channels and devices is critical to their success’. Be it the quality of amenities, use of appealing discount codes, or the location of workspaces, user data can provide crucial suggestions on how to better market and optimise existing spaces to meet the growing market of mobile working professionals.
3. Pricing and Monetisation Strategies
The move towards flexible workspaces also allows for creative pricing strategies. Lane highlights the use of ‘Dynamic Pricing’ which ‘allows (businesses) to vary… prices according to a variety of factors’. For example, businesses can discriminate prices and offerings based on membership tiers, with premium members receiving better deals for amenities or overall discounts for the bulk purchasing of hotdesks for its employees.
Another possibility would be pricing based on location and peak periods. Popular work locations with better accessibility and amenities can afford to charge higher rates and employ the use of ‘surge pricing’ during peak hours. Of course, the suggestions provided by Lane’s Flex Report are non-exhaustive. CREs are free to employ unique pricing strategies based on their local community of working professionals.
Remote work arrangements and hotdesking are no longer temporary trends or intermediary solutions. It’s time for businesses to acknowledge the move towards flexible or hybrid workspace solution as the updated ‘New Normal’.
CREs looking to make the shift towards flexible workspaces should seek to be proactive in advertising their spaces (as acknowledged by Lane’s Flex Report). Listing platforms in particular, are well-equipped with the necessary tools to give CREs a boost in promoting their spaces and reaching their ideal target audience of working professionals in need of conducive, on-demand spaces.
Indeed, beyond the devastating impacts of Covid-19, the unpredictable and prolonged nature of the crisis has also had wider implications on the global business community. It has decisively shifted the global workforce towards increased workplace agility and flexibility. Both businesses and CREs alike ought to adapt workplace systems to fit the future of work, past the pandemic.