We sat down (virtually) with some of the major players and decision makers in commercial real estate to get their predictions for the world of Hybrid work in 2022. Here are some take aways.

Flex Bounces Back and will Flex Big in 2022

After the global response to Covid shut the world down, the balance of power shifted in the favour of employees and it shows no signs of reverting. “As businesses and people review the way in which they work and what their requirements for office space will be, the development of models, such as Desana, that give users the ability to pay-as-they-go is another shift towards further flexibility. As a result, we will continue to see platforms investing increasing amounts of money as they scale-up their technology,” says Piers Malitte, Associate Consultant at Workthere.

People will increasingly be at the Heart of Real Estate Strategies

The pandemic has sparked a renewed focus on the health and wellbeing of workers. Firms have had to engage with the scientific discourse about the impact of things like air quality, cleanliness and physical space design on health. This is impacting priorities within corporate real estate teams.

“In 2022, I expect to see Enterprises increasingly put people at the forefront of their priorities. I love that people in the workforce are being heard and I think we will see more initiatives that support people’s wellbeing and health. It’s not just about an office anymore. It’s about people. You can’t have an office without people,” says Melissa Ansley of JLL.

“At JLL, we spend a lot of time researching, talking to our clients, and  surveying workers. In the summer of 2021, our workforce survey found that 63% of people  wanted to keep the flexibility of alternating between different work locations in the future. Not surprisingly, we also found that 41% of occupiers plan to increase the use of flex space as part of their post-pandemic workplace strategy. For a lot of enterprise clients the flex option helps through risk and cost mitigation but, as importantly, provides the increased flexibility of locations that their people are looking for."

Companies like The Office Group have already done this as their Sales Director, Alex Clark, explains: “Our HR team continuously review hybrid working and we absolutely listen to what our staff want. We have teams and individuals who want to be in the office full-time and equally we have teams and individuals who want to be working from home the majority of the week. We invested in building a new HQ for our business off Tottenham Court Road, which opened in December 2021. The HQ has served as a pull factor bringing more staff back to work because they’ve now got this beautiful space with a plethora of different working settings to choose from. We’ve got plenty of collaboration spaces, we’ve got freestanding and built in phone booths, and lots of meeting rooms. Our approach now is that our staff will come into the office 3 days a week. Two of those days will be in our HQ with the additional day in a different building of their choice within the TOG platform.”

Diversification of Occupiers in Flex

“Looking ahead to 2022, we expect to see a greater diversification of occupiers within the flex sector as businesses continue to adapt to hybrid working. We are already seeing an increase in interest from sectors not traditionally associated with the flexible office market such the professional and insurance and financial services sectors who have accounted for 14% of Workthere enquiries respectively so far in 2021,” says Malitte.

Clark of TOG says, “We’ve seen a very significant increase in enterprise leads proportionate to total office leads, classified as companies requiring 50 workstations or 2000 square ft and above. A large proportion of TOG’s new business transactions, above 30%, are with clients who were occupying conventional office space, now opting for Flex moving forward. Enterprise clients are taking on far more efficient spaces, often requiring a self-contained floor with diverse furniture provision and flexibility on access. The other category of clients optimise our flex platform by making use of all the buildings in TOG’s portfolio. I predict this will ramp up in 2022.”

Paul Swift, Head of Industry Partnerships (EMEA) at Desana adds: “If an enterprise client isn’t using Flex already, then they absolutely HAVE to in 2022. The problem I anticipate enterprise clients having is finding the data to support such a cultural change in their real estate strategy when so many suppliers have a vested interest in long term options.”

Technologies like Desana to Play a Crucial Role

Data is King. Without it, companies will be severely impeded in their efforts to confidently deliver their real estate strategies. Proptech start-ups like Desana can provide this.

“We chose Desana because we don’t have offices in certain locations and we want to be as data-driven as possible about how we determine what facilities will suit us best. We also use Desana in some specific countries where the office options available are not suitable for our requirements. Splunk employees  can still meet and collaborate with their teams in the spaces on Desana’s network. Desana helps us bridge so many gaps, while also providing us with the crucial data that helps us move forward and make strategic decisions”, says Charlotte Green, Senior Manager, EMEA Workplace Experience and Real Estate at Splunk.

Purpose of Central Hub/HQ will Become More Contentious

Market research firm CCS Insight predicted that by 2025, organisations will have reduced their office space by an average of 25% because of hybrid working. As a result, “The purpose of the central hub/HQ office will become even more contentious in 2022. In order to compete with the attractiveness of remote working, both commercial real estate professionals and C-Suite will need to invest time and money to understand what the purpose of this expensive central resource is and if there is indeed a legitimate need for it”, says Swift.

More Partnerships between Landlords and Operators and more Flex Space Deals

“The traditional model of renting their buildings to SMEs on 10 year leases with no break option is dead. Partnerships between operators and landlords is going to be an interesting trend for 2022 and beyond.  You’re going to see operators coming in with a strong brand and striking up deals with landlords to rent their spaces on short term tenancies. In many scenarios, landlords benefit from earning more revenue in the profit share than what they’d make in rent. Furthermore, if you have an element of Flex space like that in a building, it attracts other tenants to lease other floors. At Metric, we’re seeing a lot of operators on the hunt now. They all back the flexible office market, demand wise”, says James Forster, Associate Director at Metric RE.

James also adds: “Access to third party spaces will be massive in 2022. I think it's never going to be used in isolation. It's always going to be part of a real estate strategy where you take an HQ and supplement it with access to a third party space. That market is really just emerging now as people begin to understand the solutions out there. We are going to see a lot more people combining HQ with work from home and work from anywhere in 2022.”

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