Changing working practices are not the only determining factor. The International Monetary Fund has described the “Great Lockdown” as the worst economic downturn since the Great Depression of the 1930s, and foresees a recession at least as bad or worse than the 2007-08 global financial crisis.
Inevitably there will be a reduction in occupier demand, though it will vary from sector to sector. The worst-affected tourism and leisure industries will need less corporate space, while some professional services firms may be able to continue as normal with altered working practices. Booming sectors like technology and e-commerce are already more likely to embrace virtual working – Twitter CEO Jack Dorsey has said that employees can work from home permanently if they want to. “Companies could see this as an opportunity to downsize, to reduce operating costs and invest more in technology,” says Paul Stapley, vice president in the project management team at WSP in Canada. “Occupiers have already been moving to shorter lease terms. If they’ve only got, say, six months left, they may decide to walk away.”
Organizations had already started to shrink footprints so that they had less than one desk per person, and the recession is likely to accelerate that trend. “In a crisis, there is always a focus on trying to reduce fixed costs like offices,” says Magnus Meyer, Managing Director WSP Nordics & Continental Europe. “The typical tenant will start thinking that maybe they don’t need space for 100% of their employees, maybe only 75% or 60%. Or they might not expand because of the crisis, but just work with the space they have.”
What makes COVID-19 such a strange phenomenon is that its immediate impact will be to push organizations in the opposite direction – they will need more space per employee. Companies have been squeezing more and more people onto floorplates for a long time, with just 8m2 per employee becoming a typical density. For offices to reopen safely and maintain physical distancing, ratios will have to shoot up again, with shifts, staggered start times and continued remote working essential.
It’s too early to say whether we will ever again feel comfortable occupying space in such close proximity to others, which makes the longer-term impact on office requirements very hard to gauge. Perhaps the better question is whether organizations will want the same kind of space that they’ve occupied in the past.