Hybrid Office: At the Crossroads of Digital and Physical
Sergiy Sergiyenko, Managing Partner at CBRE Ukraine
“To go or not to go?” – this is the question that lingers in many a white-collar worker’s minds every given weekday. The dangerous bug has thrown down a gauntlet to the status quo of the usual office use. The employee is unsure whether it’s safe to go to work, and the employer is unsure whether it’s safe to open the office. Landlords are unsure whether to provide discounts for unused offices, and investors are unsure how to look at office assets in their strategic decision-making. One can say that we are currently finding ourselves in the middle of an extended remote working test-drive, the outcomes of which will play a significant role in shaping the entire post-COVID market.
It makes little sense discussing the current (hopefully) short-lived predicament, as much has been said and written on the subject. However, the fact that we have sped to the merger of physical and digital space is undoubtable. The opinion of various businesses as to their future need for office space varies widely from ‘we don’t need it anymore’ to ‘we’ll need a little less space’ – largely depending on the type of business. The main question is, however, how effective the teamwork will turn out to be for different kinds of businesses, which will determine the future office footprint.
Based on the data from CBRE research involving 10,000+ respondents throughout 18 countries (CBRE’s Workforce Sentiment Survey), one can draw quite a definitive conclusion that despite a pleasant surprise on the part of both employers and employees as to the productivity of remote work, the physical office retains some irreplaceable qualities which make its continued use all but guaranteed. These are: 1) separation of office and work life, 2) human touch or personal connection in work/business relationships, 3) a comfortable working environment, 4) strong teamwork environment, and 5) structured daily routine. One particularly interesting answer which underlines the above conclusion is found in a recent survey by Xerox published on CNN which states: “I don’t mind working from home, but I do mind living in my office.”
The CBRE report concludes that the office of the future may be modified to support impromptu collaboration, creative ideation and social connections that are best served in person. It may become a communal hub for training, seminars and career development. In all cases, the office must be equipped with the appropriate technology to effectively connect a more distributed workforce. Regardless, changes like these were being considered before COVID and should continue to be driven by a company’s people, culture and vision—not this pandemic. In the long-run, therefore, although employees may feel less tethered to the physical office, it will still play a significant role in maintaining a culture of belonging, collaboration and innovation.
The previous status-quo concentric workforce movement with long commutes will become a thing of the past. One good outcome for Kyiv is that the 40% left-right-left bank home-work-home movement has become and is going to remain much less intense, easing up pressure on the clogged approaches to bridges. What just a year ago used to be a novel, hard-to-convince-the-board hub-and-spoke workspace model, with a smaller central office and several satellite offices near main residential hubs, is now expected to be a new global trend of larger companies. With commute being one of the biggest work-from-office demotivators (the WFO acronym non-existent until now), business will now have to seriously look into moving the office closer to its workforce’s homes.
All such user-based research has a significant bearing on the physical office market, however, which has been largely omitted from the discussion. Here in Ukraine, where the typical office building still largely offers a 20th century product (small lobby, few amenities & insufficient parking), the current circumstance is begging for urgent and drastic improvement. Following the maxim that in every problem lies an opportunity, the good news of the pandemic is that it is bound to transform the physical office space towards the standards expected in the international marketplace, as occupier demand is quickly transforming.
To name a few qualities of a flexible and user-friendly building, an international level office facility will have to offer as many of the following as possible:
– a digital building key/app to use the building (entrance, light, elevators, air, etc.)
– large shared common hotel-like lobby area for eating and meeting
– pay-per-use conference facilities
– pay-per-use shared overflow co-working type offices
– green/clean break-away common space/terrace
– unlimited guarded parking availability with unlimited electric charging stations
As occupiers are fast shifting towards the hybrid office model where office use will be more and more directed towards extreme technology, flexibility, openness and teamwork, the typical little-lobby/dark-office kind of inflexible space is bound to accelerate into economic obsolescence. Especially now when the long-term real estate cycle meets the brutal test of fast changes in occupier preferences, the cost of error will be higher than ever. Therefore, focus on international experience and advice is bound to become indispensable attributes of successful professional office (re)development going forward.
A Hybrid Workforce Network
However, not only the physical aspect of office buildings begs for change in Ukraine. Bridging the gap between the best international and local lessor practice would go a long way towards moving our market a step closer to the level of its international occupiers. Whereas flexibility has become the zeitgeist of corporate governance under COVID circumstances, rigidity is still the modus operandi of many a Ukrainian landlord. Even though this article isn’t meant to be tenant advocacy, a long-term partnership approach on the part of the landlord is in high demand which more often than not is not being satisfied.
The outcome of the current pandemic-induced paradigm shift in work patterns will therefore significantly affect Employee & Employer as well as Occupier & Owner relationships. In case of the former, it will increase trust, freedom and responsibility and in case of the latter, it should produce a closer partnership in the arduous task of turning immovable, fixed property into a user-friendly flexible solution. All market players presently have a unique opportunity to change, adapt and, very importantly, admit and learn from the mistakes made in the pre-COVID normal. Even the staunchest traditionalists have this right set of circumstances to blame it on in order to make the much-needed adjustments in both physical and corporate environments. Conventional wisdom says that the only permanent thing in life is change. Sometimes we initiate it, and sometimes it’s imposed on us. What most great thinkers agree on is that our ability to adapt to change spells out our personal and business success.