David Cluer, joint chief executive and co-founder of MetSpace
Businesses’ battle to get employees back to the office looks to be coming to a head. Among a string of major corporations, Amazon has cracked down on hybrid working, ordering staff back to the office five days a week. However, pulling in the opposite direction is the Labour government, which is commandeering policy that could make hybrid working an employee’s right.
Labour is poised to unveil its Employments Rights Bill which could see an extension of employees’ rights to flexible working. The Business Secretary Jonathan Reynolds was quoted in The Times stating that employers “need to judge people on outcomes and not a culture of presenteeism”.
Business groups have expressed concerns that the proposed plans could increase hiring costs and unintentionally lead to the elimination of overtime. Despite this, Reynolds emphasised that Labour’s efforts to improve workers’ rights should not be a cause for alarm among business leaders.
The Return to the Office is Happening Anyway
To an extent this is just noise, workers are increasingly returning to workspaces. Centre for Cities reports that full-time central London office workers are currently spending more than half the working week in the office (2.7 days) compared with just 2.2 days in April 2023.
This trend is further reflected in a recent market report by Savills, which predicts growth in office-based employment in the UK, forecasting a rise from around 8.9 million today to closer to 10 million in a decade. From employees’ point of view, the MARCO New Customer Report 2024 revealed that 40% of UK employees favour working full-time on-site.
This trend is matched by what we are seeing within the industry where there is optimism that demand for office space will continue to strengthen as companies adapt to these market evolutions. Global real estate company JLL found in its latest Future of Work survey that two-thirds of business leaders expect budget for office space to rise between now and 2030.
Shorter Lease Periods and Turnkey Solutions Rent
For commercial landlords to be successful, they need to adjust their holding to be attractive for businesses looking to evolve their space to the modern working demands.
Evidencing this is the marked shift towards shorter lease lengths. This trend, which began before the pandemic but accelerated during it, is driven by tenants’ desire for greater flexibility amid uncertainty. These shorter leases, often under five years, allow companies to quickly adjust to fluctuating market conditions and changing workforce needs, while providing landlords a chance to renegotiate terms as the market evolves. At MetSpace, we’ve seen proof that this strategy works. Offering occupiers shorter licensing periods, while reducing the risk on landlords with a longer operating agreement, we’ve driven a 98% occupancy rate across our Central London office spaces.
At the same time, there is growing demand for turnkey office solutions that allow businesses to move in straight away. Rather than taking on empty spaces to customise, many businesses now seek fully furbished offices that can be instantly occupied. Meeting these demands offers landlords the chance to capitalise on the fast-growing flexible office market, benefiting from fewer void periods and better net occupancy levels.
Premium Spaces Attract Talent
The overall workplace experience has become crucial for attracting and retaining top talent. As the home of a business, the office can play a key role in this as a conduit to networking, colleague interactions and building friendships. Office-working is also being recognised as key for junior employees to gain the day-to-day growth opportunities that being in the direct presence of managers can offer. Modern work environments must go beyond basic functionality, balancing collaborative areas with private zones for focused work, while reflecting employees’ personal values and lifestyle preferences. Landlords must align themselves closely with what businesses are looking for and create working environments that people feel proud to work from.
Customisation is Key
These premium spaces are typically design-led, rich in amenities, and personalised to reflect the occupier’s brand. While turnkey solutions are important, a level of flexibility is essential to shape the office around an occupier’s needs and how a business’s employees work best, whether that requires additional meeting rooms, alternative furniture, or branding.
Looking ahead
While the culture around hybrid working continues to shift, there is growing optimism in the commercial property market.
As businesses adjust to new work patterns, adaptable, high-quality spaces that allow for flexibility to cater to evolving needs is being invested in. This adaptability is set to be a key factor driving future success in the office market.
