Hybrid working will require major changes to city office usage

Local authorities in Central London have said the change in working practices is here to stay and as such there needs to be a new approach to office management in London and financial services centres across the world.

Central London Forward (CLF) a strategic sub-regional partnership for Central London covering the local authorities of Camden, the City of London, Hackney, Haringey, Islington, Kensington and Chelsea, Lambeth, Lewisham, Southwark, Tower Hamlets, Wandsworth and Westminster, has issued the result of new research which calls for a rethink on how the City’s office space will be used in future.

CLF  partnered with Ove Arup and Partners, the London School of Economics and Gerald Eve to study the change in use of offices in central London, prospective demand for the next 5-20 years, how this might impact on local economies, and the resulting policy implications.

It found office attendance in September this year was just under half of 2019 levels and is now more focussed in the middle of the week.

By summer 2022, London employee office attendance levels appeared to be just under half those of 2019.

“An uptick, and indeed the new normal, may emerge over autumn and winter 2022, as employer policies are enforced, new care arrangements are made, and the balance of the costs of commuting and heating changes, given the recent energy price increases,” it added. “Based on metro ridership, London’s office attendance recovery appears to be ahead of New York City, and behind Paris. Office attendance rates also differ across sectors; global data from AWA suggests that those office jobs in traditional sectors, those that require dedicated equipment, or those that rely on personal contact are likely to have higher attendance rates.

“Office attendance is now even more focused on the middle of the week. Friday is now by far the quietest day, with only 50% of Thursday, the busiest day’s, attendance.”

The research said hybrid working presents “huge opportunities” for employers and employees. “Home and office lives have experienced a great re-orientation. Although patterns differ across industries, employers, and individuals, stakeholders consulted as part of this work reported that hybrid working is the assumption for central London’s office workers going forward.

“If executed well, a hybrid solution offers opportunities to secure the benefits of working in-person including social contact, collaboration and agglomeration benefits, with the potential to increase the diversity and geographical spread of central London’s office labour force, and employee satisfaction.

“Although employers now offer this, the benefits are yet to be fully realised, and there is a mismatch of expectations of office attendance between employers and employees, with the average worker falling around one day short of the number of minimum number of days in the office specified by their employer. Tools that allow for better compartmentalisation of tasks, and team days, may help realise the full benefits.”

The study found office markets and local economies in the City are most exposed to the new working patterns of office workers. Local economies in more residential locations stand to benefit. “We should see the new normal attendance rates for office workers emerge over the remainder of 2022 and early 2023,” It added. “There is a huge opportunity to embrace the best of home working and in-person working, but it requires changes from the status quo.

“The benefits to the economy that come from employees locating together need to be protected. At the same time, the option of home working has huge benefits for the individual and may help widen and diversify central London’s labour pool.

“Employees have yet to compartmentalise their tasks so that they are suited to home or in-office working. They are also disincentivised to come to office because of the time and costs of the commute.”

It added: “Central London’s wider offer is fundamental to keeping offices attractive. Increasingly it is London’s leisure and culture facilities, and vibrancy and diversity outside of the office door that matters. For many employers, variety and stimulation outside of the office is beginning to matter more than proximity to other businesses, allowing their people to be stimulated, and to innovate.”

CLF added many cities around the world are now taking action to respond to the new patterns of office use.

To protect the future of central London the CLF said steps needed to be taken.

It needed to promote a “best of both worlds” approach to hybrid working, developing a strong narrative around the benefits of hybrid working and continuing to champion central London as a centre for collaboration and agglomeration.

It needed to ensure affordable and flexible public transport. “This includes making accessing central London more affordable, especially in the context of the cost of living crisis.”

There was a requirement to protect important commercial properties and support a managed transition of less viable properties to other uses where appropriate, including the potential conversion of lower quality office stock to high-quality residential, under certain conditions.

The study added  it required steps to “help ensure central London’s office stock meets market needs. This would include lobbying for the abolition of VAT for low carbon refurbishments and continuing to provide skills and space for sectors with bespoke needs including lab-enabled offices”.

The study found office markets and local economies in the City are most exposed to the new working patterns of office workers. Local economies in more residential locations stand to benefit. “We should see the new normal attendance rates for office workers emerge over the remainder of 2022 and early 2023,” It added. “There is a huge opportunity to embrace the best of home working and in-person working, but it requires changes from the status quo.

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