The office of tomorrow must be an agent of change

COMMENT The City of London recently announced a flexible approach to negotiations with developers. In an interview with the Financial Times, the City’s policy chair, Chris Hayward, said there would be “no deal-breakers”. The move recognises that the commercial office market has changed – permanently – with the advent of increased working from home, and it responds to that change with a pragmatic spirit which aims to turn a moment of disruption into one of opportunity. It’s time for the office sector to follow suit. For those who plan, design, build and run offices, then, the opportunity lies in getting this response right. To support this, the British Council for Offices is resetting its policy and research agenda. We have identified four main areas driving change, on which we will need to focus discussion and investigation in the years ahead: economy, business, ESG and technology. Since the UK’s first purpose-built offices were developed in the early 18th century, the changing nature of the economy has seen the office emerge as the workplace of choice – or necessity – for the majority of workers. With the UK economy undergoing radical shifts in recent years, the office has another opportunity to evolve to meet the demands of today’s market. Structural change The demand for office space is no longer static. It responds to cyclical and structural changes in the economy, both globally and within the UK, as well as shifts in employment patterns and company profiles. Flexibility is the watchword. Offices must adapt swiftly to accommodate the needs of a new generation of occupiers – start-ups, remote workers and agile enterprises. Talent is increasingly the driver of locational preferences for sectors and individual businesses. Therefore, the UK’s demographics and labour market dynamics are also key. The office sector’s success hinges on creating environments that attract and retain the top talent needed for companies to grow in today’s market. Businesses face headwinds – tougher trading conditions, reduced investment capacity and pervasive uncertainty. Conventional office models are no longer sacrosanct, and organisations are starting to explore alternatives, driven by necessity. Maintaining a competitive edge is the litmus test. Will rivals offer a more enticing work environment? How can businesses differentiate themselves? By embracing change, fostering innovation and prioritising occupant needs, we can turn this disruption into a new vision of the office as an agile, adaptable space, with the resources to drive competitivity. There is a growing sense that companies that are seen as responsible and sustainable are more likely to interest employees, customers and investors. Leaders are responding to pressure from these stakeholders, who are increasingly concerned about the impact of business activities on the environment and society, and expect companies to address these issues. The subtle shift from shareholder value to stakeholder value is being driven by ESG. The rise of ESG principles in the office market is already showing benefits. Sustainable offices are not only more attractive for occupants, they are more energy efficient, so often cheaper to run, and future-proofed, so more attractive for investors. However, it is not all plain sailing. Reputational risk is not confined to the missteps an organisation might make but extends to the actions that it fails to take. It is not so easy to control the narrative. The consumers hold the power, and all the good intentions in the world can be undone by a single post on social media. Challenges ahead Technology has an important role to play in shaping the modern workplace and organisations must recognise its transformative potential. Providing a seamless experience for employees and customers alike hinges on integrating technology effectively, and staying abreast of the latest advancements ensures that businesses remain competitive and agile in an ever-evolving landscape. Offices are not just “capital assets” for owners or “factories of production” for users. They are part of the fabric of our built environment, forming the backdrop against which we live out our working lives. They contribute to the “sense of place” that is increasingly recognised as critical to building successful communities. The workplace will remain at the heart of business collaboration and culture. How the future corporation’s workplace is delivering for society will be a key duty of an office in the years ahead. Offices are well placed to deliver social value. The variety of stakeholders involved in owning, creating, leasing and occupying workspace can all add value beyond the purely economic. This is not simply about altruism. It is also about good business sense. Office buildings have a responsibility to lead a global movement to transform health and wellbeing with a people-first approach to buildings, organisations and communities. To be considered “best-in-class”, a workplace needs to be more than just a place to work. While challenges lie ahead, the office sector has a unique opportunity to reimagine its role, enhance offerings and create environments that align with the changing landscape of work and business. Richard Kauntze is chief executive at the British Council for Offices