by Virginie Wallut, Director of Real Estate Research and Sustainable Investment at La Française Real Estate Managers
The health crisis will bring about changes in the real estate market and more specifically with regards to office space, expediting the obsolescence of some assets that cannot comply with new conventions.
The COVID-19 lockdown has validated the possibility of teleworking. However, teleworking has its limitations for employees and business development. From the employee's perspective, there is nothing more unequal and exclusive than a company where everyone works at home at their computer confined to their own living and housing conditions.
With respect to businesses, looking at teleworking simply from the financial aspect and only considering cost savings as a result of fewer workspaces, takes away from the office’s main role of business development. Looking at the first teleworking analyses following the lockdown lifting, standard operations gain in productivity in the short run whereas innovation, the brainchild of tomorrow, becomes more problematic. Advocating 100% teleworking is akin to having a short-term outlook on business development.
COVID-19 has shifted the teleworking balance. Whereas employees had asked for it in the beginning, some businesses would now like to impose teleworking on their employees. We believe that it is possible and even probable that legislation in France will impose employer compensation for their employees. Under current legislation, businesses cannot impose teleworking. Employees must be compensated if they refuse to telework. Owing to a lower number of rented office spaces, cost reductions would be partially offset by teleworking compensation.
We predict that a proliferation of businesses will set up a hybrid system to combine on-site work with teleworking. Many components would play a key role in the attractiveness of office assets. The office should make employees and clients want to come in and thus:
- Be a unifier. Embody the corporate identity/culture for employees and clients and a powerful symbol that creates a sense of belonging;
- Be comfortable and abundant in services in order to create an experience, encouraging employees to feel at home and want to come back to the workspace;
- Be a hyper-communication spot. Workspaces must be flexible and reconfigurable, increasing possibilities for employees to work and communicate with each other
Office assets must facilitate teleworking, i.e.:
- Offices must be central, accessible, and close to intermodal transit hubs.
- Offices must be connected to give each employee equal access to information (those working on site and those teleworking).
Despite current fears of physical distancing, the attractiveness of major cities in terms of economic opportunities, connections, and social relationships will determine demand in the long run. Ongoing shifts in cities prior to COVID-19 will continue to bring about change in quality of life and sustainable features in cities and buildings.
THIS COMMENTARY IS INTENDED FOR NON-PROFESSIONAL INVESTORS WITHIN THE MEANING OF MIFID II. It is provided for informational and educational purposes only and is not intended to serve as a forecast, research product or investment advice and should not be construed as such. It may not constitute investment advice or an offer, invitation or recommendation to invest in particular investments or to adopt any investment strategy. The opinions expressed by La Française Group are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Published by La Française AM Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. La Française Real Estate Managers was approved by the “Autorité des Marchés Financiers” under N GP07000038 on June 26th 2007, approval (i.e. the Carte professionnelle) granted by the Paris Ile-de-France “Chambre du Commerce & de l’Industrie” under CPI N 7501 2016000 006 443 – Transactions on Buildings and Business Assets and Real Estate Management.