A few weeks ago, Tesla chief executive Elon Musk told the firm’s white collar workers that they must return to the office, or face the sack. He said that remote working is “no longer acceptable” and that staff must be in the office for 40 hours a week, pointing out that is was less than is required of factory workers.

Musk’s frustrations are shared by many business owners, and their landlords. Not only are workers in the US and UK reluctant to return to the office, many have decided to stop working altogether, taking early retirement or dropping out of the employment market. At the end of last year, Americans were quitting work at a rate of four million a month.

We should however be grateful that the Asian work ethic persists; we have not seen business leaders make such demands in this region. However our office markets are also facing challenges from home and flexible working.

Australia seems to be the keenest to hang on to homeworking, but even in Japan we see more people working away from the office than before the pandemic. For example, as of July, telecoms firm NTT has adopted working from home as its standard work style. Meanwhile, in Greater China, the pandemic is still a live issue and restrictions are in place which may force homeworking under certain circumstances.

Smaller homes in dense Asian cities are less attractive for office workers, while good public transport means commuting – cited as a bugbear by workers in the US, UK and Australia – is quicker and cheaper than elsewhere.

Nonetheless, in locations such as Melbourne, which was reporting less than 50% office occupancy on a typical day in May, the office market will be hit if home working persists. Most office markets in Asia Pacific have proved resilient to the effects of the pandemic, but they may be less resilient to a longer-term change in working practices, so landlords need to dangle a few carrots for reluctant office workers.

The prime reason for staying out of the office was, of course, health and concerns about health have persisted post-COVID. People are more concerned about hygiene and air quality than ever before. They are also more concerned about the sustainability of their buildings. These are issues that can be addressed by landlords with technology and good property management.

Secondly, office workers have become more demanding with regard to their working environment. Five years ago the office did not need to compete with the home; now it does. This does not mean providing sofas and Netflix, but rather an attractive working environment with better lighting, better design and more comfort.

The prime reason for returning to the office, for workers, is the need for collaboration. Being home alone in the study with video calls is not a substitute for continual human interaction and teamwork. A lot of the office experience is about informal collaboration, outside of diarised meetings; this cannot be replicated at home. However, to boost offices, landlords and occupiers need to prioritise creating collaborative environments, with good meeting rooms and informal breakout spaces. Office workers also need quiet spaces for when they require a bit of solitude.

The post-COVID working environment is not just about working from home, but working from anywhere. The office sector needs to embrace this and provide more ‘anywhere’ for workers. This could be decentralised office space nearer suburban areas, flexible space such as coworking or simply a greater variety of spaces within offices.

All this adds up to one thing: offices need to be better if they are to retain workers. We have seen a flight to quality from occupiers, which means owners of lower-grade office space need to up their game or find their assets stranded.

Landlords also need a change in mindset. Not that long ago, the relationship that mattered was between landlord and tenant. Now, landlords need to think about the end user, because without workers, their offices will be lonely places.

Further reading:
Savills Asia Pacific

Contact Us:
Christian F Mancini