Offices were a hot topic in 2022: on a corporate and individual level, the question in every boardroom was the future of the office, and whether hybrid working could continue.

However, a year is a long time. Early 2022 saw the start of the much-heralded return to the office; whilst Glasgow has shown a steady return, accelerating in the second half of the year, the rate has been faster in Edinburgh with high demand for limited space.

It’s clear, however, that working life has changed fundamentally - we won't simply return to the way we were.

Throughout 2022, businesses devised hybrid working strategies, but this can prove challenging for decision makers faced with an evolving landscape. No two businesses are the same and management styles, profitability and the lifestyles of their employees impacts on the space they need. The slow pace of return has left some employers frustrated.

Most occupiers know they require space as a focal hub and meeting place and that It must be more attractive to their workforce than working from home.

Occupiers are also having to overlay the impact of the economy on their 2023 forecasts for profitability and head count. Capital expenditure on fit-out is tight but they are often keen to secure the savings that hybrid working potentially offers, whilst still succeeding operationally.

Despite shortcomings with existing older space, some occupiers don't want to incur capex and are choosing to stay put, spending what they can on smartening their space. Edinburgh, in fact, has seen the highest number of regears on record as occupiers either can't find space or are deferring decisions.

2022 saw other occupiers investing in new offices, signing up for less - but higher quality - floorspace, in new buildings or top-class refurbishments. Well run buildings offering strong ESG credentials are attracting users and substantially higher rents.

Business persons around the office building

2023 will also be when the quiet - or maybe not so quiet - revolution in the office sector starts. Businesses are analysing their operations forensically, using operational data such as office and energy use. Perhaps this should have happened years ago but post pandemic tech is now being harnessed to do this.

Many are now taking small but attractive spaces in buildings with cafés, wellness and social facilities. The marked trend is for occupiers to take 'Cat A Plus' fully furnished spaces on flexible leases. Tenants are looking for more than just space and will pay for it. In keeping with societal trends, they’re also now leasing everything from landlords and enjoying easy to move into - and exit - space, allowing them to focus on their business rather than dealing with property.

‘Cat A Plus’ furnished space, very much in demand, also helps tenants deal with uncertainty and this trend seems set to accelerate.

For larger corporates, a landlord or building’s Net Zero Carbon position is increasingly important, alongside energy use and ESG credentials. This will grow in importance, reflecting the climate emergency.

Our cities are likely to see more 'recycling' of existing buildings with only selective new builds. In 2023 the economics around office development are likely to be difficult with projects that do get underway likely to charge increased rents. reflecting the cost and quality of what they are creating.

The office is here to stay despite what some would say – its benefits are now being widely appreciated from mental health and wellness perspectives. Vibrant offices are key to our cities but occupiers’ needs are changing and the best landlords will respond to this.

Phil Reid, Vice Chair of the British Council for Offices (BCO) in Scotland and managing director, Phil Reid Associates and Angela Lowe, Senior Director, CBRE

Revolution in the office sector - Phil Reid and Angela Lowe

Comments