What Hybrid Working Means For Commercial Real Estate in the Middle East
Lockdowns have shown millions of employees that working from home (WFH) is possible and preferred. Yet, as lockdowns were extended, many of those same employees realised that WFH does not always drive the most productive work. So, the idea of hybrid working has been developed and embraced by businesses worldwide.
Commercial real estate owners in the Middle East and around the world have gone from thinking that office buildings would be redundant in the new age of digital working, to now predicting that significant portions of their corporate clientele will return to the office in some form. So, in order to stay relevant in a post-pandemic world, commercial real estate owners will have to think carefully about their portfolios and how they will feature in the modern workplace.
Pandemic Impact on Commercial Real Estate in the Middle East
Corporate real estate tenants have reviewed their occupation strategies and their work-from-home policies to define ongoing real estate needs. As a consequence of this, real estate activity in this region paused while businesses figured out their best course of action. Employers in the Middle East are eager to get people back into the workplace, as they continue to heavily value the importance of an office to come together as a team.
At IREP, we have seen a shift and growth in other sectors. The logistics sector has benefited from an increase in online delivery, as online penetration impacts traditional retailing, whether in groceries or comparison goods. As the trend away from physical retailing continues, owners and occupiers of retail space have to be more inventive with their offerings, store formats and so forth, to encourage customers from the sofa into the store.
However, it is important to note that well located, well managed, and well-provisioned buildings continue to attract both local and international tenants.
Both groups are also now looking at all their facilities’ ESG and sustainability credentials. Hence, to maintain reasonable occupancy rates, developers and owners must focus on the ESG and sustainability criteria of their buildings. Our Energy Group advise both owners and occupiers, on their ESG needs. It’s one thing to source green and renewable energy, and it’s another to reduce consumption.
ESG and green energy solutions will continue to be at the forefront of people’s minds operating in real estate. A recent survey by the Royal Institution of Chartered Surveyors (RICS) highlighted that 63% of respondents believed that energy management would be the fastest growing area of sustainability over the next 12 months. The Middle East needs to see more changes to create a suitable workplace for hybrid working.
Creating a Suitable Workplace for Hybrid Working
As mentioned above, the post-pandemic workplace has to change.
Many businesses are looking for ways to make the office a more inviting place to work and spend time, with the aim to encourage all employees back into the shared workplace. Others operating a flexible working policy are looking at how employees will be using the workplace. Many are now looking at the workplace as a more collaborative space as people will come to the workplace for interaction but sit at home for computer-based work or conference calls.
The pandemic has clearly accelerated the home/remote working concept and proved that employees can work from home and still be productive. Moving forward, we expect flexible workspaces (i.e. serviced offices) to continue to have a place in corporate and occupier strategy. This flexible workplace will help support flexible workspaces and become a secondary option alongside home offices or remote working locations. For example, companies like Twitter are increasing the remit of their real estate and workplace teams to include all places that employees work for any sustained length of time. Others are reinventing their real estate to allow for more team areas, creating an environment where employees can work together and productively.
After such a long period of isolation, individuals have adapted to new ways of working. Now, as we look ahead, it is essential to understand future factors that impact demand for office buildings as businesses are having to consider a change in design and model for the workplace.