5 signs why office demand new norm is back to norm. (even if not immediate)
I have had a few ‘discussions’ with people about new norm and norm. Many kept saying that after this pandemic is over, new norm is to work from home. Offices will close down. Demand for offices will go down. May I remind everyone that moving forward… with the need for social distancing… do we believe demand for office will go down or at least maintained or even go up? A 200-staff company may even prefer to house the staffs in two separate locations instead of one. It’s also known as risk management in the corporate world.
As for examples of norm, let’s start with a world famous INTERNET company as the best example of whether working from office or working from home is more ‘norm.’
Sign #1 – It’s best to work remotely or from home versus in office?
Before I start this article, read this from the world’s most famous online / internet company; google.com “The plan would call for around 60% of Googlers coming together in the office for a few days a week, while another 20% will work in new office locations and 20% are anticipated to work remotely.” (What Google is saying indirectly is that 80% will work from office… and only 20% are working somewhere else.)
This is not the only case yeah. Another one: Goldman Sachs wants its bankers to be back to office. Another one: Facebook reopens its offices for staffs. Another one: Morgan Stanley says that if you want NYC salary, you better work in NYC.
Sign #2 – Are rental rates holding steady for the popular office units?
Many months ago, someone asked me what will happen to the offices since everyone is now working from home. I smiled and replied that the new norm is going to be back to the norm. In other words, offices will continue to be needed. To know if there is oversupply or not, look back at rental rates. If there are any oversupply, rental rates will just fall and not just fall for the offices which nobody wants. It will also be falling for those offices which everyone wants. If rental rates are holding steady, the oversupply for these good units are not happening.
Sign #3 – Are demand for goods and services going down?
Actually, if new norm meant that the demand for goods and service are falling, then very soon, many people will be unemployed. If this happens, then the demand for offices would drop in-tandem. However, we can see very clearly that demand for goods and services remain strong and there is even one term for it. It’s called Revenge Buying.
Demand is merely delayed due to circumstances but it will return once it’s possible to buy. When all these demand continue to be strong, businesses would continue to prosper and with more businesses coming into the market, they will need an office too.
Sign #4 – Demand and Sentiment for Homes at advanced nations or those which has managed to control COVID-19 better
UK: House Asking Prices hit record high (When people confidently asked for higher prices, what does that tell you?) AU: Suburbs with homes which prices are above AUD1 million. (when homes are priced above AUD1 million even in suburbs, what does that tell us?) SG: Is housing still affordable for first-timers (when articles are asking this question, what does it tell you?) I know, someone would like to point out that this is residential. Frankly speaking, if the whole residential market is dropping… then hope commercial will rise yeah… And when everyone feels confident… guess what happens?
Sign #5 – Any large corporates announcing they are moving out of their HQ and offices?
We could continue to listen to speakers who may have their own reasons why they say new norm is all about online and technology and not physical office plus technology OR we could try and find and read news about large corporates announcing they are moving out from their huge offices into a much smaller office and sending all their staffs to working from home.
By the way, there’s really not many and in fact if there are, the reason is not because they want to ask all their staffs to work from home. Sometimes, when a large corporate grows larger, they will move and they may even choose to move out of the CBD in order to get a bigger space to house all their staffs together versus having a few separate offices. These happen all the time. The only difference moving forward is that maybe it’s better to house staffs in a few officers versus within one office tower. This will provide flexibility when one of the office space had to be vacated.
Office Space (including commercial space) will always be needed (even sales galleries, classrooms, retail and more)
It’s just not conducive to have close / formal chats / discussions with an important person (can be friend, colleague, client and even potential client) in a cafe. There’s just too many distractions and do we wish for someone at the next table to hear what we were discussing?
I know, it’s possible to zoom since there’s video. Let’s not talk about the potential secret recording which we could not see or know. That’s up to how much you trust the party you were speaking to. Let’s speak about interactions. A handshake and a tap on the shoulder is far more powerful than a emoji reaction. Unless of course we stop being humans. A cheers with a knock on the glass is far more emotionally appealing than you holding your glass and knocking the glass on the notebook camera. Get real…
If we are buying a RM900,000 property, do we really want to just view a 360 video and have a zoom video call with the sales person and then we decide to buy? I am not such a person. If you are then congratulations, you are far ahead of most people I know. Not many people I know could buy something so expensive without actually having any physical connection to it.
I could go on and definitely someone related to technology could also keep giving even more ways that technology could do all these even without the need for office. I have never said technology could not enhance our work and increase our productivity. I am just saying that office space will continue to be needed. Please do feel free to work from home if needed, the decision is ours to make. Happy working.
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