Office Space Take-up Could Drop 20%: Barclays

US/UK – The arrangement of working from home is expected to become prevalent even after countries across the world have defeated the COVID-19 pandemic, reported Forbes on Monday (28 September).

The prestigious media company cited a special report by Barclays that was published last week. According to the article co-authored by the bank’s equities analysts, Paul May in London and Ryan Preclaw in New York, the appetite for office premises could decline by 10-20 percent even after the virus is long gone.

The authors think that their calculation is “appropriately cautious” and said that it takes into account available proof, namely vacancy levels of office spaces and the number of employees that haven’t returned to their office, even though they can.

However, the authors acknowledge that there are “high levels of uncertainty” on what city life would look like after the pandemic has been conquered. Some evidence indicates that there would be a modest impact, while others forecast a massive decline in office space demand.

For instance, 50 percent of the firms that are part of the S&P Composite 1500 market index talked about flexible working arrangements during their last earnings calls. Of these, the majority or 80 percent said they had an okay experience of working from home.

Moreover, a poll conducted on behalf of Barclays Research showed that over 50 percent of respondents expect that they can telecommute some of the time after the virus outbreak is over. The survey’s outcome is validated by other studies. For instance, almost 75 percent of employees deem working from home as a good experience, while nearly 60 percent intend to do so if they are permitted by their bosses.

Another evidence that corroborates Barclays’ findings is that 70 percent of US workers who still went to their workplace during the virus outbreak reduced their time in the office by about 4 hrs compared to the same period last year.

“It stands to reason that as employees who have been home full time return to the office, they will spend even less time there than those who need to go to the office amid the pandemic,” wrote Preclaw and May.

Among the information that backs a moderate impact on office space take-up is the experience of New Zealand, which can be considered a good example as it’s one of those that made the most progress in tackling the pandemic amongst developed countries.

So far, 15 percent of New Zealand’s office workers haven’t returned to their workplace, supporting Barclays’ estimate that demand for office premises could fall by 10 to 20 percent in a post-pandemic world.