Gone are single-use buildings, coworking operators and central business districts; in are flexibility, hospitality-driven spaces and a new life for high streets. These are just some of the findings from the research report The Future of Real Estate, produced by international law firm Withersworldwide.
Withersworldwide commissioned Murmur Research to produce the report, and the company spoke to high-profile executives in property, architecture, land development, hospitality and academia. All experts agree on one thing: The global pandemic has accelerated changes in the way we work, live and socialise that will not be reversed.
“COVID has changed almost every aspect of our lives, and the way we use and interact with the buildings around us has been at the forefront of this,” Withersworldwide Business Division CEO and partner Jeremy Wakeham said. “Some of the changes we highlight in our report were starting to materialise before the pandemic, but its impact has pressed fast-forward on these processes, taking us several years into the future.”
Work, home and social
Withersworldwide’s report investigated changes in three broad real estate sectors: commercial offices, residential property and the hospitality sector. Overall, the biggest theme to emerge across all areas was that employers, employees, homeowners and consumers are all starting to demand new levels of flexibility from real estate. It is no longer enough for an office to be an office, a house to be a collection of bedrooms or a coffee shop to just serve coffee.
“Offering single-use buildings will no longer be a viable strategy as people come out of the pandemic expecting to be able to work, live and socialise in the same places,” Wakeham said. “Of course, this also means that they will want more choice of location and venue, which means that there are exciting opportunities for smart investors and developers who correctly identify the demand.”
In terms of commercial real estate, many of the experts highlighted how people’s desire for a multi-use workspace that can also meet social demands could be satiated by the hospitality sector. While the shapes of spaces and the tenant mix of a building will become more flexible, what the property manager offers will be critical to making the property viable.
"If you can change the use of a single space over the course of weeks or even days, then you can really maximise income and decrease risk because you're not tied to one archaic use which might go out of business," University College London’s Bartlett Real Estate Institute Chair Yolande Barnes said.
The general feeling was that current coworking models or serviced offices won’t cut it because “they are too labour intensive; all they do is package up rented accommodation and break it down into small spaces,” Molonglo Group co-founder Nectar Efkarpidis said. Credence Hospitality Developments Chairman and CEO Islam Mahdy went as far as to say, “Hospitality is going to eventually take over a lot of the coworking functionality.”
A new life for high streets
Several respondents highlighted that with real estate flexibility comes a broadening of where people want to be. It will be increasingly unnecessary to live near an office, for example, due to homeworking. To create a “third space” — a place for people to work that is not home or the office but somewhere convenient — space on the high street could be repurposed, Cushman & Wakefield Chief Strategy Officer Richard Pickering said.
“Do you really want an out-of-town business park where everybody has to drive to, or do you want a traditional streetscape with lots of buildings that are highly flexible and where their uses can flex and you can change quite quickly?” UCL's Barnes said.
As a result of the reduced need to travel to the workplace, some areas will benefit and others will decline. Regions around cities will open up and provide opportunities for developers to create new, sustainable communities. Cities will take on a different form, as they become less a place people visit for work and more just a place for people to socialise.
“Offices will be repurposed,” Land & Partners founder and Director Jonathan Harbottle said. “Since the war, the trend has been for mono-purpose buildings but I envisage lots of office blocks being mixed-use, like vertical villages, 100 apartments, with 100 office suites, a deck and food growing on-site, with management curating and promoting what the building offers and does. … Cities won’t expand out but up.”
Overall, we are likely to see the emergence of new properties across towns and cities that provide the mix of uses people are looking for. The report notes that “owners will have to work harder in order to make the asset work for them”, which could mean “repurposing space, providing additional flexibility or diversifying the tenant portfolio.” It is not easy, but Wakeham said it is possible.
“Look at how a space can be changed easily, how you can offer tenants more freedom to come and go, how a bar can also be fitted to work as a workspace,” Wakeham said. “The first starters who get this right will streak ahead of the current leaders in the property market, who will find it harder to change their models in the short term. The opportunity is huge.”
This feature was produced by the Bisnow Branded Content Studio in collaboration with Withersworldwide.