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OCCUPIER

Global Real Estate Market Outlook 2020 Midyear Review
4 August, 2020

WORKERS SLOWLY RETURN TO THEIR OFFICES

The need to maintain low workplace density and ensure adequate social distancing is requiring employers to institute schedules that have a combination of some employees working in the physical office and others at home. This reentry process will progress throughout 2020 as occupiers learn more about the impact of loosened restrictions and seasonality on virus infection rates.

FACILITIES MANAGEMENT TO THE FOREFRONT

An enhanced focus on health and safety is expected this year, including general health screening at access points, provision of cleaning and personal protective equipment and frequent sanitization of work areas. Indoor air quality likely will climb up the occupier agenda—a trend that may lead to more demand for buildings with sustainability and wellness features. Most occupiers are not spending capital to dramatically reconfigure their space, as social distancing guidelines are believed to be temporary until the virus retreats. Occupiers are instead focused on modifying space through signage, closure of some common areas and reducing overall capacity.

ADOPTION OF HYBRID WORKING ACCELERATES

The widespread adoption of remote working has largely been deemed a success. There remain some challenges, but the trend likely will become a permanent feature of the global office landscape. Global surveys conducted by CBRE suggest that many occupiers will increase adoption of remote working after the COVID-19 pandemic ends and will increase their technology investment to support it. This does not suggest a full-time remote workforce but rather one that will have more choice over where they work, creating a more hybrid workforce not bound by the barriers of a physical office to remain productive.

FIGURE 10: FLEXIBLE WORKING AS A NORM

2020-GO-Fig10

Source: CBRE Research, Q1 2020.

A SHIFT TO SHORT-TERM LEASING AND THE SUBURBS?

As their current leases expire, many occupiers are choosing short-term renewals due to economic uncertainty. Others are not renewing altogether. In some markets—especially those in mass transit-dependent urban areas—companies are considering satellite or suburban locations to provide convenience. The process of portfolio rebalancing will take at least three years before occupiers achieve an equilibrium that satisfies lower density for social distancing and higher levels of remote working.

THE LASTING IMPACT OF COVID-19

Trends around remote working and healthy offices will have the most lasting impact after COVID-19. The workplace likely will be less centralized, with more widely distributed teams that interact in a more controlled manner. All offices will have to offer environments and services that promote the physical health and mental well-being of employees. Nevertheless, great offices of the future will do what great offices of the past have always done: serve as important hubs for the human elements and experiences that technology alone can’t provide.

Global Real Estate Market Outlook 2020 Midyear Review

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Contributors

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Richard Barkham, Ph.D.
Global Chief Economist & Head of Americas Research
+1 617 912 5215
Spencer Levy Headshot
Spencer Levy
Chairman, Americas Research & Senior Economic Advisor
+1 617 9125236
Henry Chin
Dr. Henry Chin
Global Head of Investor Thought Leadership
& Head of Research, APAC
Research
+852 2820 8160
+852 2810 0830
Julie Whelan
Julie Whelan
Head of Occupier Research, Americas
+1 617 912 5229