Date posted: 3/12/2020 5 min read

Hybrid Working, The New Normal: How Working From Home Impacts The CBD

Is hybrid working the new normal? How has it impacted the CBD? As more people work from home this will surely have an impact on business in the city.

In Brief

  • About one-third of Australian and New Zealand employees could be working from home for at least half the week post-COVID.
  • Businesses need to reinvent the balance between home work and office work.
  • With the office becoming a social, collaborative hub, home will be the place for deep-focus work.

By Matthew Brace

While a tiny minority of employees are tentatively returning to their CBD offices, many of the world’s city centres are still empty. The throngs of city workers that packed the pre-COVID-19 streets of New York’s Wall Street, London’s Square Mile financial district and Sydney’s CBD are, instead, sipping their flat whites and munching their muffins at home. Some will never come back.

About one-third of employees in Australia and New Zealand could be working from home for at least half the week in a post-pandemic world. For some, this offers the perfect work scenario, while for others it’s unwanted isolation.

Office design-and-build company Unispace surveyed more than 25,000 of its clients’ employees and found that, post-pandemic, about 30% favour working from home for half the week – pre-COVID-19, that number was about 10%.

Unispace’s managing director Asia-Pacific, Rob Aird, says this jump marks “a very significant rise and a need for businesses to reinvent the balance between home work and office work.”

Aird sees the future office as a place where employees “get culture, collaboration, mentorship, where they can solve problems in teams and innovate, as well as catch up on watercooler gossip and be creative. Basically, all the things people struggle to do alone at home.”

Chief people and culture officer for business advisory and accounting firm Grant Thornton, Kate Lindwall, agrees. “For us, it’s about getting the balance right, so we’re able to focus on the experience we want our clients to have and our people to have,” she says.

“That means carefully working out how our staff – 1300 in Australia and 250 in New Zealand – connect with each other when working remotely and how we ensure that people still have learning and development opportunities, on-the-job coaching and other vital elements when they are in the office.

“In our May survey, 84% of our [Australian] people said they would like to work more flexibly in the future, with more days worked from home. Among the main things they were looking forward to when they returned to the office was reconnecting with colleagues and collaborating on work projects,” Lindwall says. Grant Thornton is planning another survey to update those results.

“In our May survey, 84% of our [Australian] people said they would like to work more flexibly in the future, with more days worked from home.”
Kate Lindwall, Grant Thornton

Heading to the office for a social life

With the office becoming the social, collaborative hub, home will be the place for deep-focus work that requires less interaction: writing reports, analysing statistics, developing plans.

“Our people have found that such work can be done really well at home, where the distractions are generally fewer,” Lindwall says.

The 10% of employees who have spent half the week working remotely since before the pandemic will see this as a no-brainer. The office equals chat, camaraderie, coffee runs and longer-than-normal lunch breaks. In other words, distraction and time wasting. Home (with the exception of home-schooling, of course) equals quiet, more flexible hours and comfort – focus and productivity.

For the other 20% who are going to be living this dual-location life, but are not used to it, the transition could be much harder. Many people like the buzz of the office – some have no life beyond it – and can work through noise and resist procrastination. So how will they fare working alone at home in a small, silent office?

Chairman of the Australasian Association and managing partner at HLB Mann Judd’s Sydney office, Tony Fittler FCA, says the importance of the office should not be underestimated.

“There’s no doubt that collaboration and social engagement work better in an office and there are different ways to achieve this,” he says. “There are interesting times ahead for office workers, but also the opportunity for employers to get some great outcomes.”

“There’s no doubt that collaboration and social engagement work better in an office and there are different ways to achieve this.”
Tony Fittler FCA, HLB Mann Judd, Sydney

Joint managing director of Sheffield Property in Perth, Mark Clapham, says one factor not widely discussed is “the risk of people working from home getting forgotten about very quickly. They don’t just miss out on office gossip, but might miss out on promotion opportunities and career progression.”

Did coronavirus kill the CBD? Or just change the office forever?

What will tomorrow’s office space look like?

The transformation of the office-home balance means big changes for the CBD workplace, which is a quandary when it comes to leases.

Companies usually lease office space on five-year contracts, so few are likely to give those up and risk huge early-exit fees. Instead, says Unispace’s Aird, firms are reinventing the workplace to make it fit for post-COVID-19, dual-location operations.

“The big accounting and financial services firms have quite progressive work practices,” he says.

“The big accounting and financial services firms have quite progressive work practices.”
Rob Aird, Unispace Asia-Pacific

“Some are talking about aggressive downsizing, saying, ‘We’ve been out of the office for a long time, we’re already very agile, we’re already quite comfortable with remote working, so we can probably downsize the office even further.’”

This may mean subletting one floor, then repurposing and redesigning the remaining space to better meet the demands of post-pandemic office tasks: fewer desks further apart, bigger meeting rooms and more communal space.

Tom Mott, NSW state director for office leasing at Savills Australia, says the dramatic downturn in business confidence and the trend towards working from home has resulted in about 150,000 square metres of sublease space being put to the market in the Sydney CBD.

“Vacancy has doubled since this time in 2019 and is trending over 10% in the last quarter of 2020,” he says.

“The return-to-work strategies of corporate Australia will greatly impact the vacancy rate. We are seeing an upswing in demand within the SME market (broadly, tenants with less than 50-70 employees), with most tenants seeking existing fitted-out space on one- to two-year leases as opposed to the more traditional five-year or more leases. There is opportunity for tenants to capitalise on the deals available.”

Aird says there’s another crucial element to ensure people don’t get too comfortable at home in their trackpants. “To get people into the office, firms need to draw them in so offices will become more of an experience than merely a location,” he says.

“Tomorrow’s office space will look and feel more conducive to collaboration, like a working cafe, perhaps. That’s a big transition for most companies.”

Why developing tech skills will be vital

Technology is playing a pivotal role in this transition. It was already moving businesses towards the office-home split, but the pandemic has accelerated the process.

To keep pace, companies are now fast-tracking the development of their employees’ technology skills to ensure seamless operations from remote locations.

Grant Thornton’s national managing partner, audit and assurance, Andrew Rigele, says the “key fallout for auditors working from home is that we have had to increase our data analytics skills”.

“With remote working, economic uncertainty and the need to ensure quality financial reporting, the audit process does take longer – perhaps an additional 20%,” he says. “This is really squeezing the time we have to meet reporting deadlines.

“Resilience and sound decision-making have always been core attributes of audit,” he adds, but “the need to specialise has never been more important and can be done without being in the room with the client.

“During the past six months, skills in data assurance have been very useful and this is something we will look for in future candidates.

“Forensic skills will be a requirement, as will specialisation: subject-matter experts on a particular kind of reporting matter and also industry experts who understand the unique characteristics and peculiarities of the business they are working with.”

This all has a knock-on effect for recruitment. The glamorous office with the prestigious CBD address, killer views and state-of-the-art coffee machines were once selling points for firms keen to attract the top talent. But HR teams are now reinventing the incentives they promote to graduates and other potential employees. Flexible working arrangements are almost certainly going to be among them.

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