Co-working could emerge as a big winner from coronavirus
Flexible office companies may be suffering now as co-working users avoid crowded and shared spaces, but they are likely to emerge the winners of the COVID-19 outbreak, according to UBS Asset Management.
Shaowei Toh, UBS head of real estate research and strategy, Asia Pacific, said the coronavirus developments in the past month had accelerated and corroborated emerging trends in the real estate space, namely the rise of flexible working.
“Before this epidemic, working from home or mobile working was arguably more a concept that was ‘good to have’ but never really implemented in a big way, at least in most of APAC,” said Mr Toh in the latest UBS Real Estate Outlook for the Asia Pacific.
“When this COVID-19 outbreak is behind us, we believe many office tenants will review their fixed real estate space requirements, especially if this involuntary experiment with mobile working has resulted in comparable levels of efficiency.”
In the past week some of Australia’s largest companies have begun to send all or some of their workforce home, including big four consulting firm EY, which asked its entire staff to work remotely from Monday, and Westpac and the Commonwealth Bank, which started splitting parts of their workforces into different locations and rotating staff that work from home.
The working-from-home experiment across the country resulted in home office products such as stand-up desks and computer monitors running out at Officeworks on Tuesday.
“The notion of mobility and flexible working is being truly tested during this COVID-19 crisis,” Mr Toh said. “As countries seek to limit human-to-human contagion, many companies have activated business contingency plans and home-based working is becoming a daily routine for many workers.
“In other instances, employees are dispatched to alternative work locations where they can perform the same functions with the aid of technology.”
However, as the world tries to stave off the pandemic and people are told to avoid crowed spaces, some flexible office providers have taken a hit.
Servcorp founder and chief executive Alf Moufarrige last week said the ASX-listed company’s co-working sales across the UK, Europe, US and Australia had fallen by between 30 per cent and 40 per cent in the three weeks before as news of the coronavirus and its infectious nature had spread.
This week at WeWork’s Australian co-working offices there has been a noticeable drop in the number of users as some companies force their teams to work from home. At the same time, WeWork has had a rise in inquiries from member and non-member companies about alternative workspaces as a flexible option in case more offices are forced to shut.
“We see demands from companies looking for alternative locations to house employees across different locations as part of their business continuity planning for the long run,” said Lachlan Buchanan, head of real estate for WeWork Australia & New Zealand.
“In the event of a disruptive situation, having a back-up workspace where companies can relocate their teams to maintain business operations is crucial.”
Mr Toh said the acceleration of flexible working did not mean companies would cut down on their office footprint drastically, but it was likely there would be a stronger inclination towards shared workspaces which would free up the long-term lease commitments of many office tenants.
Corporate demand for co-working should get “a boost”, which would not be ideal for office landlords, but Mr Toh suggested adopting leasing strategies to capitalise on the workspace of the future might bear fruit for pre-emptive office space owners.
