MSP's Market Update: July 2021 By Chris Wright

Now MSP Capital have moved into our new ‘Strata House’ office, we look at the changing function of offices and what it means for developers and lenders.

At the beginning of 2020, many organisations experienced a surprisingly seamless transition to remote working, and the convenience of the five-minute “hallway commute” was felt by employees across the UK.

However, after over a year many began to feel the effects of ‘zoom-fatigue’ and a sense of isolation from peers. It became less about working from home, and more about living at work.

As of 19^th July 2021, England has entered Step 4 of the four-step roadmap to ease restrictions, resulting in the Government no longer instructing people to work from home.

Now, as the working population is welcomed back to the office by employers, possibly for the first-time in over 15-months, the debate about the need for a physical office space has become even more complex. There is a growing sentiment from workers to be more flexible about where they work. Organisations are now trying to figure out how best to meet this desire, while still thinking strategically about the business needs.

In order for organisations to encourage their workers to return to the office, even if it’s just for a proportion of their working week, offices need to become attractive destinations where employees enjoy and benefit from.

For developers working with commercial office buildings, it’s important to consider how workspace design will be impacted by this adjustment.

In a recent study from the ONS, working adults stated that the biggest challenge when working from home was not being able to collaborate with others. It seems sensible to assume offices of the future are most likely to be used for more for group-based work.

Businesses agree, with 53% saying they wanted their offices to have a greater amount of collaboration space. Therefore, bland floor plans and previously dedicated desk spaces are likely to be replaced with larger project rooms, and some individual desks could be replaced by hot-desking.

Flexible space is likely to become more and more important for landlords to be offering business tenants. In fact 47% of UK businesses interviewed by Knight Frank said they envisioned their real estate strategies to include a greater amount of flexible, serviced or coworking space. This will enable companies to welcome back core staff now, while still having the flexibility to expand the working space to welcome back more staff later. A coworking space would allow individual businesses to share spaces with each other, sharing costs, services and space.

We have all experienced the obvious benefits of working from home, and indeed many people will now continue to see it as a viable choice for the future, even if it is just for part of their working week. However, the collaborative opportunities that a shared office brings can’t be denied.

While there’s undoubtedly still a need and demand for offices, their previous function of perhaps just providing a desk and computer would appear to be over.  As organisations look to the future, their focus will now be how to best support their employees in how they wish to work now restrictions have eased.

We continue to have appetite to provide development funding for eligible permitted development schemes across the South Coast. We are also able to help with light refurbishments and conversions with our Bridging Loans.

As a principal lender MSP have lent on several commercial projects with both development finance and bridging loans in the past, so we may be able to help if developers want to update the office building to incorporate coworking facilities.