There is a lot of discussion right now about the future of the office. When the Coronavirus pandemic hit the UK and lockdown measures were put into place, businesses had to quickly find their feet in the world of remote working. Now several months in, questions are starting to be asked whether much of the workforce heading into the office every single day is necessary. It is a topic that we explored extensively in our Future of Work 2020 Whitepaper Report last month.
As the UK attempts to kick-start its economy and workplaces begin to reopen, the newspaper headlines are warning of a deep recession incoming. We have already begun to see casualties of this start to appear: the UK high street is in major decline with many staple brands of the high street, such as Warehouse and Cath Kitson, not reopening their doors post-lockdown, and the Financial Times reports that 21,000 more UK businesses collapsed in March than the same month a year ago – a 70% year-on-year increase.
We had a chat with Peter Bell, CEO of Expedite Group Europe and Executive Board Director at British Chamber of Commerce EU & Belgium, to get his thoughts and insights on what effects he believes the lasting ramifications will be once the Coronavirus pandemic subsides.
First of all, in what ways have you had to adapt your business to weather the Covid-19 pandemic, and what effect has this had upon the company and your staff?
“Naturally, working from home has been the new ‘norm’ and unfortunately, we’ve had to furlough staff due to projects being delayed, postponed or cancelled. We have actively found staff work to do that is non-revenue generating to both keep them motivated and engaged as well as give the companies the best chance of recovery when things start moving again.”
Will you be adopting any of the temporary practices you have put in place permanently?
“It’s highly likely that we will adopt a flexible working regime on a more permanent basis.”
Innovation seems to be a buzzword at the moment, with businesses and organisations urged to ‘innovate’ in order to survive. In what ways have you innovated within your business, and why?
"Our innovation evolves around the changes in working patterns in the commercial real estate sector. We expect our clients to reduce their office footprint generally and move to more agile working environments. We anticipate the workplace function to change and rather than being a place to go to work it will become a place to experience the company culture and to meet fellow workers, customers etc. Our innovation is around building our Workplace Consultancy capabilities to assist clients in assessing their needs and designing the office functionality of the future.”
One of the toughest things for many individuals and businesses about this pandemic is just how unknown everything is. We haven’t experienced anything like this is generations, so nobody can really say with certainty what the future holds. What are your predictions for the business world for the next 12 months, and what changes do you think will turn permanent?
“I think the next 12 months will all be about survival. The real commercial impacts are yet to be felt and there will be a couple of ‘cliff edges’ - in October when the furlough support ends and a huge number of people will be made redundant and in March/April 2021 when deferred VAT payments will be due and the majority of SME cashflows will be challenged. The economy will be badly effected, and this will result in serious inertia across all market sectors. Businesses need to focus on ‘cast iron’ opportunities i.e. activities that will not go away regardless of market conditions. Unfortunately, this will be a recession like no other, there will be so little money in the consumer sector, even food, supermarkets etc. will start to suffer when unemployment hits. This will be a period where decisions will be around preserving as much cash as possible to ride this out and/or investing very cautiously in pivot strategies. It’s not a 12-month problem it’s minimum 24 months and probably 36 months.”
There has been a lot of talk these past few weeks on the ‘future of the office’, and if remote working and smaller offices will become more common. At Expedite, you assist businesses create an office environment right for them. How do you think the ‘new normal’ of office work will affect your business?
“The only silver lining for us is that the change in the requirement for smaller offices will create ‘churn’ – there will be a lot of movement to downsize and reduce cost. Whilst this sounds negative it is much better than stagnant situations such as the uncertainty surrounding Brexit. People need to spend money to save money and this creates work in the short term. The biggest issue is that the larger players in our market that depend on big projects and market share will start to ‘bottom-feed’ putting more pressure on smaller competitors who would not normally see heavy weights chasing after the smaller projects.”
On the same topic as above, how do you think that the office real estate industry as a whole will be affected by the pandemic?
“Landlords should be VERY worried right now. I believe there will be a 25-35% drop in office space requirements in the next 3-5 years and this is a massive shift in real terms. What this should result in is a better deal for the consumer i.e. the tenant. Tenants should get better deals and should have more buying power but this industry is centuries old and changing landlord behaviours and mindset is going to be difficult – particularly as their representative agents are the ones that really have to alter their attitudes. The market should become more dynamic with shorter term leases with greater flexibility in terms. There will also be a shift into the regional office market with people preferring not to travel in to the big cities and so there should be a regional revolution and a possible revival of the local high street as workers prefer to work locally rather than at home or in the city.”
You’re an Executive Board Director and Committee Chair at the British Chamber of Commerce in Brussels and help a lot of businesses find their footing in an EU market. What effects – both short- and long-term – have you seen upon businesses during the pandemic?
“The issues are global and so businesses in the EU are effected the same way as in the UK. The short term issues are more immediate in countries such as Belgium for instance as there has been little government support such as loans or furlough schemes and so the ‘hit’ on business interruption has already been hard and unemployment has already risen sharply. I can see that the EU27 will club together and with borders opening now there will be movement towards trading out of this situation as a collective. The UK is already isolated and with Brexit negotiations fraught, with a high possibility of ‘no deal’, Britain could find itself on a slower recovery trajectory than the rest of Europe. However, moving forward with some form of trading relationship is critical to both parties and so whether there is a deal on no deal, the path to trade will be created and so there will be a lot of activity to facilitate this. This is actually one of the inevitable outcomes in this time of uncertainty – customs related jobs in the UK, France, Belgium and Holland will buck the current trend.”
And lastly, do you have any advice for business owners and leaders when it comes to weathering the Covid-19 storm, adapting, and coming out stronger?
“Yes. STOP and think. Whilst pivot strategies are critical, do not feel the need to implement them immediately. Give yourself time to evaluate and re-evaluate this fast-moving situation. Realise that the world has changed in a matter of weeks and will continue to change dramatically in the next 3,6,9 months. I would not commit 100% to any single strategy but create a broad range of potential approaches and remain nimble in order to deploy a variety of short-term tactics as things start to move again. It will be a staccato transition with a number of ups and downs in the next 24 months and so even when things start to look better there will be further setbacks as business and economic sentiment ebbs and wanes – March / April 2021 will be the first of a number of ‘after shocks’ and it’s going to be pretty miserable up until then with unemployment being the emerging headline. Knowing this and being aware that this is going to be a rocky ride should help business owners and leaders to remain vigilant and on their toes. Do not put it ‘all on black’ just yet – keep some reserves for a 2nd, 3rd, and 4th wave…not of the pandemic but of the continuation of the ripple effect this situation will cause. Be brave, stay in survival- instinct mode and plan for where you need to be in 3 years as between now and then there’s little certainty that you can rely on.”
We would like to thank Peter for giving us his time and valuable insights. You can find him on LinkedIn here.