prediction series: 1 of 6

Over the next week, we will be bringing you one instalment per day from Simon Johnson, Director at Incendium, with his predictions for the world of corporate office space in the aftermath of COVID-19.

Instalment 1

It is undeniable that the impact of COVID-19 on the world and how we have been forced to operate whilst in its indiscriminate grip has been, and is, seismic. The question is what the longer-term implications will be for how we work and the consequential impact on corporates, corporate real estate and commercial office space.

I personally think that this could be the most exciting catalyst for change in a generation, as it directly addresses and has already broken the boundaries that have limited the appetite for change that I experience every day with the clients that I work with.

The pre-COVID-19 directional trend

There has been a directional trend over the last 20 years towards more agile working that, through ever accelerating technology enablement (mobile technology, connectivity, collaboration software and secure cloud platforms), has been progressively unlocking our capability to work flexibility.

This has manifested largely through combinations of homeworking, mobility between office locations and mobility within office buildings that in turn has resulted in a shifting balance within corporate offices away from allocated individual workstations to more diverse and flexible workspaces.

“Agile” or “flexible” or “smart” working has been embraced by employers and employees to varying degrees, typically linked to the nature of business activity, the nature of individual roles, levels of collaboration and corporate culture.

A relatively conservative corporate with an agile working policy and shared desking in operation, would typically target office utilisation levels around 8:10 desks to staff and around 8-10 sqm space per desk. At these levels, natural absenteeism through holidays, sickness and vacancies mean that I often observe with frustration desk allocation that has not gone beyond 1:1 desks per FTE in real terms.

Most of the corporates that I work with increasingly refer to space in categories such as “core”, “semi-flex” and “flex”. However, the balance is still typically heavily weighted towards “core” space. A balance of 70:30:10 respectively is not uncommon.

Further, an established corporate would be a willing to commit to “core” space for periods well in excess of 10, 15 or even 20 years.

Whereas at the “flex” end of the spectrum the total amount of flex space in the market still only amounts to some 5% of requirements, with many corporates still carrying and managing flexibility internally to their portfolios.

In this context it is not surprising that even today the office leasing market is skewed heavily towards long term institutional leases and property finance models that largely transfer risk (FRI leases) and capital burden (fit out, maintenance and now capital accounting for leases) to the tenant.


Even with this directional trend, most people still commute to the office on a daily basis, most people still have a desk they routinely sit at, business travel remains rampant and corporates still carry huge occupational property portfolios, that typically amount to 9-12% of total operating cost.


The reasons for this residual conservatism are typically a corporate nervousness around being seen to “take away” from staff, conservative HR policies, IT restrictions (systems, data and security) and reliability, as well as often traditional management practices.

This has not been helped by the cost of implementing agile working, the change management required and unreliable real time utilisation data. Even where companies have implemented flexible working policies, there is often an under-estimation as to the extent of management effort, capability and style that is necessary to achieve an more outcome-based approach.

The next instalment in the series is due to be released here on the 16th April 2020.

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