The office is dead. Long live the office! Corona will not lead to a drastic long-term decline in office use. This emerges from numerous discussions that Invesco Real Estate has had with market participants, in particular with rental brokers and strategy consultants. Many office tenants are reconsidering their space requirements, but almost all of them are placing increasing importance on the location, quality and efficiency of the space used.
In addition, the topic of sustainability is becoming increasingly important. Real estate plays an important role in reducing CO2 emissions. Invesco Real Estate itself goes to great lengths to monitor energy and water consumption and waste generation. For its portfolios, the company only looks for properties that either meet high environmental, social and governance standards and are highly resilient (ESG + R) or have clear potential for improvement. This also and especially applies to the office sector, because office properties traditionally still have the largest share in the allocation of institutional investors.
Not just E, but increasingly S
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The future of real estate revolves around more than just pollutant emissions. The S from ESG is moving more and more into focus. It’s about the wellbeing of users and how property owners work with tenants and local communities during difficult times. It’s about the social impact of real estate. Certain properties offer potential for site enhancement, from which the local community also benefits.
Likewise, there will continue to be major changes in the way businesses use offices. In most cases, companies will not return to the level of office use that was common before Corona. At the same time, not everyone will only rely on remote working. For this reason, the purpose of offices in the future will be to create identity and strengthen corporate culture and collaboration. To this end, offices will have to be places of encounter for a significant number of employees who regularly come together in the same place instead of working independently of the office. More common areas and rooms for meetings and collaborative work are needed.
Flexible and attractive
In the discussions between Invesco Real Estate and market participants, it also became clear that office users who are currently looking for suitable space value more flexible rental contracts, additional equipment and infrastructure. In addition, many companies fight hard for the best employees. For this reason, companies should pay even more attention to the expectations of their employees in terms of the working environment in the future. Sustainable, modern, flexibly designed office properties in central, very well connected locations and an attractive environment are likely to be the winners, and on the other hand, peripheral, not ideally connected, not very flexible back office locations will come under heavy pressure and even become obsolescent.
Find out more in our Whitepaper
EMEA 2205/2021
About Invesco
Invesco Asset Management Deutschland GmbH, Invesco Asset Management Austria – branch of Invesco Asset Management Deutschland GmbH and Invesco Asset Management (Schweiz) AG belong to Invesco Ltd., one of the world’s largest independent asset management companies with assets under management of over 1,391 Billion U.S. dollars as of February 28, 2021.
The information contained does not constitute an investment recommendation or any other advice. The forecasts and market outlooks presented in this material are subjective assessments and assumptions of the fund management or their representatives. These can change at any time and without prior notice. There can be no assurance that the forecasts will materialize as predicted.
The publisher of this information in Germany and Austria is Invesco Asset Management Deutschland GmbH, An der Welle 5, D-60322 Frankfurt am Main. The publisher of this information in Switzerland is Invesco Asset Management Schweiz AG, Talacker 34, CH-8001 Zurich.
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