Offices: yesterday’s workplace or emerging opportunity?

So, where are you reading the #Week24 Paperclip? At your desk? On your phone on the commute? Or from your garden following a day working from home? Given it’s a Friday, there’s a strong chance it’s the latter.

The implications of this shift on the office market are well understood. As occupiers look at ways to rationalise their space, downward pressure on rents and capital values stalks the market.

And according to a report this week from Goldman Sachs, there is little reason to think that values have found their floor. With shifting occupier requirements, higher interest rates and more supply under construction, it is easy to understand this perspective.

But it is not a universally-held point of view. Also out this week was the Y(OUR) SPACE report from Knight Frank and Cresa, detailing the views of 640 senior corporate real estate professionals from around the world. Its findings, not to put too fine a point on it, offered a convincing counterview to the ‘death of the office’ narrative that has dominated over the past three years.

55% of respondents said they expected their companies’ portfolios to increase between now and 2026, with a further 22% suggesting their holdings would be stable. Only 5% expect to see their portfolios decrease in size by more than 20%. Large corporates are not the only occupiers in the market, and one big downsize can easily outweigh many incremental expansions, but the sentiment remains. These are not the numbers that speak of an office apocalypse.

When we talk about offices, we look at how existing occupiers are reshaping their requirements and assume the space they are vacating will lie empty, unwanted, for a long time to come. We struggle to imagine what occupiers will take their place.