After the initial shock of the Covid-19 crisis with many companies putting their office space plans on hold, we are starting to see some early trends in the UK and Europe in terms of which office markets are more resilient than others.
Much depends on the type of businesses that operate in a given city as some are more affected by the pandemic than others.
For example, Düsseldorf, capital of Germany’s most populous state of North Rhine-Westphalia, has a key advantage as it is a city known for its large number of law firms and consultancy businesses. The consultancy sector is currently experiencing high demand from tax and HR consultants, auditors, lawyers, banking, office equipment suppliers and IT companies who make up a large proportion of Düsseldorf’s office space occupiers.
Several Dax companies, the German FTSE 100 equivalent, are also based in the region and traditionally have more firing power than SMEs. In contrast, the start-up scene, which is currently more vulnerable due to its dependence on venture capital (VC) investors, is still relatively small compared to cities such as London, Manchester or Berlin.
Nevertheless, Covid-19 will also have an impact on Düsseldorf’s commercial market, space requirements and rent levels. The extent of this will depend on the duration of the restrictions as well as the federal government’s support measures. Many sectors could ultimately also emerge stronger from the crisis if they take the changes as an opportunity to digitalise processes and thereby possibly open up new markets and target groups for themselves.
Going forward, we see four possible scenarios for the office market and changes in office requirements:
- Occupiers implement working from home firmly into their work practices – with the same number of employees this could result in reduced space requirements.
- There is an increasing desire for human interaction and in-person collaboration. Companies could therefore review their communal areas by adjusting their current office space needs, relocating or extending the scope of their space requirements.
- Working from home and social distancing could bring about a revival of the traditional ‘office cell’, as the probability of infection is higher in open-plan offices and employees have become accustomed to a quiet working environment.
- Interest in flexible office models increases due to uncertainty. Tenants will resort to co-working and desk-sharing concepts to remain as agile as possible.
One thing is for certain and that is that office requirements will change, at least for the short to medium term.
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