Covid-19 has triggered the biggest experiment in home-working the UK has ever seen. While working from home occasionally once seemed a luxury, enforced home-working has seen some of us dreaming of getting back to the office.

No one knows when we will get back to normal, but most of us realise now that things will never be the same. For Manchester’s office-centric companies, the future of work will likely be a hybrid approach, which, of course, presents its own set of challenges. And residential developers will need to adjust the location and design of the homes they build to accommodate home-working.

Flexible offices

Office landlords and developers are asking: how will the rise of home-working affect the office market? Ultimately, flexibility will be the key trend for the sector. Occupiers will expect more flexible lease terms and their employees will demand much more flexibility from where they work, whether that’s in offices or at home. Workspace providers will need to raise the bar both in terms of design and wellbeing to ensure colleagues wish to return to the office.

The UK’s crash course in ‘Zoom’ is already persuading some businesses they really don’t need to locate so many of their staff in the London HQ. Geographically, things are becoming far more fluid with a strong case for more satellite offices in cities around the UK, such as Manchester.

This isn’t just 'Northshoring' to cut costs. Businesses increasingly recognise the opportunity in enticing new and retaining existing staff. As Mark Zuckerberg recently said, “when you limit hiring to people who live in a small number of big cities, or are willing to move there, that cuts out a lot of people who live in different communities, have different backgrounds, have different perspectives.” Over 30,000 students start at Manchester’s four universities every year, and the city already enjoys the highest graduate retention rate in Britain outside London. Employers who are hoping to tap into that talent will need a hub in the Greater Manchester area to take advantage of this diverse talent pool.

Lockdown has allowed many to reduce their weekly commute significantly. Some businesses may therefore consider more localised hubs to help address employee concerns about the length of their commute. Our What Workers Want survey showed proximity to the workplace was the top concern for workers; a similar survey by Regus found 64% of employees said working closer to home would improve their productivity. The recent Savills FiT survey, which looked at the needs and wants of office-based workers, showed that those with commutes under 30 minutes were the most eager to return to the office. Shorter commutes also help reduce employers’ impact on the environment, as they allow more people to travel to work by bike or on foot. They will also help with employees’ work-life balance, giving them more family time or opportunities to exercise before or after work.

Some employers may look to serviced space to meet the needs of their dispersed workforce. This has been the case in Finland for many years, where co-working spaces allow people living in remote parts of the country to participate in the workforce without commuting long distances (see case study).

We expect that the structural shift towards flexibility in the office market will accelerate post-pandemic. While Covid-19 has presented difficulties to serviced operators in the short term due to social distancing, it has also raised questions about corporations’ long-term office needs. This could push more occupiers to pay a premium for flexibility rather than traditional long leases, which leave them unable to respond to volatile economic conditions.

Moving to a more flexible leasing model will also hugely benefit the innovation economy. Manchester is the fastest-growing tech city in Europe, according to Tech Nations, with venture capital investment doubling in just one year. Flexible workspaces give those tech innovators the freedom to expand rapidly, which will help boost Manchester’s 62,000-strong tech workforce.

The above maps show a tight cluster of serviced spaces in Manchester city centre, but there is less space available to the south of the city centre in Didsbury and Chorlton, despite large numbers of workers living there. Not only is there a latent demand in such areas, but this may also present an interesting opportunity for repurposing of struggling retail property with increasing flexibility between retail and office use class order.

Having it all?

Having the ability to spend part of the working week connecting with colleagues, clients and collaborators in a thoughtfully designed space and then enjoy the dynamic environment that a big city offers, is likely to be a compelling reason to physically come into the office. However, Covid-19 has taught us that we can be more flexible in where we work. With an abundance of appealing suburban locations, the desire to work closer to home, for at least part of the week, is becoming much more achievable.

As the Savills FiT survey demonstrates, work-life balance is better met from home, but that sense of belonging is met in ‘an office’. We may start to see hubs and serviced offices pop up in various places, closer to people’s homes to reduce the time and environmental pressure that comes with commuting, as well as bridging the gap between home-working and commuting into the HQ every day. Work can now become even more local – even if only for part of the week.

One thing is for sure, a centralised City Centre office remains critical for most organisations. Whether a 'third' space complementing a centralised hub and home office located in suburbia becomes more of a norm will no doubt be dictated by the cost vs benefit of providing this. In a world of rising unemployment and economic pressures, those businesses that continue to value their employees and wish to win the fight for talent will look at this opportunity in a progressive manner.

Working from home – the importance of open space

If home-working is to become an increasing part of everyday life, we need homes that facilitate it. Our survey of Savills home buyers in August showed that 49% expected to work from home more often than before, rising to 79% when just looking at buyers under 50.

In anticipation of spending more time at home, many are looking for more space. Larger homes have become more important to about a third of buyers, while gardens have jumped up the priority list for 62% of buyers. Mindful of the ‘W’ in WFH, buyers are increasingly prioritising internet connectivity, with 48% now placing increased emphasis on access to good Wi-Fi.

Providing greater space for home offices while maintaining affordable pricing will be a challenge for developers. Luckily there is a trade to be made, as transport connectivity becomes less critical in favour of local amenities. This means sites further out from key employment centres, but that can still offer good local schools, restaurants, and bars, may become more attractive.

New build £ per sq ft values stood at approximately £372 per sq ft in central Manchester in the year to March 2020. These values fall off considerably further from the city centre down to £265 per sq ft in Oldham and Stockport and £177 per sq ft in Bolton. There is still scope for higher values out in the suburbs, however, with a median of £344 per sq ft in Altrincham for example.

As buyers cast their search beyond the city centre, some of these local hubs may stand to benefit. Research from Centre for Cities shows that high streets in Manchester’s suburbs have recovered faster than in the city centre. Those more vibrant local communities will make these locations more attractive for purchasers and developers alike.

It may still be too soon to pack it all in and attempt a life of self-sufficiency in Surbiton like Tom and Barbara from the classic sitcom The Good Life, however. Access to outside space is a growing concern for home buyers according to our survey: residential schemes such as Mayfield and Northern Gateway will offer this in the form of new parks. Whether we choose to live in an apartment overlooking a city-centre park or out in the ‘burbs, the pandemic has made us all a little more selective about where we spend our days.

View all of our latest Manchester Cross Sector research here.