Hybrid Working – The Challenge for Office Occupiers and Landlords 

Hybrid Working – The Challenge for Office Occupiers and Landlords

The Covid-19 pandemic has had a significant impact on office occupiers and landlords which looks set to continue for some time. Whilst it has not been a mandatory requirement, the Government has advised businesses to allow employees to work from home, if possible, at various times throughout the pandemic.

Many employers have implemented hybrid working either for the foreseeable future or as a permanent arrangement.

This has resulted in many office premises being only partially occupied at various times during the pandemic, sometimes at 10% or less of full capacity. With some likely to not return to full occupancy in the longer term.

Whilst their employees may be partly or wholly absent, businesses still have obligations under their leases to pay rent, service charge, and other costs associated with property occupancy. Landlords, and the managing agents who act for them, have taken differing approaches to managing occupancy costs throughout the pandemic.

The scope for a managing agent to reduce expenditure will depend upon many factors. Some of the areas for consideration are detailed below:

– Reception and front of house staff. Reduced visitor numbers may allow reception and possibly security staffing levels to be reduced.

– Cleaning. The frequency of cleaning and therefore the staffing required could be reduced. However, the need to ensure Covid Secure buildings could limit the scope for reductions.

– Plant run time. There may be scope to reduce the run time of certain items of plant, subject to occupancy levels and the distribution of people around the building.

– Electricity. Consumption should be reduced as a result of lower occupancy, but the scale of reduction could be constrained by other factors, such as the need to run air handling plant continuously for example

However, it is one thing to cut services in the face of a pandemic, a different proposition making longer term changes. Some occupiers will no doubt wish to retain services at a high level for the benefit of their employees and clients, whereas others, will want costs to be minimised. It will be a challenge to address these competing pressures.

The challenge facing the sector is how to continue to provide an adequate level of services in buildings that are only part occupied, and in the face of occupiers who are keenly aware that their property costs are now higher on a per head basis due to reduced occupancy. Set against this are landlords who face an uncertain future but who wish to protect their assets and ensure that they retain their position in the marketplace as high-quality office premises.

To find out how Assure can help drive down your occupancy costs contact us.

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