D2 Real Estate’s latest property report confirms what was suspected, that the Channel Islands office market has different dynamics compared to the UK, particularly the large cities.
The Channel Islands don’t have the long commute and reliance on public transport, making employees keener to return to the office than those in UK cities, particularly as training and monitoring of staff wellbeing is so much harder whilst working from home.
Many occupiers are putting ‘working environment’ ahead of ‘cost’
D2 Real Estate’s survey shows that many occupiers put ‘working environment’ ahead of ‘cost’ in terms of occupational priorities. Phil Dawes, Managing Director D2 Real Estate (D2RE) said: “This is the key message in my view. In order to encourage staff back, there is a real focus on the working environment and major occupiers are investing in their accommodation.
“This is borne-out in the case study where a landlord refurbished their building and offered something slightly different and more contemporary – not surprisingly they managed to let all their space in a difficult market, whilst other offices sat vacant. Therefore those Landlords who work collaboratively with occupiers will benefit, those that aren’t prepared to invest will quickly get left behind.
“We thought lease flexibility would be more of a priority, but over the past year we have seen major companies enter into leases of 9 to 15 years, so again perhaps not surprising it’s a neutral response, but again, this is very different from the UK.”
It’s worth bearing in mind the impact on other sectors if we remain working from home, particularly the town centre retail and food and beverage businesses. Phil said: “With the Government of Jersey talking about building a new 110,000 sq ft office in the centre of St Helier, it seems they are committed, which is positive. I understand States of Guernsey’s occupational strategy is undecided, but it will be important their employees return to support town centre retail.”
Although there is undoubtedly a change in the way we will all work going forward, the office is certainly not dead, as seen by the score of 4.3 out of 5 in response to the question ‘relevance of the office to the business’.
Future operational requirements
When asked about what future operational requirements were of office premises, the results reinforce the difference between Channel Islands office working and that in large cities, where the commute to work is so much shorter and takes less time out of the day.
- 46% said that their operational requirements would stay the same
- 25% expect their office requirements to increase
- Just 12% expect their office requirements to decrease
How difficult is it to operate when working from home?
There has been plenty of discussion around how to maintain staff wellbeing whilst working from home. It is certainly more difficult to sense issues whilst working from home and the results of the survey show this in the graph below.
It’s interesting to see that once systems were in place, IT security was clearly not an issue for the majority.
Phil adds: “In our view, the survey demonstrates the resilience of the local market. We suspect the high score against ‘relevance of the office’ would not be replicated in other jurisdictions, particularly the UK at the current time.
“This bodes well for the investment market, as one of the key attractions of the local investment market is the opportunity to buy buildings let on long leases to strong covenants.
“Although a more flexible working culture is inevitable and welcomed, the need for the office to enable effective training and mentoring, as well as being the physical embodiment of the brand and culture remain high priorities. Crucially, this survey has confirmed that the majority of the respondents strongly believe that in order to retain and attract the best staff, the office environment is critical and certain key areas, such as staff wellbeing, are extremely challenging to maintain in a purely ‘working from home’ environment.
“There will inevitably be a period of consolidation, where some businesses contract and others expand, but in essence, the office is still highly relevant. There is no doubt in our mind that offices in the Channel Islands will continue to have a major role to play as part of our working culture, where people want to go to work and as a place to encourage and drive business.”
The full D2 Real Estate ‘2021 Office Market Review and Occupier Survey Results’ can be read here.
