December 2, 2020

Coronavirus Pandemic Forces Office Rethink

David Laws, Partner at Matthews & Goodman, considers what employers should consider before deciding to return to the office.

Covid-19 is a game-changer.

Restauranteurs are now converting from ‘dine-in’ only businesses, to include ‘take away’ as an offer.

Those who prefer to work from home (WFH) because it beats the commute, saves money and makes them feel safer are prolonging their return to the workplace.

Companies must now accommodate their WFH employees and COVID-proof their workplaces, making physical distancing a necessity. More importantly, going virtual – with WFH employees demanding the abandonment of commuting five-days a week – challenges the logic and financial viability of being locked into an office lease. It is clear that how we use space and how much we are willing to pay for it is changing. So what are the options?

The first question is obviously ‘do you really need as much space as you thought you did?’. The second is ‘is your current office an optimum choice, or would another better suit your financial, current/anticipated working practices, brand and talent recruitment/retention goals?’. The third is ‘what do you think will be the shape of your business going forward and how will this impact your workplace requirements?’. Finally, ‘what flexibility does your lease and landlord afford you?’.

These questions strike at the very heart of the financial and strategic imperatives of your business and it’s important that you make the right decisions. Below are six issues that might help inform your decision making.

1. Define your brief/requirements and evaluate what you want versus what you need
– What is the purpose of your workplace? Does it still perform the function originally intended for it?
– Does it meet your employees’ expectations?
– Establish what your rationale for moving is
– What are your current and future requirements?
– Location – what is the optimum choice bearing in mind cost limitations, employees’ needs, proximity to client/partner/supplier/staff?

Future-proofing your move is critical. The move will prove an expensive mistake if your property strategy is not aligned to your business plan and commercial strategy.

If you intend to contract or expand the business, work with a property expert who will advise you on how to optimise your choices – i.e. how do you maximise the space in terms of the best combination of desks, break-out and collaboration zones for informal brainstorms and discussions, meeting rooms for more formal meetings, as well as staff welfare and socialising areas?

2. Realistic time allocation for the move

If there is one truism in office relocation, it’s that things always take longer than you think. Consider the following, as they all take time to implement. You might need:
– To commission a comms survey
– A third-party wayleave agreement to be signed
– Fit-out plans that require a License of Alteration
– Lease documents that will require reviewing by a solicitor and a surveyor
– To organise and implement the right comms/IT infrastructure – this is critical to your business continuity

For most organisations, the ‘move’ is masterminded by a non-property professional who is also juggling their core business activity.

3. Calculate the cost of moving accurately
Beyond removal and fit-out costs, most people budget for solicitor’s’ fees, tenancy agreement deposits, potential new furniture purchases and costs associated with updating stationery, signage, vehicles, website, etc. However, do not forget costs that are not immediately obvious, such as:

– Dilapidations – repairs required at the end of a tenancy/lease to restore the premises to its original condition
– Commissioning a pre-acquisition survey, which will help make informed decisions based on data concerning the fabric of your intended office, potential liabilities related to mechanical and electrical systems
– Contractual obligations, including break clauses, rent reviews and dilapidation agreements, as well as end-of-lease costs outlined in your current lease
– The cost of any potential downtime
– Installation of new communication and security systems (if necessary)

4. Engage with all stakeholders

Moving workplace is critical to the organisation’s future; therefore, its most valuable assets (its talent) should be engaged with the process as early as possible. Their buy-in is critical in terms of retention, as well as ensuring that the ‘business-of-your-business’ continues seamlessly, even when everyone is elbow deep in packing cases. What are their expectations? Requirements for additional amenities that the landlord might be offering such as public Wi-Fi, health and well-being areas, community engagement programs?

Pre-COVID, all property decisions were driven by cost. Post-COVID, all property decisions will be driven by the employee. With the drive to retain the talent and attract the best, the voice of the employee has never been louder in expressing their expectations for the environments in which they prefer to work. The views and opinions of the HR & IT departments should be valued with equal importance to that of the finance directors.

5. Beware the cheapest option

There’s an old saying ‘buy cheap, buy twice’. A cost-first approach, which fails to fully accommodate brand, commercial and HR imperatives, is likely to prove an expensive error – very quickly.

6. Are you the expert?

Your workplace is probably your second most expensive outgoing; therefore, unless you are a property specialist, you really should appoint a qualified surveyor to help you through the process – after all, everyone needs someone to blame when it goes wrong!

They will advise and often act on your behalf when dealing with issues such as:
– Negotiating the optimum terms for your new workplace
– Reviewing lease terms and ensuring you minimize your exposure in the short and long-term
– Calculating fair dilapidation terms to minimise your exit costs
– Helping you define your true occupational requirements and how best to use the space

Communication between client and advisor is critical. Advisors must listen to what their clients say and ensure they really understand what their clients’ requirements are and will be. However, clients should also heed the advice they are given and question things they might not understand or agree with. Transparency and honesty are critical to avoiding mistakes.

Perhaps a good place to start is to ascertain whether you should move or stay where you are. To help you, we have created an online tool that you might find as a useful starting
point. It will help you define your potential requirements and help determine if a move is your best option. It is not a substitute for a discussion with a qualified and informed surveyor with deep local mark knowledge, but it is a useful start.