PLANNING FOR OFFICE SPACE – A NEW WORLD OF WORK?

Grateful Acknowledgements to Reuters

Despite the economic climate we are still building vast hectarages’ of office floorspace and some key questions keeps coming back to me – Do we really need all the office space that is being built in our cities? Who is going to occupy it? And what happens if it is built but not occupied. Can it be put to other uses?

As some of you may know, I am not only a Chartered Surveyor and Town Planner but have an abiding interest in the use of technology for future working, hence the other project that keeps me gainfully occupied on a daily basis www.handyforwork.com  – a website and APP designed to help people work smarter on the move.

Smart technology is allowing us to work from almost anywhere nowadays and the traditional commute to the office is an increasingly fraught, time consuming and expensive affair. Wouldn’t that time be better spent gainfully employed rather than crammed on the 7:30 from suburbia into the city or stuck on the freeway sucking in exhaust fumes?

Commuting Costs

The average Briton for example spends almost as much time commuting as they do holidaying. Glenn Lyons and Kiron Chatterjee, from the Centre for Transport & Society in the University of the West of England, Bristol, tell us that the average worker in Britain spends 139 hours a year commuting, "the equivalent of 19 standard working days."

Commuting distances in the UK are a great deal more than the average 2.5 miles experienced in 1980. Nowadays many long-distance commuters would dismiss such journeys as working next door. It turns out that one in 25 commuters in Britain now travels more than 100 km (both ways) to work and 10 percent of commuters spend over two hours a day travelling to and from work.

So on the day it has been announced that rail fares in the UK are set to rise again by an average 6.2%, some serious questions are likely to be asked by those same commuters as to whether they can really afford to keep doing it at a time when salaries are stagnant, at best. Maybe there’s another way.

Build it High and let it ….possibly!

A recent Drivers Jonas Deloitte report(1) indicates that in London there is 9.2m sq ft of office space under construction – up 28% since six months ago. Construction volumes have trebled since the 2008 market low and 2013 is set to be record year for the West End market. Activity has also returned to King’s Cross & Docklands areas for the first time in 18 months. The report notes “Commercial office construction increased by 28% in the first quarter of 2012, compared with six months ago and up 44% since a year ago, according to the latest figures. However, whilst the report shows increasing construction, levels are still relatively low in absolute terms”.

The recently opened Shard in London has just under 590,000 square feet of office space, but few if any pre-lets means that most of this remain empty so far. Some schemes have ground to a halt pending pre-lets and it is evident from the report that, ““Despite the upbeat signs from the development data, the reality is that, for some types of offices, tenant demand remains slow. We do believe that significant opportunities exist; but get the product and/or location wrong and the pitfalls could be just as large.”

2013 is set to deliver 2.9m sq ft of available office space, with an average of 2.3m sq ft expected to be delivered annually over the next three years. Matthew Elliott, head of London offices at Drivers Jonas Deloitte, says:

“At first glance, these numbers would appear to be very light, with average Grade A take-up levels at around 5m sq ft per annum over the last 10 years, almost double the amount of space that is set to be delivered. However, occupier demand for Grade A space is declining; 2011 represented the lowest annual take-up in a decade. As a result, London now has a surplus of quality space waiting to be occupied, with 4m sq ft completed and vacant”.

Savills European Office Report for Summer 2012 tells a similar story. They note, “On average, we expect demand in the second half of the year to be stronger than in the first one, and the total annual volume in 2012 should be above the 2011 level in a few markets, notably Amsterdam, Frankfurt and Brussels. Across the markets covered in this report, the letting activity in 2012 will still decrease, on average we forecast that it will be down by 7.7%”.

“While developers and banks are wary of entering the market in the current economic conditions, an increasing trend of refurbishments of old office stock has become apparent. In some markets the share of refurbishments has increased from below 10% to about a quarter of all development completions in 2012, for example in Vienna (27%), Madrid (26%) and Milan (25%). Interestingly the refurbishment trend is also very strong in the two London markets, with 58% of completions in the West End and 59% in the City actually being refurbished”.

Working Smarter

Smart working was specifically encouraged during the London Olympics to relieve some of the expected pressure on the transport system and I don’t doubt it will have given pause for thought to many of those businesses who took up the challenge. The world of commerce did not collapse. Businesses did not cease to operate through lack of staff. In fact I have yet to hear any discouraging comments from the London commuting fraternity (or their bosses) who perhaps worked from home for a few days or travelled locally to a pre-arranged hub.

Combine this natural development caution with a growing technological ability to work ‘in the office at home’ (or in micro-hubs co-working space and the like), the increasing costs of travel to work that cannot be covered by pay rises, an increasing self-employed sector as a result of the worldwide recession and a general sense that quality of life is beginning to take precedence over the 7:00am-7:pm commuter grind and you have a cocktail of circumstances that might just be the catalyst that changes the way we work in the future.

I’m not saying for one minute that offices are not needed nor that our conurbations will instantly become wastelands of redundant office blocks. But it doesn’t take a rocket scientist to spot the huge amount of empty space around in most towns and cities at the moment.

So what to do with it all? In the UK the Government has mused on the idea of allowing an automatic change of planning use from office to residential and on its face this is an imaginative idea. But they have yet to get to the heart of the multiplicity of issues that might arise if such a proposal is imposed in a blanket fashion and the jury remains out on this one. The key issue is that most business space is neither designed for nor located in a situation that would allow such a change of use to occur without itself leading to substantive problems.

Building Smarter

Working in the rural development sector converting heritage buildings we adopt a standard mantra which is made clear to all our clients and which I think applies for all future office development, and that is ‘The Concept of Reversibility’. Always carry out conversions, or new-build schemes, with an alternative use in mind. If the primary purpose is no longer required it should be straightforward enough to reverse the building into an alternative use without having to demolish and re-build. Something we can't do anyway with Listed Buildings but you get the point.

“Barrio de Los Paracaidistas”
A prototypical tower for the people of Mexico City
With grateful acknowledgement to  Design: Metous Studio

Too many buildings are still being designed with a single purpose in mind and if that use becomes redundant then the building cannot be used for anything else. That is not only a waste of effort but (wearing my planner hat) unsustainable. Perhaps we need to start thinking more about causing multi-use capable buildings to be constructed from the outset and being a bit more flexible on the compartmentalized office/retail/residential zoning that so often maintains. Echo’s of Ebenezer Howard perhaps, but I’m referring to the buildings as much as the settlement forms themselves.

What if new buildings had a ‘multi-role-combat’ ability with a planning framework that allowed flexible changes of use? If all that 9.2 m sq ft of office space for London were capable of fulfilling more than one role – residential being the next most obvious land use of value – or maybe even designed at the outset with multiple use in mind, then maybe we could really encourage a new way of city living and working.

Ah, I hear you say. The high land values wouldn’t support such development. Maybe not at the moment; but if new ways of working and economic uncertainty lead to even a modest reduction in floorspace requirements then the single-focused office market in city centres that has been the sole driver of land values for the last few decades may begin to experience a see change; perhaps not in the very prime locations but potentially around the immediate periphery.

In the same way that technology has revolutionized our working practices and ability to communicate around the world from wherever we are I believe that in the medium term the same technology (and its successors) will begin to significantly alter our working environments too. We need to think hard now about the future of sustainable city development and about all that vacant office space.

(1) London Office Crane Survey (May 2012) from Drivers Jonas Deloitte