John Wallace is managing director of construction law firm Ridgemont
In 2024, many – if not most – office workers expect their company to offer some form of hybrid working. The benefits of a flexible-working model have been widely discussed: improved productivity, a better work-life balance and reduced burnout, to name a few. It’s no wonder so many people have opted to continue working this way since pandemic restrictions were lifted – and many now view working from home not as a perk, but an expectation.
On the flip side, many business owners are now facing a dilemma: the working-from-home trend means lots of vacant (yet still expensive) office space has been left behind, and the pre-pandemic ‘buzz’ of the office has been replaced by empty chairs.
So what are employers doing to tackle this issue? Many are looking to downsize to a smaller, modern space that is better suited to their organisation’s needs – the idea being that this will cut down on unnecessary costs and space, and entice employees back to the office.
“The fact that more companies are choosing to downsize paves the way for contractors to repurpose the space left behind”
The figures speak for themselves: in major cities across the globe, 50 per cent of major global companies have announced they will be pruning their office spaces. So when HSBC last year decided to move its headquarters from Canary Wharf to a smaller building in the City, it didn’t exactly come as a surprise.
But what does this drop in demand for traditional office space mean for the construction industry, which is already grappling with a series of headwinds including the impact of the pandemic, high interest rates, inflation, and new energy efficiency and safety legislation? Understandably, it’s cause for some anxiety.
But the construction sector should have no fear; with loss comes opportunity. The fact that more companies are choosing to downsize paves the way for contractors to repurpose the space left behind for other means, or build new office spaces designed to accommodate hybrid-working trends.
Improving existing stock
Canary Wharf is unlikely to see a mass migration of workers any time soon – and where offices do eventually become vacant in the long term, there are many options for Canary Wharf Group to consider. For example, buildings could be carved up into smaller, more energy-efficient and fit-for-purpose spaces to be leased to serviced office operators, or even converted into residential (although this does come with extra planning and construction issues to consider).
Either way, Canary Wharf Group and other developers and landlords must be able to think quickly and respond to demand from clients. It’s important to consider what your client will be looking for; often, this will consist of a new location that better suits the needs of their business and employees. So the construction industry can take advantage of this by constructing those smaller office spaces in the desired locations.
There’s also the emphasis on ‘modernity’ – it’s not just about the buildings being smaller, but what they can provide. Hotdesking, co-working spaces, breakout rooms, cafeterias and gyms are all incredibly popular. Receptions, storage areas and accessibility are all important, too. Buildings will often be home to more than one company, which means they’ll need to be flexible and suited to multiple needs.
The heightened demand for smaller, more modern office spaces comes with other benefits: they take less time to build, for starters, meaning the whole turnaround of building-to-sale will be much quicker.
In a nutshell, the construction industry is well-accustomed to change and knows how to adapt. Yes, hybrid working means demand for office space has changed significantly, but the sector is flexible and more than able to keep up.
