“Hybrid work has placed people in the center of working life in a new way. Future office environments are cozy, adaptable, support well-being and offer services. The demand for flexible office spaces is growing, and real estate owners must keep up with the change, actively offering solutions for tenants. Hybrid work also offers companies new opportunities in recruiting and promoting diversity at work,” writes Investment Director, Real Estate, Päivi Tomula.
A few weeks ago, I spoke about changes in the work environment at the Nordic Real Estate Forum in Tallinn, which gathered top influencers from the real estate industry. Although views about the benefits of hybrid work vary, one thing was established: the market is changing, which highlights the need for importance of adaptable and flexible spaces even further.
As a real estate investor, Pontos has an excellent outlook on changes in the market, the lessor’s viewpoint and the effects of new trends. The occupancy rate of premises, length of leases and demand for different spaces indicate practical changes taking place.
Hybrid work is a different form of working, one that requires adaptability from premises. Offices in today’s environment need to serve personnel physically, socially as well as virtually.
Spaces and services need to be attractive to make employees choose the office as their place of work. Good traffic connections and parking opportunities are an absolute must, when employees are deciding between remote and office work. Cleanness, indoor air quality, cozy recreational spaces, phone booths and lounge spaces adaptable for larger gatherings are important. Yet quiet working space is also required.
Offices have an important role in hybrid work environments and in creating a functioning company culture and community spirit, which are significantly harder to implement remotely.
Digital work environments must be functional, and companies need good network connections, technology and systems for enabling hybrid work. The work environment covers more than the physical space. It should enable working seamlessly, both remotely and at the office.
The decision to work at the office is also guided by the available services. For example, good lunch alternatives beat microwave meals at home. It is also convenient if you can go to a nearby gym directly from the office or utilize other services that make life easier or increase well-being.
This has led and will continue to lead to growing demand for new, modern office spaces, while rental prices for old-fashioned, more remote offices have already dropped.
Companies’ need for spaces and their availability change, with people increasingly working remotely, and online meetings have become more common. Owners must be even more active and plan new opportunities for promoting the competitiveness of tenants.
The market will become polarized, and active lessors that invest in collaboration and can offer their customers functioning solutions are the ones who succeed. Working ways in the hybrid environment have not yet become established.
When a lessor offers flexibility and a large service offering, tenants continue to be interested in signing long leases, which provide value to lessors in terms of the financing and valuation of the asset.
Our portfolio company AVIA Real Estate has introduced the Avia Club concept, which offers a flexible way to rent spaces from offices close to the Helsinki-Vantaa Airport. Tenants can use a separate app for booking more office or meeting spaces and other services according to their needs.
This flexibility has turned out be a critical component in companies’ decisions regarding office spaces.
Climate change, increasing costs and energy availability require new methods for maintaining properties. Social, financial and ecological sustainability are important for creating long-term value.
Large and international companies require owners to provide environmental certificates or similar proof of environmental efforts in their premises. Sustainability requirements from other tenants are also increasing.
Improving energy efficiency support lower costs as well as environmental responsibility.
There are tools and services available in the market for solving these challenges. One solution is the AI-based real estate management software by our portfolio company R8 Technologies, reducing energy consumption in commercial properties by up to 20 percent.
For companies, working without a fixed location provides opportunities for engaging talent from a larger geographical area and promotes diversity and equality. It has been studied that increasing remote work increases gender equality, as it facilitates juggling work and family life. Remote work also enables combining work and free time, impacting personnel well-being and thus performance.
On the other hand, employees seek encounters through colleagues. Time spent together increases the feeling of communality and psychological safety. Social encounters have a significant effect on people’s well-being and minimize the risk of burnout, and as such, also increase work efficiency.
Thus, the office continues to have a strong place in the new hybrid work environment.
Requirements for leaders are highlighted – one must consider remote work conditions while also offering an attractive work environment.
Hybrid work should be efficient, practical, equal and support well-being, regardless of location. This requires new practices for deciding when and which meetings should be face to face, and what types of tasks can be carried out from any location.
Work must be planned in a different way. Remote workers need to be managed too.
To summarize, one could say that the inevitable and unstoppable change in the world of work requires flexibility from premises, lessors and tenants, as well as company management and employees. The best workers are in high demand, which increases the need to consider people’s needs in increasingly diverse ways.
Change always provides new possibilities for standing out in the market and improving one’s efforts.
Those who adapt to change and look for solutions are most likely to succeed.
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