Before the COVID-19 pandemic, an unprecedented wave of office demand had arrived. However, the situation changed dramatically due to the impact of the novel coronavirus, and with the full-scale adoption of telework, office vacancy rates began to rise. This article explores how the development of telework has changed the office market and what the future of offices will look like.
How Has Telework Affected the Office Market?
With the full-scale adoption of telework, demand for offices has been declining. On the other hand, there is also a counter-trend of expanding floor space per person due to social distancing measures, and some observers suggest that short-term office demand is roughly neutral overall.
Changes in Office Demand Due to Full-Scale Telework Adoption
By early June 2020, approximately 30% of full-time employees were working remotely. For Japanese companies that had maintained in-person work styles, this was a major change. While most companies initially introduced telework reluctantly, it has been proven that customer satisfaction and employee productivity are not affected, and an increasing number of companies are continuing telework going forward.
The recommendation of telework has also led to reduced commuting stress on crowded trains and improved work-life balance, becoming an opportunity to reconsider work styles.
Corporate Telework Implementation Cases
Fujitsu, with approximately 80,000 employees, adopted telework as its basic work style. The company stopped paying commuting allowances and instead provided work-from-home allowances, and announced a policy to reduce office space by approximately 50% by 2023.
ENECHANGE, an energy venture company, found in surveys conducted after introducing telework that there was no negative impact on customer satisfaction, and that employee productivity and health were also good. With positive effects on business performance, the company decided to reduce office space by approximately 40%.
Future Ways of Working in Offices
Going forward, it is expected that a hybrid work style combining office attendance and telework in optimal proportions will become mainstream. Most inconveniences of telework can be addressed, and while ICT advances are creating better environments for working from home, face-to-face communication remains important for companies to build competitive strength.
How Have Companies Changed Their Thinking About Offices?
The purpose of reducing office space has shifted from simple cost reduction to "cost optimization based on redefining the role of offices." An increasing number of companies are viewing this as a kind of investment, returning the savings to employee benefits and bonuses to improve work performance.
How Will the Office Market Change in the Future?
Offices are shifting from "fixed costs" to "pay-as-you-use." The expansion in demand for shared offices and coworking spaces is a symbol of this trend.
From Fixed Costs to Pay-Per-Use
Shared offices are a form of office where you pay by the hour or on a monthly contract and only use the space when needed. They are not only an effective option for small businesses and sole proprietors who face high barriers to renting regular offices, but also for companies looking to reduce their office space. With facilities including meeting rooms, equipment, and Wi-Fi, along with address registration services, they enable highly cost-efficient office operations.
From Work Space to Collaboration Hub
Offices remain important places. This is because new value is created through face-to-face communication and collaboration. Offices are indispensable places for building corporate culture and generating innovation and ideas.
In recent years, we have seen evolution different from traditional offices, such as the installation of games and snacks, and the creation of free spaces. The purpose is to create an environment where employees can collaborate, interact, and rest more easily, leading to improved performance.
What Is the Basis for the Claim That Chance Encounters Generate Innovation?
MIT's "Westgate West" experiment proved that physical proximity in space rather than shared values or beliefs is the key to forming friendships. This insight has greatly influenced the office design of Apple, Google, Pixar, and others.
At Pixar, Steve Jobs integrated three buildings into one vast office building. By mixing people of different occupations, he created a space that promotes collaboration and creativity. At Google's New York campus, the design ensures food is within about 45 meters from anywhere in the office, encouraging chance encounters between employees.
What Are the New Forms of Offices?
Various forms have emerged, including offices rentable by day of the week, new shared office plans, and hotel-based workspaces.
- Day-of-week office rental: A service where you can rent by day of the week on a monthly basis. You only use it on needed days, and water, electricity, and communication costs are included.
- Multi-location shared offices: You can freely move between locations in multiple cities, also expanding your network with other companies.
- Hotel-based workspaces: Utilizing existing hotel facilities to provide workspaces at reasonable prices.
To grasp future office market trends, it is also important to understand regulations on rental property management. When considering office investment, the latest trends in the Tokyo real estate market are also useful references.
Frequently Asked Questions (FAQ)
Q. Will offices become unnecessary with the spread of telework?
Demand for offices themselves will not disappear. Demand for the traditional "office as workspace" is decreasing, while the importance of offices as places for collaboration and interaction is increasing.
Q. What is hybrid work?
Hybrid work refers to a work style that combines office attendance and telework in optimal proportions. Companies are seeking the optimal balance depending on the characteristics of their industry and IT literacy.
Q. What are the benefits of shared offices?
The biggest benefit is being able to use the space only when needed, significantly reducing fixed costs. Meeting rooms and equipment are available, and address registration services are also supported. They are also used as supplementary spaces for companies that have reduced their office space.
Q. What will happen to future office vacancy rates?
While they are trending upward in the short term, the outlook is that they will not rise as sharply as during the Lehman Shock. Office demand is expected to recover with economic recovery, but may not return to previous levels due to the establishment of telework.
