This pandemic has forever changed the way we work. The majority of the white-collar workforce has been working from home ever since the pandemic broke in early 2020. It is predicted people shall continue to work from home until late this year as more and more waves are predicted to hit us. Companies across the world have vacated millions of square feet of office spaces in major cities to cut down on cost as well as give WFH options to their employees. 

Despite the hassle moving entails, it will pay not to renew your lease once it runs out. Here are a few situations that have triggered many companies not to renew their traditional office lease, and why you too should NOT do so: 

1. Unpredictable Pandemic 

The outbreak of multiple waves of the ongoing pandemic has created huge uncertainty in the minds of people. Founders and CRE professionals, who were planning the “return to work” for their team members this year, are now struggling with the tremendous uncertainty around covid. Many experts are predicting more waves or new variants to hit us very soon.  

Hence, it would be a grave mistake for companies to commit to a “long-term traditional lease” with any landlord. 

2. Flexibility of Operations  

As more companies adopt increasingly distributed corporate ecosystems, flexibility will be key to employee satisfaction as the office remains a fundamental part of the corporate culture. According to JLL’s Occupancy Benchmarking Survey, 67 percent of real estate decision-makers are increasing workplace mobility programs. 

Companies should explore short-term commitments with co-working spaces or flexible office space providers for their office requirements. This shall allow them to ramp up slowly and steadily without committing to a large real estate space and upfront cost amid an uncertain external environment. 

3. Remote Working is Productive 

As per the study done by research firm Gartner, one-third of employees in India will be working remotely by the year 2022. Almost all other surveys suggest that employees, as well as employers, have adopted work from home efficiently.  

The October 2020 Fortune/Deloitte CEO Survey found that 76% of CEOs indicated that their organizations would need less space moving forward. This could drive significant cost savings in both operating costs and capital expenditures. 

Hybrid working would be the new normal with people working from offices, homes and “third offices”. These Third Offices would be the nearest coworking offices for employees. By rethinking how employees work, companies could reduce the amount of office space they need, driving lower costs and a better employee experience. 

4. Technology Transformation 

The unprecedented technology transformation driven by the cloud and digitization of business has significantly reduced the size of physical offices required by corporate. Some may even argue the necessity of having a physical space in this era of the digital economy! One may never need the same size office space that they had prior to the pandemic. 

Hence, companies should wait and watch, reassess their workspace strategy and explore office spaces according to the new requirements. 

5. Distributed Teams 

The world is slowly moving towards a “15 mins City” which means a local economy wherein residences, offices, and essential services are all will be available within a 15 mins drive. This may not be true in a real sense in Indian metros but the essence of such micro-market economy might be a reality sooner than later. 

A hyper-local office will enable companies to be more environmentally conscious as reducing real estate footprints as well as employee commute will reduce the impact on the environment. Explore the nearest co-working spaces to plan your distributed workspace strategy! 

Conclusion 

As per a recent JLL report, “Office space will continue to evolve as a result of the pandemic and is arguably going to play an even greater role in driving corporate well-being and productivity”. With hybrid working becoming a “new normal” companies will need to reassess their workspace strategy – smaller offices, distributed offices, employee wellness, and work from home.  

Hence, Do Not renew your traditional office leases with your landlord. The world is too uncertain for a long-term commitment!  

Feel free to reach out to Rahul@clayworks.in for any queries.