Winners and losers of the crisis

The end and consequences of the Corona crisis are not yet foreseeable. But one thing is certain: after the shutdowns are lifted, society will be different. The way of working will be different. In Germany, in the globalized world. What does that mean for the office market? How will office use change? Which concepts are out of date, which are becoming more attractive? Who will be the winners, who will be the losers?

 

Thesen:

1. From the landlord market to the tenant market

For years, the development of office rents knew only one direction: upwards. The rental index for office properties in Germany has risen by more than 30% since 2010. According to ZIA, Berlin even recorded an increase of an incredible 65% during this period. In many places, demand exceeded supply. Brokers spoke of a lack of space (and ignored the gigantic potential of temporary vacancies in the occupied space in the existing stock - e.g. due to part-time work, out-of-office days, too much space). The power was with the landlords, they made the rules.

That is likely to be a thing of the past for the time being. Rents cannot be permanently decoupled from the real economy. The swath of devastation that Corona is wreaking through economies - recession, consolidation, layoffs, bankruptcies - will leave its mark on the office market and turn the tide in favor of prospective tenants. The rental market will relax and will most likely become a tenant market. This means: an advantage for those seeking office space!

 

2. There will be more home office work

Before Corona, less than 15% of working people in Germany worked occasionally and just 5% only worked from home. Currently, one in two of the 15 million office workers in Germany are doing the latter - a tenfold increase! 30% of them are working from home for the first time. Home office was massively expanded out of necessity during the crisis - and it works. A learning experience especially for employees, superiors and colleagues who have previously considered work and presence in the employer's office as well as personal presence at meetings and in collaboration to be essential.

Home office will be scaled back again with the end of social distancing, but not to the level before Corona. Working from home has passed the involuntary "stress test", and this was done ad hoc and under difficult conditions such as looking after children at the same time. Even though many people wish for an end to the restriction to their homes and long for face-to-face contact and collaboration, home offices have gained lasting importance and are becoming an integral part of future-oriented office concepts.

 

3. Coworking operators who were expansive before the crisis and had expensive space in trouble

In particular, those companies that aggressively stocked up on expensive space until shortly before the crisis and signed long-term rental agreements will be among the losers. They are already suffering massively from the numerous cancellations, especially in the meeting and conference business, but also in actual coworking, the coexistence of strangers in the space with the typical characteristics of open space, closely spaced desks and the inevitable numerous contacts when coming and going. In addition, new bookings are not being made.

Quite a few flex office providers are unlikely to be able to recoup their space costs due to reduced occupancy and cheaper rents from alternative offers. In addition, the open space that dominates many coworking offers will no longer be viewed as uncritically as it was in the past, given the experience of the pandemic. Finally, the increased importance of home offices is not playing into the hands of coworking operators.

 

4. Companies are becoming more digital. Offices are becoming more digital.

The sudden need for social distancing, home office, remote work and virtual collaboration has demonstrated the digital maturity of organizations and companies. While weak points were previously less noticeable during boom times, they have suddenly become very clear and critical during the corona pandemic: overloaded networks, old IT infrastructures, missing tools and analog cultures.

In a recent survey by the Federal Association for Digital Economy (BVDW) among more than 1,000 employees of small, medium and large companies, 45.7% of respondents stated that their employer was not yet sufficiently equipped technically for home office.

Companies are now forced to invest heavily in modern IT office structures. Digitization is receiving an enormous boost - technically and culturally.

 

5. Flexibility instead of rigid rental contract obligations: Office as a Service on the rise

The planning security that still existed in companies and businesses a few weeks ago has been pulverized by Corona. Apart from the business of a few profiteers of the crisis, the vast majority of them have lost business, often on hold or, not infrequently, lost a significant amount of it altogether.

The consequences are also not foreseeable in the larger political and economic context of our globalized world, which has thus been severely disrupted. Due to the trillions of dollars in public funding programs and rescue packages - key words "unlimited loans", "nationalizations", "bazooka" - and simultaneous tax shortfalls, the level of public debt is increasing enormously. Currencies are under pressure. International upheavals are looming. There is already a heated debate about the readjustment of burden-bearing in society and in international cooperation; the demand for Corona bonds is a prominent example.

In such uncertain times, signing a long-term lease and committing to rigid premises is economically questionable and will be avoided by many companies and organizations. What is needed is a wide range of cost-efficient workspaces that are flexible in terms of time and location. Space providers and brokers will not be able to refuse this. Flexibility has already been organized and learned during the crisis and will be an essential criterion when deciding for or against a space.

The winners could be new, innovative coworking and business center operators who are entering the market at lower space costs, as well as providers of sharing platforms (keyword: "Airbnb for office"), such as ShareYourSpace.

 

6. Sharing offices and workspaces expands the offering

Compared to other industries, sharing approaches in the office market are still young and little known. The traditional office space offering with rigid, long-term rental contracts dominates. That could now change.

The sharing economy stands for more conscious, resource-saving demand behavior: the joint, temporary use (collaborative consumption) of a resource.

Web platforms such as ShareYourSpace make this possible in the office market according to the Airbnb principle by networking space owners and space seekers, structured searches, simple presentation, inquiry, booking and payment processes, mobile access, localization and local searches. On the ShareYourSpace marketplace, space owners (whether owners or tenants) can generate income or reduce space costs by renting out their non-permanently occupied offices and spaces. The person booking does not have to enter into any long-term commitments. Maximum flexibility for all parties. The offering is broad: all locations, locations, sizes, equipment. Whether it's an office room or an entire floor. There are no restrictions to specific locations and not just high-priced spaces. The platform also allows short-term and spatially small-scale bookings. This brings the flexibility that is urgently needed right now to office and work environments: Office as a Service, pay per use.

In addition, the strongest possible lever for more sustainability in the real estate industry is being used: Space is being used more efficiently, resources and the environment are being conserved. This ultimately makes a contribution to climate protection, the dominant issue of our time until the crisis.

Increasing digitization and increasingly flexible working methods are contributing to sharing concepts. In addition, the supply side of space is increasing, across all known and new segments (classic offices, retail space suitable for sharing, special spaces, etc.). Last but not least, the argument of additional income or lower space costs through sharing will gain weight for office owners and providers.