With offices lying empty for now, PayFit has teamed up with HubbleHQ, a leading online platform for flexible office space, to discuss how to deal with the impact of coronavirus on workspaces.
Coronavirus, remote-work & office space
Of all of the many, many thousands of things affected by coronavirus, little airtime has been afforded to the great swathes of office space lying empty and unused all across the UK.
Since the Government’s lockdown came in place, the vast majority of people are now spending their working days within the confines of their own home.
During this tumultuous time, hectares of office space have been gathering dust as their usual inhabitants continue to avoid unnecessary journeys to and from work.
While this may seem like an unfortunate byproduct of coronavirus, there is a serious discussion to be had regarding whether once this is all over, offices will ever be the same again.
While the economic impact of coronavirus may be hard to predict at this stage, dissecting its impact on social issues and society as a whole is nigh on impossible.
Remote work, for example, is one of the consequences of coronavirus and while its popularity and the levels of productivity associated with it can certainly be questioned, there is little doubt that it will become significantly more present in people’s working habits moving forward.
However, this doesn’t mean that offices will become obsolete and that companies will suddenly, en masse, implement fully remote work policies.
The shift towards remote work has been gradual and it would be wrong to suggest that it’s only since the outbreak of coronavirus that people have begun to embrace it. Instead, it's a trend that has been picking up steam for the past five years and the current crisis is merely an acceleration of where many businesses were heading anyway.
"Headlines that none of us will ever return to an office again are overblown. While the COVID-19 crisis has proven that most acknowledge work from home is possible, the jury is still out on whether it is desirable.”
Tushar Agarwal, CEO @ HubbleHQ
Nevertheless, the impact of coronavirus will certainly have an impact on the ways businesses treat their office spaces.
The average organisation will typically have three primary expenses - marketing, staff and rent. The latter two are intrinsically linked; the more staff a business employs, the more space it will require.
However, one of the knock-on effects of coronavirus will inevitably be a sharp rise in unemployment. This is despite government initiatives, such as the Coronavirus Job Retention Scheme.
It is currently predicted that more than nine million people will be furloughed. In fact, the figures are even more dramatic when they are contextualised within the number of companies taking advantage of the Scheme; a staggering 50% of UK companies are expected to place most of their staff on furloughed leave.
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While the Government’s Scheme may be temporary, it would be foolhardy to predict that once the UK exits its state of lockdown, life will automatically return to normal.
The likelihood is that the tremors caused by coronavirus will be felt for a sustained period of time, and the aftershocks will almost certainly cause more uncertainty moving forward.
With this in mind, many businesses will be forced to make uncomfortable and difficult decisions regarding the futures of certain members of their team, and a reduction in the number of employees may well lead to an excess of office space.
Subletting office space
Rental contracts are often non-negotiable and getting out of them before scheduled break clauses can be tricky. This can mean that companies may need to explore other ways of reducing the overall cost of rent.
One of the ideas floated by HubbleHQ is the subletting of any office space that isn’t immediately required.
Subletting has been a recognised strategy for businesses looking to generate extra income via their workspace for a long time, and the far-reaching effects of coronavirus will likely make it even more commonplace.
Coronavirus will impact businesses in a variety of ways. Some may need to adapt their growth plans, and as such may not look to recruit as many new employees as initially forecast.
Companies in this situation could find themselves with excess office space that they had acquired prior to the crisis, and now, given the change in circumstances, may not require its use for an unspecified amount of time.
Others may have seen employees leave or teams become more distributed geographically meaning that once again the offices they currently occupy are too big for their needs.
Equally, some could have secured new office space via some of the flexible deals on the market, while still having time left on their previous lease - and as a result, may need to offset their old space once they’ve moved.
On top of this, the huge “remote working experiment” currently underway will likely mean that many companies will adopt more flexible work-from-home policies, meaning that they’ll have fewer people in the office at any given time.
While subletting is subject to landlord or operator approval, HubbleHQ’s expertise in the office space sector allows them to support and guide companies that are looking to sublet excess space. Not only are they able to act as consultants regarding the process of subletting, but they are also able to list the office space on their site and market it for free.
What are the benefits of subletting office space?
There are clear financial advantages of subletting office space, such as: the sharing of rental costs and a reduction in the cost of overheads. Nevertheless, there are other less tangible aspects of subletting office space that may well positively impact a business.
For example, startups and SMEs may be able to share not only office space but also ideas on how to promote their individual businesses.
Because subletting provides an opportunity for increased collaboration, there is also the possibility of gaining access to an untouched customer base and nurturing new business relationships.
Finally, one of the great advantages of subletting an office is that companies can choose the people they work alongside. Bringing in a company that can provide knowledge and expertise on a subject that they are not necessarily confident in may be able to boost overall performance.
PayFit & Coronavirus
Like many businesses, PayFit is adjusting financial forecasts in light of the economic downturn, including previous requirements for office space.
As a fast-growing tech business, we’d planned to expand to a larger office with capacity for double our current headcount and we’d also signed a new lease agreement beginning in March.
In light of recent events, we’ve had to move quickly to push back start dates, adjust our budget with regard to the fit out, and negotiate with our current landlord to bring down rental costs.
Pushing back start dates, if possible, is a great way to reduce wasted rent costs while the team is remote working; however, longer-term cost savings would require either moving to a smaller office or subletting the space.
We’ve started to work with HubbleHQ to explore the options of subletting, but it will take some time to understand the impact on the rental market and how prices will adjust downwards due to the excess supply of office space.
"HubbleHQ have a great inventory of office space, and have become one of the primary sources for young companies to find an office, so I’m looking forward to finding a solution that benefits both PayFit and any young business who may be looking to downsize their office and sublet ours.”
Nick Miller, UK Country Manager @ PayFit