The Economist: Redesigning the corporate office
According to The Economist,
For centuries businesses have settled inside the old walls of the City of London. Its geography is the same. But inside the Square Mile’s temples of commerce the changes have been profound. At the start of the 20th century offices aimed to maximise efficiency by mimicking the factory layout with rows of supervised typists and clerks, as promoted by Frederick Taylor, an early American management consultant. In the 1960s less rigid Bürolandschaft (“office landscaping”) made its way across the Channel from Germany. The 1980s ushered in “cubicle farms”. Today open-plan offices and unassigned “hot desks” aim to flatten hierarchies and increase informality for many of the City’s 400,000-odd whitecollar workers.
All this means that landlords should expect to spend more keeping their buildings up to scratch, says Peter Papadakos of Green Street Advisors, a real-estate research firm. This may reduce the rental yield on offices from 5% today to perhaps 4%. More companies are fearful of being locked into new 10-15-year leases at a time when automation and the rise of temporary jobs make it hard to forecast future headcount. Some firms are opting for co-working spaces rather than leasing directly from traditional landlords. Co-working firms now account for about 5% of office space in London and New York. Most of their clients are small businesses. But HSBC, a big bank, will occupy 1,100 desks in WeWork’s new 6,300-desk London branch.
To read the full article, click here.