After corona, asset management will require more courage
Thorsten Leischke, Management | VLR Germany GmbH
Severe crises usually lead to major and long-term changes. But just as often, they also act as trend accelerators. In the asset management of office properties, two things will be required much more after the Corona crisis: active engagement and courage. We have observed a trend towards a stronger emphasis on active asset management already for quite some time. There are several reasons for this, including significantly lower yields, the new technical possibilities available in the digital age, and the increasing demands of many tenants. This trend towards a more active asset management will accelerate and become more firmly established as a result of the corona crisis.
For many companies and their employees, the attitude towards the stationary office workplace is changing. Millions of office workers in Germany and around the world are currently working from home, more or less out of necessity. Those who have a space where they are able to work without disruption find that it works quite well. Often better than expected, and sometimes perhaps even better than in the office. And acceptance is increasing not only among employees. Many employers are likewise discovering that the technology works in most cases and that having a bit of trust in the employees can certainly pay off. The stigmatisation that once was – and in a few cases still is – associated with the term home office is giving way to growing popularity on both sides.
At the same time, however, many employees and employers alike are finding that they can’t quite do away with the office entirely. Working from home is not the be-all and end-all of workplace concepts. After weeks at their desk at home, many employees cannot hardly wait to go back to the office. Not everyone finds the necessary peace and quiet at home to be able to concentrate on their work every day. From a fairness perspective, the suggestions from policy-makers to introduce a general right to work from a home office are a double-edged sword – not everybody can accommodate a home office. But the discussion shows that the topic has suddenly become highly relevant.
Not an either/or, but a both/and situation
So this is not about an either/or scenario, but about flexible options between office and home office. For the employer, this raises the question of whether a permanent workstation should still be provided for all employees, if some of them are not at the office anyway but instead working from home, or on vacation or sick leave. Of course, this requires the employees to undergo a change in mentality: away from the territorial claim of their own fixed desk and towards greater flexibility in their understanding of the workplace. This can already be observed in many companies, especially among younger employees. The technical possibilities are readily available – thanks to the Cloud. But how many office work stations or how much office space should the employer ultimately provide? Hardly any employer can give a blanket answer to this question.
This is why flexible and modular spatial concepts that can adapt to the requirements of the company will be in greater demand than ever before after the Corona crisis. This is where active asset management comes into play. In the future, asset management will have to allow office tenants to rent additional office space or meeting rooms for short-term needs or to return spaces that are no longer needed. Flexible workspace as a catch-all term that also covers the hip co-working concept will take on a whole new meaning. In a larger multi-tenant office building, it will be perfectly normal in the future to set capacities aside so that tenants have room to breathe and to offer shared infrastructure from reception services to cafeterias. As a result, co-working will likewise evolve from hype to everyday service on a healthier smaller scale.
Investors see greater opportunities than risks in short-term leases
The demand for office space will change permanently. Large rental spaces will become less popular, while smaller units will gain importance. At the same time, more and more tenants will enter into flexible leases with shorter terms. Until recently, a lease with a term of several decades and a tenant with a strong credit rating, such as a public authority, was considered particularly desirable, but preferences are changing – even among investors who see short-term, flexible leases as opportunities rather than risks. By offering an attractive space in a good location with options for alternative uses, vacancy risks can largely be managed. On the other hand, single-tenant spaces that are locked into an inflexible lease can turn out to be a cluster risk.