Together with TU Darmstadt, Swiss Life Asset Managers surveyed 1000 office workers in Germany about the future of the office. The results show that offices remain in demand as a place to work and as an investment product, but there is a real need for change.
For a long time, the office was the only place where people would go about their day-to-day work. During the coronavirus pandemic, German office workers learned what it was like to work from home. For the first time, the only place they could sit at their computers was their home.
After the pandemic subsided, the question arose as to what role the office would play in the future. While business owners, real estate asset managers and corporate real estate managers have so far attempted to answer this question, we have yet to hear from the office workers themselves. Swiss Life Asset Managers has addressed this by carrying out a study1 in collaboration with TU Darmstadt. It dealt with the following questions: 1. How do office workers perceive the different functions of offices and office properties? 2. How do they assess the current situation? 3. What changes do they want to see? The 1000 people surveyed are representative of all German office workers, who in turn make up 36.7% of all German employees.
An office must deliver maximum value to remain attractive
In order to remain in demand as a place to work, the office must not only be inviting, it must above all encourage productivity. Everyone is largely in agreement on this: 88% of those surveyed want a workplace that offers the maximum benefits.
73% of respondents are satisfied with their office workplace, which is a good starting point for German office properties.
The coronavirus pandemic has shifted general perceptions: for 54% of respondents, the office is just one workplace amongst many. When asked how much working time they would like to spend where, they answered as follows: 40% in the office, 44% in the home office and 16% in another location, such as a coworking space, café or station lounge. It is clear that hybrid working, where working from home can be combined with the office, has a lot of support and is important to employees.
A piece of the workplace in the portfolio?
One result that came as a surprise to real estate experts was the desire of a significant number of respondents to want to invest in office properties or to continue to do so; 19% of respondents gave this answer.
23% of respondents are considering investing in office properties as a means of saving for retirement, while 29% consider office properties to be an attractive asset class. In their eyes, they are as attractive as residential property and government bonds; they seem to be considered as safe and at the same time more attractive than less profitable savings deposits or risky cryptocurrencies.
Here there is a demand that the fund industry has thus far failed to recognise: office workers seem to want to have a stake in the places where they work and spend a large part of their lives.
Impact on climate is underestimated
The EU Sustainable Finance Disclosure Regulation has become the best possible tool for implementing ESG criteria in the real estate industry. However, many of those surveyed were not aware of it. At 42%, less than half of them are concerned about the environmental impact caused by the construction and operation of office buildings. By contrast, a higher proportion recognise the environmental impact of transport or manufacturing. This shows that office workers need to be made even more aware of the carbon footprint caused by office properties.
Relevance and pressure to change go hand in hand
Overall, a clear picture has emerged: office workers view the office in a much more versatile way than previously assumed. Not only do they see it as a place to work, it is very important to their lives in three ways: firstly, the office should be an attractive place that offers a productive working environment alongside the option to work from home or remotely; secondly, it should be open to private investors and be available as a means of securing their retirement provision; and thirdly, it should meet increasing environmental requirements. The study concludes that there is a conflict of objectives here, with different interests needing to be balanced. It is also clear that the industry is facing enormous pressure to change. A project developer who revitalises outdated properties into modern spaces or builds new offices could use this opportunity to create the workplaces of the future.
There are around 310 000 office properties in Germany, with a total value of around EUR 1.3 trillion in 2022. The study should encourage both corporate real estate managers and investors to take a critical look at their office stock: how many properties actually provide sufficient benefits to be seen as adding value by office workers in the future? How can we ensure that office properties will continue to be accepted, even as awareness of sustainability issues increases? And as a result, how does a property remain attractive to tenants and employers and generate regular income for investors?
1 Andreas Pfnür, Martin Christian Höcker (2023): Bürogebäude im Interessenkonflikt der Beschäftigten – Ergebnisse einer empirischen Befragung deutscher Büroarbeitenden. In: Andreas Pfnür (Hrsg.), Arbeitspapiere zur immobilienwirtschaftlichen Forschung und Praxis, Band Nr. 47, Technische Universität Darmstadt