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Real Estate: How Is Remote Work Affecting Office Space?

Real Estate: How Is Remote Work Affecting Office Space?

The pandemic was a time of unexpected ups and downs, changing the way we live and work. From one day to the next, companies and employees faced great challenges and had to adapt overnight to the new conditions created by Covid-19. In an effort to continue to operate as before, many companies adopted the remote work model, a form of work that although in Europe had begun to gain ground in recent years, in Cyprus was still in its infancy.

 

Indicatively, Eurostat data shows that 5.4% of the European workforce worked from home in 2019, while in Cyprus the corresponding percentage did not exceed 1.3%. A year later, remote working in Europe jumped to 12.3%, an upward trend followed by Cyprus, reaching 4.5%. For the first time, this new work regime was implemented en masse worldwide and in such a short amount of time.

 

In light of the new circumstances, many companies worldwide believe that the remote work model is here to stay, as it offers a number of advantages, most importantly the reduction of fixed costs. It is a fact that the business world is now seeking flexibility and lower rent costs, while it is concerned about finding ways to protect the health of employees when they return to the office. It is considered that safety, health and human interaction concerns will certainly continue to exist for a long time to come. And for some companies, this factor may be another reason to indefinitely extend their remote work regime. The above data reinforce the concerns felt internationally that in the near future there may be a reduction in the demand for business premises and office space.

 

These concerns are also felt by Cypriot entrepreneurs, who are at the beginning of working out plans to reduce their costs, which are expected to be finalised after the effects of the pandemic reach the final investors.

 

It is, however, our assessment that the office market in Cyprus is not expected to be affected by this trend, as the increased interest from foreign companies to relocate to our island is much greater than the shorter demand for office space created by the work-from-home trend. It is likely that the measures taken by other countries to deal with the pandemic and the new situation have rekindled investor interest in Cyprus. In fact, significant developments are expected following the recent lifting of the restrictive measures. The first signs are already evident.

 

But if the recent conditions of the pandemic and the existing environment continue in the long run, working from home could dramatically undermine the character and culture of a business, with remote working becoming more permanent and the demand for office space being significantly affected. Another emerging trend that is expected to affect the office market in the near future is the demand for new types of offices, which will be environmentally sustainable and with larger interiors.

 

It is a fact that we are still far from returning to normalcy and therefore, apart from estimates and speculations, no one really knows how things will turn out in the future. It is certain, however, that when the pandemic is completely over, we will return to a very different world. In the new everyday life, a hybrid work model will probably prevail which will combine remote work with office work, which will inevitably leave its mark on the office market.

 

The only sure and safe way to grow the office market is to turn to sustainability and the development of buildings and office spaces that consume low to zero energy and offer a safe working environment.

 

 

* By Yiannis Misirlis

  Director of Imperio Group, Deputy Chairman of the Cyprus Land and Building Developers Association (LBDA), member of the Board of Directors of    the Cyprus Chamber of Commerce (CCCI) and Industry and Chairman of the Real Estate Committee. 

 

 

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