How work from home fatigue is brightening the office market outlook

With time, it’s clear the mass work from home experiment necessitated by Covid-19 won’t replace the communal work space that makes collaboration and social interaction possible

While demand remains uncertain, investors and occupiers will increasingly favour high-quality office space that can meet the post-pandemic requirements of safety and flexibility

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Commuters head out of Tokyo Station on May 6. In Asia, surveys conducted last year showed that most workers missed the social interaction that office life brings. Photo: Kyodo

Published: 2:30pm, 24 May 2021Updated: 10:59pm, 24 May 2021

Among the main commercial property sectors, offices are the big unknown in the post-pandemic world. From the moment lockdowns and travel restrictions were imposed to contain the spread of Covid-19, it was clear that retail and hotel properties would be hit hardest, while e-commerce-driven logistics assets would thrive.

Even after the vaccine breakthrough last November, which caused sentiment to shift towards industries that would benefit most from the reopening process, the uncertainty over future demand for office space persisted.

While an S&P 500 index of retail-focused real estate investment trusts (Reits) has surged 63 per cent since November 6 last year, a gauge of office-focused Reits has risen by a less spectacular 33 per cent.

The ambivalence towards the office market stems from the unprecedented challenges which the mass homeworking experiment poses to the role and purpose of offices, and, just as importantly, the heated debates over the sustainability and desirability of remote working.

Indeed, over the past year, views about working from home, and about the function of the office, have evolved significantly. While the discussion initially focused on the benefits of remote working, as people realised it was much easier than anticipated, the focus has shifted to issues surrounding productivity and mental health.

As the pandemic persists, views on working from home have evolved, with the focus now on productivity and mental health. Photo: Getty Images