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Traffic congestion will heighten WFH impact on offices: AEW

[Image: Anouk Fotografeert/Unsplash]

The Dublin and London office markets look set to pay the penalty of high levels of traffic congestion and will be among the office markets most affected by the working-from-home phenomenon.

This is one of the conclusions contained in AEW’s Mid-Year 2021 Outlook which focuses on Covid-19 adaptations.

AEW believes high levels of traffic congestion incentivise both employers and employees to opt for more working from home (WFH).

The flip side is that low levels of congestion could make the return to offices easier thus making Copenhagen, Berlin, Amsterdam and Warsaw the most WFH-resilient office markets owing to their freer flowing transportation.

AEW said that post-Covid 19 work practices are projected to trigger a roughly 10% WFH increase from 2018 to 2024 but this will only reduce space demand by 5% since workers who sometimes or usually work from home will still attend their office half the time.

Working from home will offset office demand 1% pa

Over the six-year period WFH will reduce office space requirements at 1% pa to offset normal growth in office employment across the 25 European office markets AEW surveyed.

AEW also looks at the effects on Ecommerce and said that as the vaccines allow consumers to return to bricks-and-mortar shops, e-commerce penetration rates are projected to come down in 2021.

From 2022 onwards, ecommerce penetrations rates should resume their upward trajectory although at a slower speed.

AEW also predicts that because most European governments will be heavily indebted after Covid they are “increasingly likely to finally become serious about properly taxing e commerce platforms and levelling the playing field for in-store retail,”

And, while returns of goods have hurt pure e-commerce platforms’ profitability, omni channel retailers will be better positioned to deal with these and traditional retailers should see a boost to in store sales in 2021 and 2022 allowing them time to optimise store networks and implement omni channel strategies.