Return to work forces focus on limited grade-A office stock

As property markets recover from the disruption inflicted by the pandemic, there are still questions to be answered about the extent to which the office segment will need to adapt to lure companies and their workers back to the CBD.

“A lot of the initial conversations were oversimplifying what’s a very complicated situation,” Axa IM Alts’ head of research and strategy Justin Curlow explained. “Even if people work from home one or two days a week, that doesn’t necessarily equate to 20% or 40% less office space demand,” he told Real Asset Insight’s Richard Betts.

“Just as transport infrastructure is designed around peak usage, office usage going forward is likely to be driven around peak usage of that office,” Curlow said.

But the coronavirus pandemic has focused attention on ESG, health and well-being considerations. “I think it’s going to lead to a lot of pent-up demand and focus on grade-A, top quality assets in well-connected locations which, in Europe in particular, are fairly limited in availability – only around 10% of the office stock across European markets has been built over the course of the past decade.”

Click on the video above to watch the full interview or listen to the podcast below.