Avoiding 'Amazonification' of the Market

Government WFH Must Not Become the Amazonification of the Office Market

We have all seen the impact technology has had on the retail property market.

Equally, we have all read the impact technology had on the effectiveness, or otherwise, working from home (WFH) had during the various lockdowns from March 2020.

• Property and its associated industries are a significant employer in the UK.

• The construct of the economy relies on a functioning office property market.

• A great number of people rely on the success of the office property market.

Office property features in millions of pension investments. A functioning office property market also props up innumerable businesses, large and small, who support the staff of and those who visit offices. Essentially, the office market has a psychological contract with the proprietors of these businesses whereby ‘if we fill the offices, your chosen business to support the staff in our buildings can succeed’!

A report by IPF Research Programme early last decade cites ‘The commercial property sector has a substantial multiplier effect on the rest of the economy, with each £1 of GVA (gross value add) generated in the construction and repair and maintenance sub-sectors being associated with an additional £1.09 GVA in other sectors, and each £1 of GVA in the commercial property real estate services sub-sector associated with an additional 42p in other sectors.’

If the proprietors of retail operations who support the office sector fail, a concomitant impact is felt not only by those who own the real estate they occupy but the broader UK economy.

‘The Telegraph’ reported on 30 June 2022’ “More than a third of Whitehall are still working from home two months after Jacob Rees Mogg ordered staff return to the office.” It further adds “In the week commencing 13 June (2022) several (government departments) had less than half of their staff on average attending their main headquarters.”, thus impacting the myriad of smaller business who rely on these civil servants to support them.

Whether we like the so-called passive/aggressive notes Jacob Rees Mogg left on the desks of Whitehall civil servants or not, his protestations were seen largely through the eyes of the boss wanting to, not unreasonably, make his staff accountable. The intention of the note however is likely to also encompass the abovementioned benefits occupied offices have to the London economy.

Meanwhile, as reported by JLL Research’s ‘Central London Office Market Report April 2022’, “…the professional services sector…(and)…the banking and finance sector…have been key to the buoyant leasing market over the last two quarters.”. In the same report, they add “Space under offer…was the highest level since the start of the pandemic.” and “Active demand is the highest since 2018…”.

We have harnessed technology affording us the benefits it brings to business and our lives. It would be foolhardy and short sighted to do this in a way however which has irreparable impacts on the economy and therefore our lives and livelihoods. Of course, knowing what we know now, if we could start again, we may not build our workforce and a substantial part of the economy around the office sector. The aforementioned impact technology has had on the retail property sector demonstrates how powerful tech forces are on us all.

The private sector is showing their faith in the London office market. It is about time the public sector showed that same faith and aid the economic recovery by returning to the office to avoid the Amazonification of the office market.