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COVID-19 to have mild office space impact

office property

The COVID-19-induced practice of working from home is unlikely to impact the office space segment of the commercial property market.

A global investment manager has anticipated the practice of working from home resulting from the coronavirus will not have a significant effect on the office space segment of commercial property.

“The work-from-home construct is omnipresent for many of us, but work from home we think over time will have a neutered impact on the office space – it will only go so far and there are several tailwinds which are supportive of especially high-quality office space,” JP Morgan Asset Management head of real assets and alternative investment strategies and solutions Pulkit Sharma said.

One of these tailwinds Sharma cited is the negative operational effect on organisations of having employees work from home for an extended period of time.

“If everybody is working from home … then the productivity levels could be higher, but if half of the working population is working from home and half in the office, then it sort of stifles innovation and productivity,” he said, suggesting this would not be sustainable in the long term.

According to Sharma, the phenomenon of having a number of people in an organisation working from home is also something that is not new, as reflected by office occupancy data, and has not had a huge negative impact to date.

“If you look at the office going data … the maximum traffic of movement into office space happens midweek on Wednesdays and there are 50 per cent occupancy levels on Mondays and Fridays ” he said.

“But that doesn’t mean that the office space usage of corporations shrinks. They still need the space for the surge usage on Wednesdays.”

Further, he pointed out certain professions and their associated activities will always require property and office spaces from which to operate.

“[The] medical space, labs, they require an in-office presence,” he said.

In addition, rent collection data still reflects a strong office occupancy rate, he noted.

“So work from home is a theme which may stay in certain industries, but can only go so far,” he said.

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