Has COVID-19 truly killed the office?

It’s no secret that COVID-19 has shifted demand for real estate assets, particularly in the commercial space as work moved from the office to home following a series of lockdowns and restrictions. But has the pandemic actually killed the demand for office space entirely?

Mr Paver believes this may not necessarily be the case.

While fear has been the common reaction for commercial investors, Mr Paver explained that a more long-term view needs to be considered.

“Is it going to be a permanent way that we work? There’s going to be an element of that… I don’t think it’s as simple as saying, ‘Well, we’re going to completely change the way we look at the need for office’,” said Mr Paver.

For him, personally, the COVID impact on commercial property has two sides.

“I view the COVID impact in a couple of ways. One is in terms of the actual demand for office space and another is the type of office space that we actually develop,” he said.

Ultimately, Mr Paver opined, demand for commercial space will return.

“As soon as we can start getting people back in the office generating that energy to improve the growth of the businesses themselves, and we start generating a bit of white collar employment growth, then that’s going to come back.”

Innovation is key

But, while demand is expected to rebound, Mr Paver explained that investors will need to be more innovative. More appropriate amenities and features will need to be considered, dictated by stricter health protocols, he said.

“Healthy buildings are the way forward.

“What are the appropriate spatials? What are the appropriate amenities that you include in a building itself versus in the precinct around?”

At the end of the day, Mr Paver advised investors to seek products that fit their purpose, not discounting the needs of the changed community.

“What COVID has thrown up are changes, for better or worse. Just the way that these tenants are doing business, some of them are shrinking. It doesn’t mean that they don’t need space, it could mean that they might need to move,” said Mr Paver.

“It’s really all about tailoring solutions for people’s current needs... Different individuals or firms or organisation’s current circumstances will require different solutions,” he concluded.

Tune in to James Paver’s episode on The Smart Property Investment Show to find out more about institutional investing, the changing commercial property market, and where the opportunities lie in 2021.