Job losses brought about by the COVID-19 pandemic will have more of an impact on office demand in Europe than working from home, according to Capital Economics.
The economic research consultancy said data indicates that the relationship between working from home and office space per worker is weak.
“And even if working from home becomes more prevalent in the next few years, we think that the most important driver of occupier demand will be that job losses from the virus outbreak will not be recuperated for some time,” according to the research, written property economist Amy Woods.
In light of lockdowns and social distancing, a larger share of office-based workers are currently working from home.
“And it seems likely that some higher level of remote working will remain once the virus is brought under control, both to help with social distancing and as firms and workers have found it to be beneficial,” Wood said.
Data from Capital Economics suggest that if working from home becomes more prevalent because of the virus, demand for space will not necessarily reduce, or at least not to the same extent.
However, other factors are clearly at play. Indeed, as rents rise, tenants tend to economise. This can also be done by, for example, hot-desking or having smaller desks.
In turn, office space per worker has fallen in countries such as Italy, even though the share of remote working has been broadly stable over the past 10 years, Wood said.
“That said, we think that the most important driver of office occupier demand over coming years will be the impact of the disruption from COVID-19 on employment.
“Specifically, we do not expect that job losses will be fully recuperated in all countries, even by the end of 2022.”