Commercial property: The Great Exodus?

Posted by Flux on 

30 July 2020

(How lockdown has accelerated the practicalities and convenience of remote working)

I sympathise with asset management companies at the moment. Not only are landlords and property management companies dealing with their own internal management problems and the layers of anticipatory grief their workforce is experiencing, but there is a noticeable rise in business owners terminating their leases after months of lockdown, either because they can no longer afford to pay the rent, or now more commonly, business owners have discovered that enforced remote working has worked well for them, as well as their staff.

Just in my own circle of business acquaintances, I’ve heard of three small business owners who have cancelled their leases and moved out of their rented office space. 

And this is just the start. Many more will do so the minute their leases come up for renewal.

When countries around the globe started to go into lockdown, making remote work a necessity rather than a nice-to-have, it was dubbed “the planet’s largest work from home experiment”. Four months later and with the prospect of a prolonged and indeterminate, staggered lockdown, the much touted “new normal” is starting to take shape.

Flexible working spaces like Workshop 17 are experiencing a surge in new memberships and the companies signing up range from large corporations to SMMEs. The reasons for the surge are interesting and varied.

For the smaller companies it is simple mathematics and cost cutting. If the company has been able to survive in a virtual space and the remote management glitches have been ironed out, then why would the company owner continue to pay rent for office space that has lost its relevance? All flexible/co-working spaces offer flexible solutions to suit any business need, whether it is a weekly boardroom for meetings, hot desking for a transient workforce who occasionally need to escape their WFH (work from home) environment, or simply a neutral business space to conduct meetings.

For larger companies, lockdown has been both a challenge as well as an epiphany. 

Before lockdown, a few companies were already experimenting with setting up certain divisions, like an innovation hub for example, away from corporate HQ in a flexible working space. Lockdown has accelerated this thinking and made them question the need for so much core space.

Most of the companies offering flexible working spaces have branches in different cities or even different branches within a city and sometimes each branch will have its own design persona. This allows a remote workforce to either work from home, choose a flexible work hub most appropriate for their day, or venture back to the mothership when needed.

Our return to load shedding has also contributed to this movement. Not every company has a generator and the same applies to households. So, as an added measure to ensure continuous productivity, companies are signing up for memberships so that when the next load shedding cycle hits (and it will), their staff are able to move to a flexible working space where they can continue to operate. These memberships come at a fraction of the cost, and inconvenience, for a company compared to setting up UPS systems for their entire workforce.

The only glitch in the system is the ability for managers to adapt to remote management rather than overseeing bums-on-seats, in a nine to five, forty-hour workweek template.

That template is obsolete anyway, and again lockdown has simply accelerated its demise.

Does this signal the end of the corporate HQ? Not really. But it does signal a shift in the size, functionality and purpose of a corporate HQ. And that is a seismic shift in thinking.

For asset management companies, already dealing with the impact of the pandemic on retail space, this is another ripple effect that will have long-term effects on commercial properties. Watch this space.

By Dion Chang – Founder of Flux Trends

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