The end of the five-day working week in South Africa

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Covid-19 lockdown has not changed the direction of the long-term upward trend of Working from Home (WFH). According to real estate insights from FNB Commercial Property Finance, it has only accelerated this and probably perpetuated the prolonged decline in office market size relative to South Africa’s entire property market.

“But it could significantly change some office design trends. While ‘collaborative space’ is a buzzword, I believe that ‘private space’ is most lacking in office buildings,” said John Loos, real estate sector strategist at FNB Commercial Property Finance.

The office real estate sector regularly underperformed the commercial real estate sector, he said.

Loos said the shift to open offices, away from the old-fashioned closed offices that many employees had in previous decades, allowed for space savings as employers could significantly increase the density of employees’ workspace.

“I believe cost savings was probably more of a consideration when moving to an open plan than employee productivity considerations.”

In addition, technological advancements in information and communication have significantly reduced the amount of space required for document storage, while also increasing employee mobility. This led to an increase in the proportion of office workers who could work remotely full-time or part of the time, FNB said.

Old habits and “comfort zones” may have been the only thing that kept many more people from fully embracing the available technologies for remote work and communication, to improve their day-to-day productivity by being able to avoid wasting travel time and financial resources in many cases. resources to save costs, Loos said.

WFH trends

He said that Covid-19 lockdowns have not introduced a new trend here. They only accelerated a long-term trend, adding even more pressure to the already depressed office sector.

The lockdowns forced late users to give remote working a shot, and many discovered how much virtual business interactions could improve productivity by eliminating wasteful commutes, not just the daily commute to and from the office, but equally important. the frequent time-consuming trips for many of us to meetings somewhere in the city.

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In addition, for those of us who wanted to use more remote interaction long before Covid-19, the lockdown period made it an acceptable practice in many businesses, Loos said.

“My expectation was therefore that, after the easing and eventually the end of the lockdowns, many workers would resume commuting to the office, but the level of office visitation would not go back to the 2019 pre-Covid 19-day level.

“Then, from the new post-lockdown ‘normal’ level, the gradual long-term trend towards greater levels of remote working would resume, assuming the assistive technologies will continue their long-term improvements.

“This seems to be happening. Offices are fully open, but office occupancy rates do not appear to have reached the levels they were before Covid-19. And I suspect that current office presence levels are more or less where the commute will stabilize. ”

The office market is correcting in 3 broad ways

The correction of the office market, in response to all this pressure on office demand, would then take place in different ways.

  1. Refuse rent

First, rents would fall. This has happened to a significant extent. Rode’s rental data, which estimates the average national A-class decentralized office rent/square meter, is down -7.6% in real terms at Q1 2020 levels, and a very significant -16.4% in ” real” terms when adjusted for GDP inflation.

  1. Decline in the relative size of the office market

The second part of the correction would lie in a slowdown in the pace of supply of new office space coming to market, along with decreasing existing inventory, Loos said.

“This also seems to be happening. Some of older existing office space is being repurposed into housing, while StatsSA’s construction statistics indicate very low levels of planning and completion of office space lately.”

For the 12 months to May 2022, the number of square meters of approved office space plans was 69.6% lower than in the 12 months to May 2019.

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The office sector is likely to continue its long-term trend towards a smaller share of South Africa’s total property stock, Loos said.

  1. Building design will change as landlords compete with home’s attractions

The third way the office market is likely to adapt is in building design, and this is where it gets more complex, Loos said. The market has to compete with the house in the case of those jobs that can be done from both places.

A key selling point for employees regarding the benefits of the office is collaboration, Loos said. “Employees need to see each other in person at least some of the time, so the story goes, and to be sure, collaboration is important in many jobs at least some of the time.”

Collaboration has thus become a buzzword, and with it the term ‘collaborative space’, he said.

“But perhaps a neglected part of the whole equation is the work part. Collaboration and interaction with employees is sometimes necessary, but a lot of the time for many employees is about focusing individually on their work, preferably without distractions,” said Loos.

“Distraction and disruption for some employees who work from home can be an issue. But what about the open office garden? There is also often plenty of noise and nuisance.

“For many years there has been a lot of space for collaboration in many office buildings, be it meeting rooms, coffee shops or break rooms. The design may need improvement, but I’ve rarely seen a shortage of collaborative space.”

Loos pointed to a shortage of private space, where people can work undisturbed – a necessity in many jobs.

“There was a reason that many years ago old office buildings had offices where employees could go in and close the door.

“That need for private space has suddenly skyrocketed with the ‘zoomification’ of many of our day-to-day business interactions. Even for those who are back in their offices on a daily basis, many will communicate with others remotely to save wasting travel time and money,” he said.

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Open open plan offices where colleagues in the immediate vicinity telephoned or talked to each other were disturbing enough for local residents. Now the often confidential video conferencing is being added to the mix, he added.

Enter the office of the “phone booth”, the small soundproof booth for quiet work. “The few out there in the open-plan office buildings seem very popular, and it seems that many more are needed now,” Loos said.

“So maybe if there’s one trend change coming out of all of this, it could be a partial shift from the open-plan office to an office with a significant increase in private space.”

Collaborative space was a buzzword in the Covid-19 period, but it is private space that is arguably sorely lacking, the real estate expert said.

What to do with a much longer weekly off-peak period?

Finally, an important issue for the office sector is what to do with a much longer “off-peak period”. “There is a visible change towards a much shorter weekly peak period in the office. The turnout period used to be 5 working days,” says Loos.

“Now it is arguably three days – Tuesday, Wednesday and Thursday – at its best, and even Thursday can be quieter. In many office buildings, at least four out of seven days have a very low attendance rate.

“I expect to see much more creative ways to use that downtime for other commercial activities, possibly by another tenant. Because right now it seems like a rather costly affair for many companies to maintain office space that is not used for most of the week,” he said.


Read: South Africa’s 9 to 5 working day is being phased out