Hybrid workspace outlook

The growth in employees preferring to work remotely in the United States has been a topic of interest for years—a trend greatly accelerated by the pandemic. But how is remote work perceived outside of the United States? Such work preferences are often closely tied to cultural norms, so it’s to be expected that the ongoing shift toward hybrid workspaces doesn’t look the same across different countries.

To gain further insight into this phenomenon, JPM spoke with Professor Sam Azasu, a top educator of property management with an established track record at the University of Wits in Johannesburg, South Africa. Azasu recently moved from South Africa to Spain and has a unique perspective on how hybrid workspaces are affecting employees and the property management profession in these two parts of the world.

South Africa

According to Azasu, companies in South Africa allowed remote work during the pandemic, but there were major variations in terms of who was expected to come to work in person and who could work remotely or in a hybrid fashion. “One of the main considerations for South African companies is the inconsistency of electricity, internet access, and security, as well as functional home office spaces for their staff,” says Azasu. “Not every employee is going to have access to backup generators or can assure their employers of the security of their home networks.”

Sam Azasu, University of Wits, Johannesburg, South Africa

Backup power also closely correlates with internet connectivity, which reduces the proportion of South Africa’s workforce that can participate in hybrid work. Unfortunately, as a result, this digital divide in a country like South Africa can lead to only certain sections of workers being able to pursue hybrid or remote work, causing a further gap between different socioeconomic groups.

This divide can also be seen in the interregional movements of skilled workers. Current data shows that many highly skilled workers throughout South Africa are choosing to relocate, with cities like Johannesburg losing workers to Cape Town and its surrounding suburbs. Cape Town and similar beneficiary metros seem to offer better security, more efficiently run public services, and a generally higher quality of life. So, while the populations of destination cities like Cape Town may be increasing, the highly skilled workers making that move may not be offsetting the rising vacancies in the traditional office markets.

In countries like South Africa, the office market was under pressure long before the pandemic, as more new assets were coming out of the pipeline than the market could absorb. Metros like Johannesburg had an excess supply of office inventory as far back as 2016. The pandemic and subsequent rise in remote/hybrid working have only deepened the problem, with high vacancies across Johannesburg’s business districts.

Spain

“In Spain, hybrid work options are complicated more by the country’s legal system than the reliability of electricity and internet access,” says Azasu. He further explains that Spain published a royal decree a few years ago, making it mandatory for every company to keep an hourly record of their employees, regardless of job type. Implemented before the pandemic, this law is intended to prevent labor abuse and fraudulent overtime claims. Now that the pandemic is subsiding in many regions, questions are emerging as to how this law can be implemented in a remote or hybrid work setting.

With the inception of the law, many employers called on the on-site property management teams of their buildings to install biometric systems to track employee entry and exit. More recently, to accommodate the shift to remote and hybrid work, some employers have attempted to emulate this by implementing digital sign-in and sign-off systems to track daily work.

Research by Savills indicates that the office real estate markets in Madrid and Barcelona are recovering and showing positive absorption numbers, a welcome relief for commercial real estate professionals. This is most likely due to relocations, as owners of newer and better-positioned buildings can now attract tenants away from older buildings and those in less desirable areas. This has put pressure on owners of older buildings to invest in capital improvements, with estimates that just over half of the supply of Class A office space currently in the pipeline will come in the form of such repositioned assets.

Where property managers come in

Between these two systems, there are additional factors to consider. For example, hybrid work and the opportunity for greater work-life balance may particularly appeal to families with children. This is emerging as a major source of the attractiveness of remote work in both South Africa and Spain.

By recognizing the underlying motivations and constraints at play, property managers can focus on enhancing attributes of residential buildings that have now become “multipurpose units” in order to attract people looking to work from home. Some must-have features of buildings targeting such residents would include backup generators and secure internet connectivity. Conversely, property managers and owners in the traditional office sector may have to explore creative ways to make their buildings more attractive for workers whose emotional connections to their workplaces have been weakened by the long periods spent away from these spaces.

Looking to the future

In the future, it looks like a complete return to work in the office is not likely to take place in either South Africa or Spain. In both countries, workers have discovered the time and money saved from avoiding a daily commute, and employers have also become aware of the productivity gains from uninterrupted work in the home environment. At the same time, employers are divided on whether all-remote work should become the norm, whether employees should return to working in person on a full-time basis, or whether a hybrid solution might strike the necessary balance.

“While these two countries are unique in their approaches to remote work, the disruptions to business as usual that accommodating remote work and hybrid workspaces present are universal,” concludes Azasu.

As universal as the disruptions may be, the degree of hybrid work becoming the new normal will be primarily driven by local factors. Fewer people may opt for hybrid work in South Africa than in Spain due to infrastructural constraints. Globally, property managers will continue facing the same issues of addressing high-vacancy office buildings, needing to make residential units more conducive to remote working, and modernizing older buildings of both types to accommodate the modern employee.