The Covid-19 pandemic that began in 2020, along with the ensuing lockdowns, highlighted the efficacy of remote working in many job roles traditionally carried out in office settings. This gave rise to theories predicting ‘the death of the office’.
Yet, anyone with insight into the turbulent nature of the property market would understand that, while certain sectors may encounter tough periods, doomsday prophecies are generally exaggerations. This is true in this case as well.
Despite this, there’s no denying that a change in office usage frequency and manner has transpired, and it impacts far more than just the commercial property sector. Certainly, a reduction in the pace of people arriving at offices in Dublin city on specific weekdays has broader ramifications for the city’s consumer spending and foot traffic.
This arising situation prompts several inquisitions. For example, what are the consequences for the city’s retailers, caterers, pubs, not to mention the employees, wholesalers and transporters that supply them? In an increasingly digitised era, what implications does this have for the city’s vibrancy, and how will our city’s property landscape evolve over the course of the next five, 10, or 15 years?
In December 2023, Dublin City Council’s Economic Development Office assigned CBRE Research to carry out a comprehensive project to garner robust analysis and data on the effects of escalated remote working in Dublin city. The analysis, which centres on present and forthcoming trends in areas such as office spaces, retail hospitality, and city’s future real estate landscape, will guide a policy on empty and derelict properties in the city centre.
Offices
To conduct the analysis, CBRE undertook several steps. Initially, we polled our biggest corporate office tenant clients, along with an additional hundred Dublin city office employees. Corporations were questioned about their current teleworking policies, office attendance figures, return-to-office dictums and future office space strategies. In the same vein, city workers were asked about their present work-from-home rates and their daily spending in the city when working in the office.
Among the critical discoveries were:
As of now, companies in Dublin city report an average office attendance rate of 50 per cent during the workweek. This is a decline from the 65-70 per cent before the pandemic.
In the survey conducted, on Mondays, only 35% of the respondents attended office while on Fridays, this figure reduced to 29%. Wednesday seemed to be the most popular for office going, with a 61% attendance rate. Among the 100 office workers surveyed, a whopping 76% opted to work remotely for at least one day of the week. The average weekly expenditure by each working employee in the city fell somewhere between €64 and €74.
Three critical queries arise as we examine this dip in office attendance. Firstly, is this a permanent trend? Secondly, what could be the implications on the demand for office space in the long run? Lastly, how does it impact city centres in the long term?
In response to the first query, we discovered two-thirds of the respondents were already under an office attendance obligation. When considered if remote working has affected productivity negatively, 33% said ‘Yes’ and 56% disagreed, while the rest were uncertain.
This research does come with a disclaimer – that over the past 12 months, many large companies, particularly in America, have imposed a five-day-a-week office attendance rule. Major establishments like Boeing and Tesla, as well as big banks like Goldman Sachs and JP Morgan, have such rules for specific staff.
Although prime office spaces in coveted locations will always be in demand, we’ve noticed a perceptible change in the frequency and manner of their usage. This change will influence the office space demand in the long run, but to what extent remains ambiguous. The pre-existing vacancy levels and office leasing in the city already provide a clue, but other cyclical and market-specific variables are also involved – we delve deeper into these in our research for DCC.
As for Retail & Hospitality sectors, many city areas, especially those with restaurants, pubs, and clubs, are vibrant throughout most days of the week. The thriving economy of Dublin, coinciding with consistent population growth and a vigorous tourist market, continues to invigorate city life. However, the way this thrives may be changing somewhat.
The decrease in city visits during weekdays raises questions about the impact on the city’s retail and hospitality sectors. To understand the situation, we conducted a survey involving 50 retailers located in the heart of the city and spoke with leaders from two recognisable Dublin retail advocacy groups, as well as a well-known city pub owner.
Our inquiry aimed to determine the changes in foot traffic, consumer expenditure, and overall trade since the onset of the COVID-19 crisis. The feedback we received from the retailers tallied with the views expressed by the retail advocacy groups.
Nearly half of the retailers experienced a 21-40% decrease in footfall at their city centre shops following the pandemic. Approximately 48% identified Friday as the day with the most significant dip in activity. Furthermore, the busiest weekday for city centre pubs, which used to be Friday lunchtime, is now trending 20% lower than on Thursdays in the post-pandemic period.
These developments make us question what the future holds for the city. Although there remains a strong role for city-centre offices and retail outlets – entities expected to remain at the forefront of the city’s commercial market – the ongoing digital revolution suggests that the urban architectural landscape may become more diverse over the next decade or so.
We foresee an increase in ‘liveable space’ properties, for example, private and public apartments, hotels, hostels, and student residences, as well as some medical-use buildings, which will supplant a part of the older office and retail spaces. Such transformations are not just predictions; we have seen instances of this in the city already, with some office properties sold for repurposing, mainly as hotels and student residences.
Article authored by Colin Richardson, who is the Director and Head of Research and Consultancy at CBRE Ireland.