The 4th session of the Cosmic Conference began with an engaging discussion about workspaces of the future, and the impact of the remote work movement on commercial real estate in the UAE.
As companies are shrinking their real estate footprint and allowing their employees to work from home, many are also now considering hiring people outside of their own countries, which is sometimes referred to as tele-migration. This means that commercial real estate will continue to see an increasing mismatch between supply and demand, particularly in a country like the UAE where 84% of the population is made of expatriates.
In this session, panelists shared their outlook for commercial real estate in Dubai and how property owners can adapt to new demand as well as what offices and flexible working spaces of the future will look like, how they are designed and the role government can play in breathing new life into the sector.
About the Speakers
Ayman Youssef is the Vice President at Coldwell Banker UAE, a leading provider of full-service real estate in the region. A veteran of the industry and Coldwell Banker®, Ayman is responsible for the growth and day-to-day operations for 5 branches and more than 100 sales agents in UAE including management, planning, and the strategic development of the company. Ayman has led valuations and transaction management processes for several significant players in the region and was involved in plot transactions to a total sales volume of AED 2 Billion.
Omar Nakkash, is the Founder and Design Director at Nakkash Design Studio, a multidisciplinary architecture and design practice based in Dubai. In addition to this role, Omar is the Managing Partner at Nakkash Gallery, a Dubai-based interior architecture studio and interiors gallery known for transforming spaces through iconic design, curated furniture, and art.
Omar Al Mheiri co-founder of Letswork, the UAE’s largest community of workspaces. Letswork offers affordable, flexible, and inspiring workspaces for SMEs, freelancers, and corporations across the country. Omar was selected for the E25 entrepreneurship program at EMAAR, where he launched Letswork with his co-founder, Hamza Khan. Omar is also a member of the Private Sector Youth Council in the UAE.
Is the office dead?
As with all sessions, this one began with a poignant question; is the office dead? The response was a resounding “no” from all speakers, here is what they had to say:
Omar Nakkash shared his view on why the office is not dead, “No, the office is here to stay. This space will always be required for human interaction. The pandemic gave us an opportunity to question, redefine, and experiment with what the functionality of the office space is and what it will become. I see it evolving into industry-specific tailored solutions.”
“The office is definitely not dead but it is developing into something else,” said Omar Almheiri. “To grow company culture you need in-person interactions. Besides building culture, the office offers a separation between home and work. For those who don’t want to invest in an office but need a space to ‘escape’ to, then co-working and flexible working spaces offer that. These spaces have the ‘library’ factor, where people work near each other but not with each other, which is especially helpful for freelance or startup life which can be ‘lonely’. It also helps inspire a sense of accomplishment - if you have gotten up and gone to a different location, you feel like you got up and achieved something today.”
Sharing his viewpoint on the real estate industry, Ayman Youssef said, “The office will simply evolve. The office of the future will focus on the social element of the culture. I believe coworking spaces will be what offices of the future look like, and the data supports this. From a global perspective, the data shows us that in China office sales have increased in Shenzhen, with a slight decline in Shanghai and Beijing. In the US, they were actually already at a low vacancy rate.”
Remote and flexible work are directly linked to the popularity and emergence of coworking spaces. Omar al Mheriri offered a perspective about this relationship and what trends he has seen among customers amidst the pandemic:
“Convenience is key,” said Almheiri. “Spaces should be close to home, kids school, the gym, etc. Secondly, we have seen people looking for a change of scenery, particularly as they came out of the lockdown. People want to get out of the house and go to new places. We also saw a surge in requests for private spaces. We typically cater to different workspace preferences, and to accommodate the new needs, we partnered with ROVE hotels, to convert some hotel rooms into private workspaces just for people to get out, get some extra room. We allowed customers to also book meeting rooms and private offices for our platform. This creates a balance between private/public spaces.”
Omar Al Mheiri also spoke about the increase in queries for coworking spaces during the pandemic and whether this demand will render offices obsolete. "We did see a surge in requests, people downsized their teams and also distributed them further in regards to social distancing. We were not alone, the biggest coworking space players also saw the same thing,” he added. “We believe this will continue to support the traditional office model; coworking spaces introduce more people into the top funnel of the office space demand.”
Offices: Demand & Supply
Ayman shared his outlook on the expected supply of office real estate (particularly in Dubai) and how the pandemic has affected real-estate development.
“In Dubai, offices, retail, and residential have seen a downturn and decline. Specifically, Grade A office space has declined 15% Y-on-Y when you compare Q1 2020 to Q1 2019. COVID-19 just accelerated this slump, but it’s important to note that it never turned the market, it was always down.”
“This is great news for the real estate market because, in Dubai, the supply needed to come under control. The supply has pushed us to find new demand from buyers internationally but it is still oversaturated. This also means that we will see a big backlog of supply in the next couple of years, but this will be delayed, or, phased out, in my personal opinion. For offices in specific, the majority of supply already took place in the last few years, we are running at a 9 sq km feasible area and we are expecting an additional 310,000 sq m which isn’t a significant amount of supply.”
Remote work has inspired companies to consider global talent pools, as highlighted in session 3 panelists. Ayman commented on what this means for the future of real estate in the UAE.
“There are global trends about working from home in the suburbs and ‘outskirts’. In the USA for example, the office spaces in the suburbs outperform those in the city sales-wise. Similarly, there was also increased demand for villas outside of the heart of the city in Dubai so people could have some extra space. In terms of talent and employment, I don’t believe this will have a direct impact on Dubai. We are still a service-dominant economy (hospitality, F&B, freight, logistics, airlines, etc). So the components of the economy itself might need someone to be physically there to create that service job. So it will have an impact but not to a large extent.”
The office of the future
All panelists agree that while the office is not dead, the office of the future will look vastly different from what we know the office to be today. Omar Nakkash shares his opinion on how to design the office of the future. “Flexibility is important and a key aspect of designing experiences, the workplace is no exception. It is also very industry-specific and relative to the size of the company. There is no one size fits all. As we test and experiment with new spaces, it will only work if design thinking is applied, and if it brings cross-functional teams who evaluate different layouts, methodologies, etc. that align to the objective of the space (based on human needs).
The pandemic in particular has created new needs for design guidelines as outlined by Nakkash. “The physical office design will need to accommodate for the virtual space as well. antibacterial surfaces are the new norm for materials, acoustics should be suitable for both virtual and physical spaces. Of course, social distancing and partitioning is a must, along with fresh air circulation and ventilation.”
Open plan and collaborative areas have long been a hallmark of office spaces, moderator Marilyn Zakhour probed about this, sharing her point of view on open floor plans. “The industrial revolution triggered the need for co-location. Factories being built inside cities needed people to manage them and the office was designed to mimic the factory floor with a manager overseeing everything. That is where the open space concept comes from.”
Omar believes that this will continue to exist but will be based on the organization and culture. “Multinational companies will need even more space to distance employees but we know that human interaction decreases with open floor plans and digital interaction increases.
Physical architecture has always been paired with digital design. Office spaces have evolved. One example of this is the open floor plan which was created and then dismantled because of counter-productivity. The physical office space will need to compete and coexist with the virtual office space. It is a hybrid-model created for collaboration. "
Lastly, today’s office spaces can be equated with prestige. The idea of the corner office or a wall of accolades communicates achievement and seniority. This means that the status offices can convey is in ‘selling’. Omar Nakkash shares whether he thinks companies will lose opportunities without this prestige. “In the short term, people are still learning as they go. Remote work has a huge financial implication for mega-corporations. These spaces locked down for long-term leases could potentially be converted to a space that just gives a ‘wow’ effect for clients.” He adds, “in the longer term, the perception of this ‘need’ will change. People will allocate less importance to the idea of an office. It will not be a deal-breaker. Perhaps one day we will create the perfect replica of spaces but we don’t have that yet. Will we be able to negotiate, sell, or have difficult conversations online? There is something that comes from being physically present that enables these. You can still start the conversation digitally, but there is an element of in-person interaction that is needed.”
A new reality
As a result of the pandemic and remote work, whether it is temporary or not, we have a new reality. Just as e-commerce companies disrupted shopping centers and the retail industry, panelists discussed whether and if so, how that will be mirrored in office and remote workspace.
“When it comes to offices and remote work, I believe that digital and brick-and-mortar spaces rely on each other, said Omar Al Mheiri. “There is a correlation and it does have something to do with lifestyles. Certain teams are co-located in a traditional office and if remote work has been initiated already, then the lockdown was not much of a shock. Efficiency is the byproduct, and this mutual reliance is built on trust. “
“There is a misconception between online retail and brick and mortar. Just 10% of all retail purchases in 2019 in the USA was via e-commerce. Meaning 90% of sales were still done in-store," Omar Nakkash added. "If you look at that analogy into the office space, obviously it has grown too but humans are very interactive and the face-to-face engagement cannot be replaced. We will lose a percentage, but the fundamental office space will remain.”
Marilyn also agreed with this, “If you look at the data, we see that retail is not dead and that the office is not dead but we can question how we work and use them. We did not learn to hunt lions in Savannah over Skype. We don’t evolve as fast as we would like, our DNA is deeply ingrained and it determines how we collaborate and form communities. A trend is important to identify but it is not going to change the world so rapidly,” she said.
The Future of work is…
“Lean,” said Omar al Mheiri. “Count your pennies and question what is truly necessary to stay agile.
“The future of work is tailored,” said Omar Nakkash. “It’s a future that is based on your industry, company, size, and objectives. The pandemic allowed us to redefine what it is that we need to work on but our future is bespoke.
Ayman Youssef said that “The future of work is hybrid. It is better than it was and will be hybrid. We will definitely be working both virtually and in-person.”
Want to learn more?
Check out all other sessions from the Cosmic Conference 2020.