The implications of Currys' new hybrid working model

Electronics retailer, Currys caused waves in the corporate real estate market last week for deciding to move out of its corporate HQ and transition office staff to WeWork and own store-based locations.

Taking a step back, the implications hold some positives that go beyond the commercials of the transaction.

Further threat to the (old) status quo

Some brokers were (possibly justifiably) concerned about what this would mean for the office real estate market. After 2021 there was a massive resurgence in take-up, with November and December being some of the highest sales on record, and many were already predicting that demand would tail off as immediate requirements give way to corporates reassessing their longer-term needs. This move by Currys seems to be indicative of one option large occupiers might take. And if many large occupiers follow suit, it will mean a sizeable reduction in space required across markets globally.

However, Currys is only one of the first to have made some bold decisions with regards partnership with coworking offerings. Standard Chartered did the same globally as part of their corporate real estate strategy globally. Many large corporates use coworking solutions – that reality isn’t going away and the coworking providers of this world will become even more important “frenemys” of the traditional brokers.

Office as a brand bastion

Releasing the critical mass of office workers into a coworking location has called others to speculate on whether the same branding benefits can be achieved as in a dedicated HQ. However, 400 desks will be dedicated to Currys in the Waterloo WeWork (seen above), which will allow for a uniquely Curry’s culture to permeate, and WeWork does support company branding and modifications for occupiers with larger footprints. However, another part of the strategy is allowing people to use WeWork’s other locations when they need to. As a large retailer doesn’t it make sense to leverage space in their own stores? It doesn’t get more on-brand to connect office staff to the company’s primary product.

Flexibility the driver in face of change

Of more significance than reducing the use of dedicated, yet likely underutilised space, is that this option offers flexibility, as was emphasised in the press release: both real estate flexibility and flexibility for their employees. Data from McKinsey on the `great resignation’ says that workplace flexibility was the most common reason given by the few who did return to traditional employment. Companies are very likely to be making real estate decisions not only on cost per square foot but for reasons of human capital.

In fact, the far more interesting and important point made in the official press release was not around cost saving or even flexibility, but around the consultative process that the company went through to arrive at their decision. According to the Currys CEO this was not simply a case of leasing less real estate with fewer desks and relying on people working from home (an option others have taken) but that “We have listened to our colleagues, who have been outstanding through Covid’s many challenges, and have implemented the changes they wanted to see.”

What it takes to meet expectations

In the roundtable that Pragma hosted with Handley house sister company Benoy in March this year the consensus was that people need a reason to come to the office, with the obvious corollary that if you want to retain staff then you should reach out and ask them what it is that they like in a transparent manner.

Psychological studies show that if you ask people what they want and then deliver it you will get the most positive response (in this case loyalty, engagement, productivity), however, if you ask them what they want and then don’t deliver, you have a worse outcome than if you had never asked at all. Lockdowns and working from home for so long has meant most people on re-entering the office have demonstrated what they want without having to be asked, it is some form of hybrid model, at least for now.

A lot of the time people come into the office because it has the tools they need to do their jobs better, and in general people want to do their jobs better. They want to collaborate and socialise and feel connected to all the positives that a good company culture delivers. Brands that deliver on that promise, regardless of the headcount per square foot benefits that their real estate decision making may bring, will come out stronger for it.

Property professionals who are concerned about the future of corporate real estate markets need only ask clients what the staff would want, and the deal is in the bag.

Claire Stephens
Director
c.stephens@pragmauk.com

Pragma wrote a series of article on the workplace in March which you may find useful:

How to build a workplace strategy

How to incorporate ESG into your workplace strategy

How to adapt to flexible working and encourage employees back to the office

How landlords can develop a strategy that will attract end user tenants