A permanent shift to working from home is set to slash office demand, push up house prices for years to come and even bring an end to the flagship retail store, experts have said.
Demand for office space will fall by around one-fifth, according to analysts at Barclays, as the majority of bosses plan to make at least a degree of Covid-era remote working a long-term feature of their businesses.
Increased flexibility, time saved on commuting, lower costs and higher productivity were all cited as reasons to keep more staff working from home for at least part of the week.
Just under one-quarter of employers said they will not encourage staff to work from home after the pandemic.
“People have discovered that remote work can be extremely productive. As a result, we expect office demand to be reduced by up to 20pc,” said the report in the bank’s annual Equity Gilt Study.
Offices will “remain critical” but “the function of the office will change, becoming the gathering place for social interactions and a place for collaboration and creativity-inspiring discussion, informal training and general communication, as opposed to the process and task-driven space it has often been in the past.”
At the same time more home working means house prices will rise for years to come.
“Owning and improving that home, wherever it is, will become more important,” the analysts predict.
“Real estate brokers should continue to see brisk business, as should manufacturers of appliances and exercise equipment.”
House prices in the UK have already risen by more than 10pc since the pandemic began as lockdowns forced families to rethink their living arrangements, and gave those who kept their jobs extra savings as spending on commuting and socialising plunged.
Meanwhile home working and the desire to avoid crowded areas has accelerated the shift away from physical retail and towards online shopping.
“The large urban flagship store is likely to disappear over time. We believe they are going to become even more unprofitable given the shift to online sales,” the report said.
Smaller local shops as well as delivery fleets will become more important instead as customers seek convenience and quick online deliveries.