‘Jury’s still out’ on hybrid working, says top fund manager

OBC

• Emirates REIT boss points to mass return to office in banking sector
• But Dubai’s flexible workspace centres report high occupancy too
• Their clients are corporates – and people who want a break from WFH

“The jury’s still out” on the post-pandemic model of working partly in the office and partly at home, according to a leading UAE real estate investment trust (REIT) manager.

Thierry Leleu, CEO of Equitativa, told AGBI that the “office sector is a sector that we are confident in here in the UAE.”

Equitativa is manager of Emirates REIT, the UAE’s largest listed Shariah-compliant real estate investment trust. Its boss Leleu said: “I would say the jury’s still out on the hybrid model. I think that’s not going to fly. Most banks, trading companies, financial institutions, everybody’s back at work.

“The impact of the hybrid model will not be as significant as people may have feared in the past.”

His comments come as operators of flexible offices in Dubai are unveiling plans to expand because of sharp rises in occupancy.

• Dubai workers return to office in their droves as rents rise
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After the coronavirus pandemic disrupted office-occupier trends, demand for flexible office space is being driven by corporates looking to adapt to new models and retain staff, as well as individuals seeking a place to work outside the home, according to real estate consultancy Savills.

One Business Centre (OBC) is a flexible office operator with sites in Jumeirah Lake Towers and Dubai Media City. It is planning to open a third location in Emaar Square in October.

Abir Moussa, managing director of OBC, said: “We’ve seen a marked shift in our client occupancy in recent years with more established SMEs [small and medium-sized enterprises] and international companies looking to change their office environment in response to the need for more diversified business models and flexible working practices.” 

He added: “In response to this increasing demand, we are now expanding our own real estate portfolio.”

Matt Hewitt, owner of OneSpace Business Centre in Dubai, also pointed to “unprecedented times in terms of demand and occupancy” in the emirate.

“Post-COVID, we have more than doubled in footprint, and pretty much fully occupied,” Hewitt said.

OneSpace clients include Uber, Hitachi Rail and Movenpick Hotels and the company is seeing more blue chips taking space than ever before, he added.

Hewitt predicted that more commercial developers would be designing flexible workspace into their projects. These facilities usually include hot-desking workstations, open-plan offices and collaborative co-working spaces.

Swapnil Pillai, associate director of Middle East research at Savills, said these developments were good news for Dubai’s overall office sector.

“Landlords benefit from high occupancy levels from flexible space operators, in addition to conventional office occupiers, and clients can opt for fully furnished, ready-to-move-in space,” he said.

The sector as a whole is rebounding, Pillai added.

Emirates REIT, which oversees 2.4 million square feet of space, recorded 82 percent occupancy in the first half of this year, a 12-point increase year-on-year. Its portfolio of 11 properties, which includes Index Tower, is valued at $758.6 million.

Meanwhile, Dubai Multi-Commodities Centre has announced that all the office space at its Uptown Tower development has been fully pre-leased ahead of the building’s completion, which is expected later this year.

More than 495,000 square feet of Grade A office space across 22 floors has been pre-leased. Anchor tenants include Hisense, HIKVision and the Gemological Institute of America.

The tower is the first building in the Uptown Dubai District, with work on two more commercial skyscrapers set to commence soon.

According to Savills, there is growing interest from landlords in Dubai to provide flexible options across their portfolio by working closely with service providers or even launching their own inhouse product.

Pillai said: “As an established market, Dubai has a first mover advantage when it comes to attracting companies and talents to the region which use Dubai as a springboard for their Middle East operations and expansions.

“In line with global trends, the city has seen a steady increase in flexible space providers over the last few years. Though their share of the overall office market remains limited [to date], it is gradually increasing as new players enter the market and existing providers expand their footprint.” 

In 2018, flexible office take-up by providers accounted on average for about 8 percent of total office absorption across the global markets that Savills monitors. This plummeted during the pandemic, but in 2021 flexible operators began taking new spaces again, with flex office take-up accounting for 5 percent of the total.

Eri Mitsostergiou, director of Savills world research, said: “Since the end of 2021 the negative trend has been gradually reversing as operators begin securing new sites for expansion.

“Demand for flex is now fuelled by a wide range of different businesses, both in terms of sector and size. We anticipate demand for flex to remain strong, especially in an environment of ongoing structural changes and cyclical uncertainties.”