Guest blog by Paul Tostevin, Director of World Research, Savills
The latter in particular has come under the spotlight this year as companies look to re-evaluate their current office footprint, and take into consideration how flexibility might work going forwards. The Digital Nomad Index, which forms part of this years’ programme, uses proxies including the cost of a flexible office desk to gauge how cities are cementing their fundamentals in order to secure best talent. Cities such as Melbourne, Eindhoven and Seattle all score highly.
Naturally footloose, it is widely known that tech companies have long embraced flexible working and, consequently, have been early adopters of flexible office occupancy. Even with an uptick in remote working as a result of Covid, there has been much reason to suggest the longevity of the office as a corporate hub and location in which employers can foster employee collaboration and creativity.
Indeed last year saw continued occupier activity; specifically from Big Tech. Even during the pandemic major deals have been announced, a sign of sustained confidence in city centres and therefore a positive signal for flexible offices too. In August, Facebook signed a new 730,000 sq ft lease at New York’s landmark Farley building. Netflix announced in October plans to treble its office space in London. Tencent, ByteDance, Alibaba and Amazon are all making moves into, or expanding in, Singapore. TikTok is seeking space in London and Dublin.
These notable deals serve not only to reinforce the ongoing appeal of conventional and flexible office space, but simultaneously highlight the attractiveness of city centre locations to tech talent as set out by our index. There is indeed no coincidence that the cities that top this index are already important markets for flexible space and will continue to be so as the pandemic recedes.
Naturally there is also the element of cost to consider, of which flexible office space is a component. Rising living and working costs are also a challenge and have led to the rise of the more affordable Tech Contender cities, such as Detroit, Manchester and Cape Town, as detailed in the Tech Cities programme. However the continued success of higher cost locations (San Francisco, London and Tokyo, for example) suggests that people will, to a certain extent, pay more to be in vibrant places that also give them access to biggest networks and widest funding opportunities.
With the race to lure the best talent certainly being one to watch, what will prove pivotal will be how these cities capitalise on the attraction of the location itself, while using office space as more of an enabler. While lower cost cities will have the benefit of being more affordable, whether over time they can match the demands tech companies have for community and funding will be something only time can tell.