Hybrid working 'could save Scotland’s SMEs £6.5bn a year in office rent'

Scotland’s small and medium-sized enterprises (SMEs) could save around £6.5 billion a year on office rent by embracing hybrid working, according to exclusive new data.

Leesman, which captures employee sentiment on work environments, has found that 83 per cent of UK staff are now working in a hybrid way, and 36 per cent of these go into the office one day a week maximum. It consequently believes most companies could, by embracing a mix of home and office working, cut their physical workplace requirements “significantly” and still accommodate all employees who wish to use such space.

The organisation has calculated that Scotland’s SMEs, which employ 1.2 million people, would if they adopted hybrid working only need physical workspace for 768,000 people at any time. This could save them an estimated £545.4 million in monthly workspace rental costs, or £6.54bn annually, based on a minimum space requirement per employee of 50.5 square feet at an average monthly rent of £25 per sq ft.

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Leesman said Edinburgh, where there are an estimated 246,000 office workers, would only require office space for 157,440 staff, and this could result in savings (based on average city office rents) of £1.71bn annually. It added that by adopting hybrid – which almost half of Scottish firms have done according to a study from September – a 250-person organisation in the city paying prime headline rents of £38 per sq ft could save up to £2.07m per year, or £1.74m at £32 per sq ft. An equivalent-sized organisation in Glasgow paying prime headline rents of £35 per sq ft could lower outgoings by up to £1.91m per year, or £1.64m for £30 per sq ft, while firms in Aberdeen paying prime headline rents of £23.5 per sq ft could save up to £1.28m, Leesman added.

The firm’s founder and chief executive Tim Oldman said it has found that the average home supports the average employee better than the average office, providing a clear opportunity for firms looking to reduce costs and potentially offload “huge swathes of real estate”. He also said even the most expensive spaces in Edinburgh and Glasgow are still a “fraction” of the price of their London equivalents, which could prompt an increasing “ripple” of organisations moving staff north.

Purpose

Mr Oldman also flagged how workers are planning their days in the office to coincide with key events such as strategy meetings in a trend Leesman brands “purposeful presence”, and he expects offices to adapt as a result.

“If the office can be great at the things that employees want to go there to do, then the employee can move further away, and they can use it more purposefully,” he said.

Leesman believes Scotland’s SMEs would if they adopted hybrid working only need physical workspace for 768,000 people - out of a total workforce of 1.2m - at any time. Picture: Getty Images/iStockphoto.

Another major trend he is predicting is larger organisations increasingly seeking more environmentally sustainable buildings in better parts of cities, where they can also be supporting local communities. "If you're a pension fund, I would be worried [because] I think the value of an awful lot of office stock is going to be struggling to sustain its valuations going forward if it is not an experiential space.” A separate recent study found that investment into Scottish commercial property nosedived during the third quarter amid economic uncertainty.

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Mr Oldman also praised Edinburgh Park as well-positioned due to good local amenities, for example, but in Glasgow, he expects areas associated with smaller businesses to “really start to suffer – I think it's the smaller end of the SME market where you're going to see a higher adoption of remote working”.

The firm’s founder and chief executive Tim Oldman said it has found that 'the average home supports the average employee better than the average office'. Picture: contributed.