The Great Return – our NZ experience bodes well – The Property Chronicle
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The Great Return – our NZ experience bodes well

Investor's Notebook

Last month WeWork surveyed the heads of real estate from 69 global corporations asking how they envisioned the world of work in this new COVID-19 age. Three themes emerged:

+  Acceleration of how flex space might be utilised

+  Optimising existing portfolios

+  Leveraging data to offer employees a greater range of working choices

These results are perhaps unsurprising from a flex-space provider, but WeWork are not alone in arriving at these conclusions. Nevertheless, the debate about the death of the office/rise of flex and work from home (WFH”), (or ‘work from anywhere’ as I recently suggested), continues to be the CRE topic of the moment.

Diverse views proliferate from office investors, workplace experts, occupiers and tenants, each with valid observations. McKinsey Consultants have dedicated a whole series on “re-imagining the office and work-life” after COVID-19, and Cushman & Wakefield were first out of the traps with their design for a virus-combating “Six Feet Office”. Conversely Twitter has announced staff can work from home ‘forever’. More locally, here in NZ AMP Wealth Management is closing its offices, telling its 350 staff to work from home, and the four day week, already underway pre-COVID, appears to be gaining more corporate support – probably because it is a baby-step to other more disruptive “new ways” of working.

History will tell us who was right, but at present it’s very hard to see how it all might play out long-term as the disease remains unrestrained in many countries and has re-emerged in places where it was thought to be under control. No stable, observable platform for a return to work has thus far existed, until now.

The best available empirical evidence demonstrating how economies might return to work can be found in New Zealand, in reality the first, most transparent country to bring the virus under control. 

On 8th June, after about 11 weeks of full or partial lock-down, NZ moved to Alert Level 1. This move came as the country declared that it had “eliminated” COVID 19: there were no active cases and had been no new cases for 28 days. The borders remain closed to non-NZ residents, returning residents are quarantined, and testing and tracing protocols continue. But the move to Alert Level 1 allowed the workforce to return to work without any restrictions whatsoever, and so against the background of the current debate it is informative to observe what has actually changed on the ground in these relatively normalised circumstances. The answer appears to be ‘not much’.

Well before the COVID chaos, Statistics NZ (an arm of the New Zealand government) formed a commercial arm, Data Ventures, to bring together datasets from across government and the private sector in a trusted environment. Subsequent to the current crisis unfolding, Data Ventures were commissioned to provide a Mobility Index to support the National Crisis Management Centre, an agency which directs NZ under this national emergency. The Mobility Index is able to provide a snapshot of mobility now as compared to a similar day in 2019 by using maximum and minimum population estimates and further breaking down the data across multiple sectors. 

Their most recent analysis (22 June Report) suggest that the predictions of wholesale shifts to WFH from We Work and others may be off the mark. In particular Data Ventures observed;

“… workplace activity continued to increase slightly compared to the week prior, [which mirrors] the observations for daytime residential populations. Compared to a typical week in 2019, we see that activity is returning to previous levels …”






Investor's Notebook

About Toby Scott

Toby Scott

Toby Scott has lived in New Zealand since 2003. He previously enjoyed senior roles with Australasian banking group ANZ and global agency CBRE, arranging or advising on debt funding requirements for many of the country's larger property investors and developers. He now owns and operates Tascott & Co, a real estate capital management company.

Articles by Toby Scott

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