As the US economy reopens, ramped-up corporate spending on video systems and plans to increase shared workspace suggests hybrid work is here to stay, potentially weighing on commercial property prices in New York, San Francisco and other major cities.
After jumping in the wake of the pandemic, sales of technology for facilitating remote work continue to trend higher. Retail sales of USB cameras and computer microphones rose 77 per cent and 36 per cent each between March and May when compared to the same period last year. Last year's figures were also double those in the same months in 2019, according to market research firm NPD Group.
Computer goods maker Logitech International said earlier this year it expected sales of webcams and cloud-based video collaboration equipment to remain strong in 2021, after tripling to $1.48 billion in the 12 months ended in March from a year earlier.
And a Morgan Stanley survey showed that a majority of companies plan to increase shared workspace, as they try to reduce costly real estate.
"Executives at many corporations would like everyone back, but technology spending plans tell you they recognise the need for a flexible workspace," said Vikram Malhotra, a real estate analyst at Morgan Stanley.
The rise of the hybrid office poses a headwind to workspace demand in cities like New York and San Francisco, where there have been few big-name office building sales in recent months. Institutional holdings of office assets in the two cities are valued at $231bn and $128bn, respectively, according to LaSalle Investment Management.
While leasing activity has rebounded since the lows of the pandemic, rental prices are weak and vacancy rates remain high, weighing on the value of office buildings and weakening deal activity.
Total sales of office properties in Manhattan, for example, slid by more than half to $5.4bn last year and were just $41.9 million in the first quarter of 2021, according to Cushman & Wakefield.
The work-from-home trend will weaken the pricing power landlords have on leases and the returns investors expect from office assets, Mr Malhotra said. The bank estimates the changes will reduce the amount of US office space by about 13 per cent.
Green Street, a real estate advisory firm, forecast in June that remote work may negatively impact office demand by about 15 per cent.
"Prices in those big global gateway cities – New York, San Francisco – they're the poster child, they're soft," said Mark Zandi, chief economist at Moody's Analytics.
Many corporations plan to allow at least some remote work, including Swiss bank UBS Group, which earlier this week announced plans for a mostly hybrid workforce. Other companies, including Goldman Sachs and Morgan Stanley, have resisted establishing a hybrid workplace.
At Cerner Corporation, a US healthcare technology company, 75 per cent of its 27,000 employees could be "dynamic" and work half the time remotely, said Tracy Platt, the company's chief human resources office.
"We want to get the best of both worlds and we're confident we can through this model," she said.
Does it make sense to require people to come to a certain specific location every day? In some cases it didn't make sense before the pandemic.
Deb Donley,
owner and principal of architecture firm Vocon
Not everyone believes hybrid work will shrink offices or maintain its appeal in the long run. Most employees will likely work three- to four-day weeks, making space consolidation tougher, said Alex Goldfarb, an analyst at Piper Sandler.
At the same time, "people want to be seen as though they're part of the game, and there's not a game out there that you can win if you're not on the field", he said.
Still, the pandemic has accelerated changes that had been afoot for some time. Vocon, an architecture firm, designed offices before the pandemic that had 20 per cent of employees at so-called hot desks, where multiple workers use a single physical work station at different times. Now, said Vocon, some clients are allocating more than 40 per cent for what can be shared space.
"Does it make sense to require people to come to a certain specific location every day? In some cases it didn't make sense before the pandemic," said Deb Donley, owner and principal at Vocon.
Demand for office space does not need to collapse to adversely impact occupancy, rents and values, LaSalle analysts wrote. A demand drop of 5 to 10 per cent could spur elevated vacancy rates and delay the sector's recovery five or 10 years, the unit of Jones Lang LaSalle said.
LaSalle has underweighted its exposure to office buildings since well before the pandemic, said Rich Kleinman, LaSalle's co-chief investment officer for the Americas.
"Many people have not been accurately assessing the amount of capital that's needed over the long term to own an office building," Mr Kleinman said. "It's not as attractive of a risk-return proposition as some other property types."
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Global Fungi Facts
• Scientists estimate there could be as many as 3 million fungal species globally
• Only about 160,000 have been officially described leaving around 90% undiscovered
• Fungi account for roughly 90% of Earth's unknown biodiversity
• Forest fungi help tackle climate change, absorbing up to 36% of global fossil fuel emissions annually and storing around 5 billion tonnes of carbon in the planet's topsoil
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MATCH INFO
Europa League semi-final, second leg
Atletico Madrid (1) v Arsenal (1)
Where: Wanda Metropolitano
When: Thursday, May 3
Live: On BeIN Sports HD
OTHER IPL BOWLING RECORDS
Best bowling figures: 6-14 – Sohail Tanvir (for Rajasthan Royals against Chennai Super Kings in 2008)
Best average: 16.36 – Andrew Tye
Best economy rate: 6.53 – Sunil Narine
Best strike-rate: 12.83 – Andrew Tye
Best strike-rate in an innings: 1.50 – Suresh Raina (for Chennai Super Kings against Rajasthan Royals in 2011)
Most runs conceded in an innings: 70 – Basil Thampi (for Sunrisers Hyderabad against Royal Challengers Bangalore in 2018)
Most hat-tricks: 3 – Amit Mishra
Most dot-balls: 1,128 – Harbhajan Singh
Most maiden overs bowled: 14 – Praveen Kumar
Most four-wicket hauls: 6 – Sunil Narine
Fixtures
50-over match
UAE v Lancashire, starts at 10am
Champion County match
MCC v Surrey, four-day match, starting on Sunday, March 24, play starts at 10am
Both matches are at ICC Academy, Dubai Sports City. Admission is free.
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Killing of Qassem Suleimani
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Iftar programme at the Sheikh Mohammed Centre for Cultural Understanding
Established in 1998, the Sheikh Mohammed Centre for Cultural Understanding was created with a vision to teach residents about the traditions and customs of the UAE. Its motto is ‘open doors, open minds’. All year-round, visitors can sign up for a traditional Emirati breakfast, lunch or dinner meal, as well as a range of walking tours, including ones to sites such as the Jumeirah Mosque or Al Fahidi Historical Neighbourhood.
Every year during Ramadan, an iftar programme is rolled out. This allows guests to break their fast with the centre’s presenters, visit a nearby mosque and observe their guides while they pray. These events last for about two hours and are open to the public, or can be booked for a private event.
Until the end of Ramadan, the iftar events take place from 7pm until 9pm, from Saturday to Thursday. Advanced booking is required.
For more details, email openminds@cultures.ae or visit www.cultures.ae
Spider-Man%202
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Director: Romany Saad
Starring: Mirfat Amin, Boumi Fouad and Tariq Al Ibyari
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
'Ghostbusters: From Beyond'
Director: Jason Reitman
Starring: Paul Rudd, Carrie Coon, Finn Wolfhard, Mckenna Grace
Rating: 2/5
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
T20 World Cup Qualifier, Muscat
UAE FIXTURES
Friday February 18: v Ireland
Saturday February 19: v Germany
Monday February 21: v Philippines
Tuesday February 22: semi-finals
Thursday February 24: final
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
Developer: Ubisoft Montreal / Ubisoft Toronto
Publisher: Ubisoft
Platforms: Playstation 4, Xbox One, Windows
Release Date: April 10
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
