Staley suggested that with the “remarkable” fact of transferring around 70,000 Barclays staff to working from home (WFH) due to the Covid-19 pandemic, there was likely to be a “a long-term adjustment” where companies would increasing use remote working rather than big offices.
“The notion of putting 7,000 people in a building may be a thing of the past,” Staley told reporters on a call on Wednesday morning.
Staley said there would to the that would likely lead to more.
“We will find ways to operate with more distancing over a much longer period of time,” he said, suggesting the FTSE 100 lender could use its branch network as a hub for call centre workers and even investment bankers.
While Barclays will start a staged re-opening of its offices, beginning in Hong Kong and then with others unlocking their doors across Asia, the US banker said this would not mean all staff would be returning.
“This is going to happen over a pretty long period of time,” he said. “This is not going to be a light switch.”
His comments are similar to the CEO of Morgan Stanley, who this month said he saw a future for the bank “with much less real estate”.
Even when the UK lockdown is lifted, social distancing practises will create practical limits on the number of workers to return to its Canary Wharf offices.
“How many people can work in this building if you limit the number of people in an elevator to two at a time?” Staley said. “It’s that sort of thing.”
Pressure on the large landlords and REITs has been more apparent on retail and leisure properties through coronavirus lockdown, with rent deferrals agreed and some reporting that they had only received a slice of their normal rent payments.
Land Securities PLC (LON:LAND) said earlier this month that it had already seen a “huge shift in the use of our buildings”, though valuations were said to be stable in its London offices, while other, more office-focused listed landlords such as Derwent London PLC (LON:DLN) and CLS Holdings PLC (LON:CLS), issued quietly confident statements.
Property values, however, were beginning to be affected this month as less than half of overall rent in March was collected on the due date, analysts at Liberum noted, with rent collection levels seven days after the due date standing at 47% for retail properties, 71% for offices and 62% for industrial real estate.
Following Staley’s comments, there was some agreement in the City about the potential long-term impact on office property from the pandemic.
“Working from home is clearly working rather well,” said Neil Wilson, market analyst at Markets.com, from his home office.
“Office space will command less premium as demand will fall,” he added, also anticipating a big knock-on for retail as result.
“Landlords are stuffed,” he said. “The impact on the economy will be permanent.”
Point, counter point
Analysts at UBS, in a note last week, said they saw “some validity in the theme” after the Morgan Stanley comments but think it is likely to be confined to a marginal effect.
They said they “do not think this poses a threat near the same level as e-commerce did on retail, as some have claimed”.
UBS’s property team said that if ‘WFH’ becomes more prevalent for certain functions, “days spent in office are likely to be spent on more social aspects, requiring additional meeting rooms, etc”, while hot-desking may be rendered less appealing given hygiene factors.
“Offering employees the option to work from home in order to promote [diversity and inclusion] and employee wellness is one thing. Relying on it as part of a corporate real estate cost saving strategy it is quite different,” the analysts said, noting that having a comfortable space to work from home is a privilege, varies widely by location, and is typically not contributed towards by employers.
Therefore, companies relying on their employees having this as an option “may run counter to diversity and inclusion guidelines, as it could disadvantage those that do not have this option available to them [and] could limit how low the ratio of desks to employees can be pushed”.
Effects in other sectors
From a rise in online shopping to reports of the slow lingering death of restaurants and cinemas, there have been many predictions about how the Covid-19 pandemic will change the way the world works: