News Article energy prices flex inflation New Work office report workplace
by Property Forum | Report

With energy prices rising at an unprecedented rate and the system of governmental discounts on utility bills in Hungary significantly changing, working from the office might become a more attractive option even for those that love working only from home. In the coming months, not only employees but employers will also try to reduce their energy use. Energy-efficient office buildings will further increase in value as they will become a more attractive option for tenants. Flex and serviced offices will also see increased demand as they will be able to provide a more financially stable option for tenants with utility costs included in the rental fee.

Working from home results in higher energy consumption at home, especially at times when the heating or cooling of the space is required. Up until recently, employees have rarely minded the increase in utility bills as their salary has been steadily growing since the start of the pandemic and energy prices have remained unchanged for years due to governmental intervention.

Employers as tenants in office buildings, on the other hand, are increasingly feeling the heat. So-called service charges that include utility costs have historically been a fraction of the rental fee but that is changing as energy prices are skyrocketing. Furthermore, the heating or cooling of an office building is not significantly cheaper if it sits almost empty, so they don’t save money by employees working from home unless they downsize their office space.

With the new utility price system that entered into force on 1st August in Hungary, effectively only those can benefit from government-subsidised utility prices that have smaller households and/or live in energy-efficient buildings. For everyone else, staying at home the whole day once the heating season starts is going to become significantly more expensive. The first thought of many office workers is naturally to go back to the office, potentially full-time so that the employer bears to cost of the energy they consume during the workday.

While employers will probably welcome the return of employees to the office, some of them might soon feel the need to decrease utility costs. This pressure, coupled with the growing importance of ESG compliance in the corporate world, will encourage many tenants to do things differently.

If the office space is still underutilised, some might decrease the amount of space they lease. Others might encourage employees to cut down on their energy consumption. And those whose lease is expiring soon might look to move to more energy-efficient buildings with lower utility costs.

Another option for employers is to move some or all of their employees into flex offices. In flex offices, leasing terms are flexible and utility costs are included in the rental fee (unlike in traditional office buildings). Even if flex operators will be forced to increase their fees to cope with rising energy prices, tenants choosing them will be able to plan ahead with more certainty.

“Going flex is the perfect solution for companies that want cut leasing costs but are uncertain about how many workstations they will need in the future or on any given day. With solutions like New Work’s “Space in the Cloud” service, tenants can reduce their core space commitment down to 50% and cover the peak loading factor with cloud services. Employees using this service have access to all locations via a mobile app so they can choose where they want to work on a given day – or for just a few hours – depending on where they are and where they need to go,” explains Hubert Abt, CEO and Founder of New Work and workcloud24.