"The modern office in the right location"

Before the COVID-19 pandemic, 4 percent of employees worked exclusively or predominantly at home. During the lockdown at the beginning of 2021, this figure rose to 24 percent.¹ Therefore, many saw this as the end of the office. However, a study² commissioned by Berenberg came to a different conclusion: "The office remains indispensable in many cases, as a place to meet and to develop creative ideas. Innovation is mostly achieved through teamwork," explains Prof. Dr. Tobias Just, Chair of Real Estate Management at the IREBS at the University of Regensburg.

^{1 Wirtschafts- und Sozialwissenschaftliches Institut (WSI), February 2021
2 IREBS/Berenberg study: Office real estate after Corona - a scenario analysis (in German)}

"The location, energy efficiency and flexibility are crucial"

Face-to-face collaboration and effective exchange in an economy focused on innovation and creativity cannot be completely replaced by digital infrastructure, the study concludes. The demand for office space will not decrease if it is possible to remain attractive to foreign, qualified immigrants and if the labor force rate continues to increase, as it has done so over the past few years. "In the future, the use of office space will be more about facilitating cooperation and communication and less about simply processing orders," Tobias Just explains. Offices will therefore look different in the future: "The American version of the open-plan office is likely to become a thing of the past, not least for reasons of hygiene," explains Christian Wittke, Head of Relationship Management Real Estate at Berenberg. "In the future, there will be significantly more team and collaboration areas in addition to individual spaces. Work that requires concentration can still be done from the home office, provided the employee has the space to do it”.

According to Tobias Just, three things will be important for office investment in the future: Location, energy efficiency and flexibility. The office location will still matter. Offices that are located close to public transport and shopping facilities or other urban amenities, or even medical care, will remain important for office workers and therefore also investors. It will become difficult for offices in locations with less or no infrastructure. The issue of sustainability will also become more important: "This concerns not only low carbon emissions, but also the construction of the property and even its deconstruction. Classic office space from the 1980s and 1990s will need to be upgraded or it will fail. In addition, the flexibility of office space is becoming more important. The pandemic has shown that the economy cannot be planned perfectly," Tobias Just explains. "Uncertainty remains high and therefore the more space that can be adapted quicker, the more resilient offices will become, regardless of any future crisis."

Berenberg special real estate fund: modern metropolitan offices

Due to the expected continued demand for office space, Berenberg has launched a new open-ended real estate special fund. The “BERENBERG Real Estate Deutschland” invests in office properties across Germany that fit the definition of the future modern office. With this new fund, Berenberg aims to continue the success story of its three previous open-ended real estate special funds. All of these funds have proven themselves during the pandemic and have distributed between 3.5 and 4.5 percent return for 2021. The new fund will focus exclusively on office properties, in metropolitan areas and major cities throughout Germany and thus differentiates itself from the previous funds, that invests in office, residential and retail properties in one specific region in Germany. This is where Berenberg currently sees the greatest potential, which ties in with their aim to build a regionally diversified real estate portfolio. The selection is made according to strict criteria. "The office has a future, but only if the modern office is in the right location," Christian Wittke explains.