A migration back to offices is expected this week, after an official end to lockdown was declared yesterday, but workplace environments won’t entirely return to normal and it will take some time for office occupancy rates to recover in the capital.

Real estate company CBRE Managing Director James Hodge and CBRE Manager of Advisory and Transaction Services Ludovc Hautin discussed the lockdown’s effect on the workplace and the office sector’s near- and long-term prospects during a virtual discussion  yesterday.

Hautin said it was natural for employees to want to return to their workplace, despite some global media trending views that predicted the end of traditional office spaces. While remote working can seem ideal at first, Hautin said employees ultimately crave being part of a team or company and interacting face-to-face with colleagues rather than through digital means.

Hautin raised issues specific to Cambodia that hinder efficient remote working, such as spotty WiFi connections, a lack of air-conditioning and familial distractions. For jobs that can’t be done remotely, the outlook is murkier.

Precautions need to be taken to ensure the safety of workers in factories and other sectors that require the physical presence of workers. Hautin said hotels will need to employ strict disinfection measures but said they have proved they can do that after some hotels were transformed to quarantine centres during the pandemic.

Hodge added that traditional offices will be affected in day-to-day operations as well because more precautions must be taken to keep high-touch areas sanitised and social distancing may be prioritised.

In a wider sense, Haurin and Hodge agreed that while a rough patch lies ahead, the office sector isn’t destined to fail. Between 2015 and 2019, the sector boomed, with occupiers filling spaces faster than new spaces were being built. Developers rushed to fill the demand – with many constructions completed last year – which has contributed to the oversupply of office space the capital is experiencing at the moment.

The main factor causing the oversupply, however, is strata-owned buildings – those owned by multiple parties. While there was less than 25,000 square metres of these available in 2017, close to 300,000 square metres are expected in the market this year. This has created a tenant’s market via the excess of unoccupied space. Overall, though, the outlook for the sector is positive.

Compared with regional competitors, Phnom Penh still offers better deals and it could lure companies looking for headquarters in Southeast Asia, as well as digital nomads or entrepreneurs looking for collaborative workspaces.

At the moment, Hautin said tenants are looking to lock in longer-term deals for bigger spaces to take advantage of the buyer’s market.

“The biggest key driver of the office market will be the competitiveness of Phnom Penh compared with the rest of the market,” he said. He added that the high level of English spoken in the capital, its location and its competitive rental rates will help lure digital nomads and international businesses alike.

• Tags: office space