Large cities with longer average commute times are more likely to experience a severe and lasting impact from the surge in homeworking prompted by the COVID-19 pandemic, according to the CEO of a major European office landlord.

Giacomo Balzarini, the CEO of PSP Swiss Property AG, said during a first-half earnings call that his company is more insulated from the trend due to the relatively smaller size of the Swiss cities in which its portfolio is based.

"We have to distinguish between the Swiss cities and the big international cities where [there is] a big commuting problem," Balzarini said. "And here in Switzerland, luckily due to the small size of the cities, the commuting is less of an issue. So people are able to get in a healthy way to the offices."

Homeworking has become widespread in recent months as governments around the world have ordered lockdowns to delay the spread of COVID-19, which had killed almost 800,000 people globally as of Aug. 17. The success with which many companies have adapted to homeworking has prompted several large multinational firms to offer employees the option of working from home permanently or more regularly.

Facebook CEO Mark Zuckerberg said up to 50% of the company's employees could be working remotely within the next five to 10 years. Other major multinationals that have taken a favorable stance to long-term homeworking include Twitter, Box and Fujitsu.

A recent survey by Morgan Stanley's research unit AlphaWise found that London, Europe's largest city, had the highest proportion of office employees working from home full time, at almost 50%. The proportion of office employees working at home full-time in other major European cities ranged from about 20% to 30%.

PSP Swiss Property owns a portfolio of mainly office properties worth CHF 8.10 billion in Switzerland's largest cities. More than half of its properties are based in Zurich (53%), with Geneva (11%) and Basel (9%) its second- and third-largest markets. Offices account for about two-thirds of its portfolio value, with retail and other property types making up the remainder.

Balzarini said the COVID-19 crisis had shown that homeworking is technologically feasible, but its adoption was forced, due to safety concerns, rather than voluntary. Contrary to forecasts that the crisis will result in reduced demand for office space, the lasting impact of health and safety concerns could see companies require even more space, he added.

"I truly believe that companies will come back to having people in their offices, perhaps in different setups," he said. "Perhaps they need, in certain cases, even more space. It's just not feasible anymore to have space of 8 to 10 square meters per employee."

Switzerland's main office markets have been "quite resilient" despite the shock of the COVID-19 crisis, Balzarini added. Business sentiment is recovering with occupiers beginning to show interest in taking space, he said.

"Generally, we have observed a quite healthy environment despite this shock phase, especially even more so on the transactional markets," said Balzarini. "In the prime areas, we are back at pre-COVID levels, or even in certain segments at lower yields, which has also been materialized in the valuations we have seen."