Office space has never been more in the public eye. While real estate for occupiers has become a strategic priority for business, the workplace represents a strategic lever available to business leaders to pursue a competitive advantage. In this respect, real estate decisions influence and reinforce several business priorities from talent management, corporate and social responsibility, inclusion and diversity, to the transformation of corporate culture and brand or the restructuring of business models in light of rapid technological advances. Failing to put the office space at the heart of the strategic agenda is, simply put, failing the business.
For the landlord, this strategic agenda raises the stakes and demands a fundamental rethink of the market proposition. As business-planning horizons shorten, greater occupational flexibility and lease terms are required. The office space, to an extent, must become a fluid and flexible business service and not a fixed physical product.
(Y)OURSPACE - Insights from The Global Workplace is a report by Knight Frank that identifies five trends that will shape future occupational demand across global real estate markets. Individually, each of these concepts will be highly influential. Collectively, they represent nothing short of a ground breaking occupational convention.
The Productivity Push
It is an accepted fact that real estate is a strategic device for business. Attitudes towards the cost of real estate are changing as focus shifts towards effective rather than cheap solutions. With real estate having to play a critical role in the push for increased corporate productivity, it is no longer about increasing the density of occupation with an aim to save at all costs. That approach has proven to be counter productive. The aim now is to increase productivity by strengthening the interaction between people and property through the creation of, and investment in, a positive, serviced and well-supported workplace experience.
Next Wave Technologies = New Business Models = New Occupational Demand
Next wave technologies such as Artificial Intelligence (AI), robotics and automation are expected to bring about a period of rapid organizational change and process re-engineering. This will alter the future form, function and location of the workplace, reset the quantum and quality of staff required for a business, and brings about closer interaction of humans and machines to support greater corporate productivity. Critically, it will create new and different forms of occupational demand in global real estate markets.
Changing Corporate Constitutions
As we enter a boom period of global merger and acquisition (M&A) activity, and as the search for talent intensifies, occupier portfolios will incorporate markets and submarkets that were once terra incognita
The seemingly constant revision of business models derives from frequent technological changes. As organizations re-focus on their core competencies or seek skills that sit outside of their traditional orbit, corporate supply chains are becoming broader and deeper. At the same time, corporate diversity initiatives and the rise of multi-generational workforces serve to alter the company demographic. These trends have multiple implications for the workplace, as they strengthen the need for a more flexible, collaborative workspace that improves interaction between staff.
‘Space As A Service’ Becomes The Demand Default
The workplace is becoming a flexible business service that can actively support growth, rather than a fixed and often financially onerous (to the occupier) physical product. This repositioning is alluring to the occupier and will soon become the demand default. Traditional landlords have little choice but to adapt to this new dynamic and adopt the approach taken by the co-working ‘upstarts’. They must extend their innovation beyond the design of the physical product and towards the provision of soft-services, community and well-being.
Mobility And Mergers Underpin Occupier Activity
As we enter a boom period of global merger and acquisition (M&A) activity, and as the search for talent intensifies, occupier portfolios will incorporate markets and submarkets that were once terra incognita. There will be a conscious movement towards workspaces close to talent pools, but which also have the amenity, service and infrastructure to assist in the retention of that talent. We are in a new era of occupier mobility. It will not only bring greater complexity to the corporate real estate portfolio, it will extend the pool of demand emerging within global real estate markets.
In summary, these five trends will determine the future - the what, where, how and why - of the global workplace. They will shape the new office spaces and demand the attention of occupiers and landlords alike.