CEO, America at The instant group oversees the company’s expansion and operations across America.
While the workplace in the US was turned upside down by the pandemic, not all markets and office types were equally affected. In May 2021, we looked at office demand and tariffs in cities in the US and Canada, surveyed 186 users, and took an in-depth look at the global office design company M Moser. It is clear that the future of work will continue to evolve for both companies and employees. Here are the five most interesting takeaways, and what they mean for real estate, human resources, information technology, and other executives focused on getting back to the office.
1. Lifestyle cities – cities with warmer weather, relative affordability, and growing job opportunities – saw oversized demand and increases in the cost per desk for flexible workplaces. Cost-per-desk is the agile / flexible workplace standard for measuring prices and tariffs, while conventional office space is measured according to the price per square meter. This was different in every city, from Phoenix (with the largest increases in the US) to Nashville, Denver, and Austin. On the other hand, Washington, DC; Boston; New York; San Francisco; Chicago and Los Angeles saw the largest declines. In Canada, the cost-per-desk was relatively high, despite a slight decrease in the cost-per-desk in Vancouver.
With the advent of these secondary or lifestyle cities, the demand for flexible workplaces has changed significantly. We can assume that many companies employ hub-and-spoke office strategies, ie “hub” offices in the central business district that are used for targeted collaboration, combined with “spoke” offices in areas closer to Employee’s place of residence and where employees work can work on days when they are away from home or in a hub office.
2. Size matters and offices are getting smaller. Despite increasing demand between the first two halves of 2020, transaction sizes for flexible workspaces fell 29% over the course of the year. As companies move to more dynamic workplace strategies that include work-from-home, work-near-home, and general hub-and-spoke mentalities, their square footage requirements for each individual location are not quite as large.
Despite the best plans, most companies realize that now is the time to be flexible and fall will be a time for testing, measuring, learning, and customizing. Employees have become consumers and they will vote with their feet. The most successful return-to-work models will be agile enough to address the needs of their employees.
3. The suburbs are in, although the jury hasn’t decided how long. There has been suburban migration in the work area, as the data we analyzed in New York City and the surrounding suburbs shows. While demand in New York City declined in 2020 from 2019, commuter cities in Westchester, Connecticut, and New Jersey saw significant increases in demand.
Time will tell how these changes will last – whether these are actually people moving out of the city center, whether these are suburban workers who normally come to New York City but are now able to Working close to home, and whether those workers stay there in the suburbs, return to the city, or adopt a hub-and-spoke model where both are needed.
Companies and their managers should consider the human-physical-digital triad. Where do people work? How do you work? What is the desired operating model for the company considering these three aspects in connection with sustainability? This is what companies need for long-term success and future security.
You also need to listen and measure employee behavior. The spectrum of measurement strategies ranges from polls and polls to badge swipes and beyond. The advanced analysis includes app-based reservation systems and the entire IoT offering, with sensors measuring activity.
4. The tectonic shift of work caused by the pandemic has shifted the balance of power from property to people. Today employees are consumers and space is a service. Agility and scalability became indispensable for companies in the past year, regardless of whether they were built up or down. With businesses now viewing their own employees as consumers, there is a new need for human, information technology and real estate functions collaboration like never before. When companies look to the future, they need to leverage synergies across silos.
5. We are now in the hospitality game. It’s no longer about handing out key rings and pointing to the toilet location. Office must-haves are changing. The future security of our office space will take new ideals into account. They will be agile, healthy environments designed for interaction, inclusivity, and collaboration, and their success will be measured by usage. People will vote with their feet, offices and locations will be scaled accordingly.
An increase in the collaborative work areas and a decrease in the individual work areas can be expected. Employees will charge more from the office than free snack bars. Many believe that “onsite will be the new offsite” and that a targeted presence in the office will stop passive presence. Since the employees stay away to work on individual projects, the office is used for collaborative and social aspects. Maintaining continuous feedback loops and reminding you to test, measure, learn, and adapt will be critical as new standards take root.
Agility, defined as the ability to move quickly and easily, will be paramount in the post-pandemic world. Agility is in contrast to the old way of operating corporate real estate. The terms of the 10-year lease are limited to smaller and smaller parts of corporate real estate portfolios. Tomorrow’s users will expect more from office space in terms of adaptability and services. The flexible workspace industry, known for its customer focus, is ideally positioned to capture this changing demand and adapt commercial real estate to meet changing business needs.
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