The most likely future we see is work that will take place in a mix of remote, urban, suburban and drop-in locations as companies adopt a “hub-and-spoke” model.
Flight to secondary cities and the ’burbs
Just as the demand has risen for homes in leafy suburbs away from congested city centers, so too will more office space be needed in suburban hubs.³ We see a diffusion of work away from large-scale mega-offices to smaller, more local hubs that are closer to employees’ homes, removing long commutes but offering collaboration spaces for better social interactions. In the UK, for example, there has been a 267% increase in demand for suburban office space year-on-year, as companies flee London in search of cheaper and less congested alternatives.⁴
Dozens of cities once considered too small, too rural or too lacking in amenities and culture are now finding themselves at the top of desirability lists. Americans, increasingly freed from long commutes to and from their employers’ headquarters, are seeking homes that offer more space, better access to the outdoors, better hospitals and better schools.⁵ This shift will alter the economic and demographic balance of the country. Page-per-view property views on real estate platforms such as Zillow are up 50% year-on-year.⁶ “Even the coolest markets in America right now are generally performing well and titled in favor of sellers,” says Cheryl Young, Senior Economist at Zillow. “There’s a lot of demand for housing right now and homes are typically selling quickly for prices above what we were seeing last year.”⁷
This year’s events have already buffeted businesses with sudden regional spikes in infection and partial or complete lockdowns of targeted sectors. A saw-toothed economic recovery appears to be a feature of growth as we emerge from the pandemic. These peaks and troughs in demand require employers to build an agile cost base, and shorter, more flexible leases are already in demand. Two thirds of CRE executives in our survey (64%) are targeting lease terms of three to five years. But flexibility has to be weighed against a cost premium for shorter commitments.
We may see developers creating their own flexible office brands as they readjust their strategies to meet the demands for flexibility and on-demand space provision, or pursue partnership models.
The smart, clean, ventilated office
This year’s focus on enhanced hygiene in all workplaces is unlikely to abate anytime soon. In May 2020, the World Economic Forum made a series of predictions about the office of the future,⁸ and this report indicates that socially distanced workstations may be in permanent demand. Some modifications to workspaces — including contactless controls and simple solutions for frequent and thorough cleaning — are likely to outlive the crisis period of the pandemic. In addition, office design will need to accommodate the desire for natural ventilation, such as windows that can be opened in lieu of using sealed air-conditioning systems.
This low-tech shift is balanced by an increasing long-term demand for technology such as smart buildings that support companies’ environmental, sustainability, health and wellness initiatives. For example, a number of companies are experimenting with virtual and augmented reality to enhance the experience of virtual collaboration.⁹ Increasing use of automation and robots will help organizations support new safety standards, monitor employee footfall, phase high-intensity periods and leverage analytics to better understand employee behavior. While many companies have seen an increase in trust of employees, technology also has a major role in addressing the need for enhanced oversight of remote workers. Artificial intelligence systems can monitor keystrokes to estimate and check productivity of employees located at home, for example.¹⁰ Futureproofed smart buildings that are wired to enable increasing use of advanced technologies will be winners in this new post-pandemic era.
The employee experience
Companies competing for talent must be able to provide an attractive experience for employees — enhanced employee experience. The office isn’t just a place for productive work to be undertaken and supervised; it’s also where high-energy, meaningful interactions and a challenging work experience happen. The office is increasingly a source of value rather than a fixed cost. How this experience is defined is changing. The talent of the future will take flexible working, enhanced hygiene and first-rate digital tools as a given. But employers will also need to create a working environment that optimizes creative thinking, high productivity and teamwork.