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Data & Technology

Are we seeing the end of traditional office spaces?

The nature of work has evolved from the industrial age, through the information age to the conceptual age. As work continues to evolve, how will the workplace change for today's workers and tomorrow's graduates? The pace of change has been accelerating. What will people do in the offices of the future?

Amie Silverwood, Content Manager - Communications and Media, RICS Americas
18 June 2019

More than 80 percent of the U.S. workforce would like to telework – an attractive option for employers who could benefit from a potential annual saving of $50 billion USD in office costs. Augmented reality, or full virtual reality (VR) can allow workers, service providers and clients to meet in virtual cyberspace, so why do we need office space at all?

The nature of work has evolved from the industrial age, through the information age to the conceptual age. As work continues to evolve, how will the workplace change for today's workers and tomorrow's graduates? The pace of change has been accelerating. What will people do in the offices of the future?

The workplace of the future is a hot topic in the world of investing where businesses seek to gain a competitive edge while minimising costs, increasing agility and attracting talent. PropTech and other new technologies offer solutions to make workspaces more responsive to occupier needs but as spaces get reinvented regularly, are traditional real estate categories still relevant?

Tech advances eyed with suspicion

While pressure to innovate and embrace new tech solutions is putting additional strains on the workforce, predictions of doom are misleading. Automation and tech advances won't eliminate the total number of jobs – for every job lost to automation, more will be created in new fields. Uniquely human traits like analysis and innovation cannot be replaced. There will always be a need for humans behind the machines, but the machines can allow humans to focus on more meaningful tasks.

The jobs of the future will be less fixed – they won't fit current job descriptions. Workers will need to embrace lifelong learning and retrain regularly to keep their skills up to date in the dynamic workplace. On a positive note, learning new skills has never been easier thanks to remote training options and access to a world of information at our fingertips.

Building agility into the workplace

Not only will workers need to retrain but workplaces will need to be reconfigured to be more flexible to accommodate the changing nature of work. Tech tools allow asset managers to match supply with demand and find new uses for available space. Industrial space is being used as office space, hotels are being used as entertainment space. Any underused space can be harnessed to fill a need.

"The wave of flexibility is apparent everywhere," said Dror Poleg, Founder of Rethinking Real Estate at the World Built Environment Forum Summit in New York City in May. "It applies to the whole market. In New York, more than 50 percent of the leases signed each year are flexible."

Though leases are being rewritten to make them more flexible, this trend is rolling out slowly because it takes time for old leases to time out and get reconfigured. Beyond flexible leases, companies are finding innovative ways to build agility. They're still trying to make predictions on how much space they will need in five to ten years but occupiers are also forming new partnerships that allow them to expand and contract as business demands. This might mean companies are sharing space with others – even within the supply chain and logistics, companies are coming together to make better use of underutilised space and find efficiencies to allow for growth in markets with a tight supply of industrial space.

Attracting talent in the gig economy

Companies are scrutinising workplace culture to appeal to talent through digital technology, self-service and partnering with service providers. Investors know that if they want their investment to pay off, they need to accommodate a sense of live, work, play in the office.

Though we may credit young workers for championing fun, Baby Boomers, Gen X and Millennials all appreciate a good mix of work and play. As real estate becomes more fluid in its uses, investors and occupiers are increasingly reliant on technology to add agility to office space.

"Technology is essential," says Maureen Ehrenberg, Global Head of Facility Management Services at WeWork. "There are some great things we've been able to accomplish with simple technologies and the greater ability for companies to embrace the gig economy."

But with a move to the gig economy putting many workers on short-term contracts, what's the use of having an office? Will offices be outdated in 2050? It's likely there will always be a role for the office experience in some aspect – but it will be a digital upscale of the traditional model. Workers on short-term gigs benefit as much as long-term workers from the sense of place and community that comes with a physical office space.

The office's purpose is shifting. Many employees work from home and come into the office to connect with others rather than to work at a fixed cubicle or behind a closed door. Dynamic workplaces match employees with a workstation or work environment as required – a meeting space, shared space or quiet corner. Employers are recognising the need to accommodate different workstyles and office space must reflect this changing need.

However, companies aren't ready to ditch office space entirely. They're looking for the right balance between remote work and bringing people back to the office, even in the gig economy. This fine balance isn't an easy one to get right – or get the analytics to back up gut feelings that productivity is higher in one place or the other. At the World Built Environment Forum Summit 2019, Poleg mentioned even Google has acknowledged that measurements of productivity aren't reliable – they survey their employees to find out how productive they feel.

Technology is essential. There are some great things we've been able to accomplish with simple technologies and the greater ability for companies to embrace the gig economy.

Maureen Ehrenberg
Global Head of Facility Management Services, WeWork

Opportunity to increase wellness

The debate as to whether remote workers are more productive than the full-time office workers isn't clear cut but the benefit of bringing workers into an office environment is that employers can invest in productivity measures that have proven to work, such as increasing fresh air, light and access to exercise.

There is an industry shift from being property-centric to people-centric as occupiers spend 10 to 15 percent on buildings and energy but 85 to 90 percent on their people. Even modest wellness improvements can have significant returns but such benefits depend on employees coming into the office. Harvard research suggests green buildings improve occupants' cognitive performance by around 60 percent, equivalent to up to $6.5 thousand USD annual productivity gains per worker.

However, wellness improvements are not a one-size-fits-all solution. Most offices in the world are designed for an average worker but there's no such person as an "average" worker – looking at wellness through such a lens is ineffective. Flexible spaces are key – allowing workers to choose the right environment for the task at hand or to fit their comfort. In recognition of this need, hybrid strategies for the workplace are becoming the norm in the public and private sector.

There will always be an appetite for shared environments where workforces can work together. However, to stay relevant building spaces will have to be flexible enough to fit the needs of the occupier today and tomorrow.