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These trends are especially relevant as businesses develop RTW plans and consider how their space will be used in the future. Just as we have had to adapt to new ways of working, commercial landlords and brokers will have to evolve their real estate offerings to meet the new needs of their current and future tenants.
Ask most real estate or workplace experts and they’ll tell you the office isn’t dead, but it will have a different purpose. The focus will shift from a traditional 9-5 to incorporating hospitality services and creating truly experiential environments. What does this mean for commercial landlords and brokers? Moving forward, organizations will expect more from buildings and office spaces, predicts Steve Quick, CEO at Unispace.
“The reality is that organizations’ spatial needs have changed. Not every pre-pandemic office space looks fit-for-purpose," explains Quick. "To come out on top, landlords need to start being much more commercially-minded about how they offer up their stock, so their spaces are fully aligned with businesses’ needs and goals.”
With challenge comes opportunity, and we believe the new approaches to working will open the door to different real estate opportunities landlords and brokers can capitalize on.
Adapt and pivot
As companies look at how their workforces will operate in the future and the effects on their real estate footprint, landlords and brokers will need to be prepared to pivot to meet new demands. Quick notes, “We anticipate office footprints to be about 20% smaller as ways of working and priorities change. Even as companies grow headcount, there’s no longer a guarantee their spatial needs will grow alongside this. Being able to offer tenants more square footage isn’t necessarily going to be an advantage for landlords.”
“We’re seeing a sweeping cultural shift occurring within organizations, large and small. They are entirely rethinking the amount of time employees spend in their physical environments—and how these environments will be used to their best advantage.“
Flexibility, the new name of the game
Imagine an office environment that gives occupants the flexibility to seamlessly transform their spatial needs on an ongoing, and even daily or weekly basis. This allows them to easily allocate desks, meeting rooms, or other collaboration/socialization spaces to accommodate clients and partners who no longer have physical offices of their own.
“From our own research and what our clients are telling us, workspace will need to be more flexible and multi-use. This growing demand for a mix of fixed and flexi-space is a fundamental shift in how space is leased and operated. We’re seeing more hotel-like models emerge where the space is operated as a service," adds Quick.
While this creates a compelling opportunity for commercial landlords, it’s a huge shift from how they’ve traditionally operated. Given the recent data showing flexible workspace providers have widely outperformed commercial real estate players, it may be the perfect time to pivot and capitalize on the flexibility trend. Especially for landlords with office spaces in non-CBD locations, offering flexible suburban workspaces provide companies with options to meet their employee and business needs.
Download our location guide for more information on location strategies and flexible workplace solutions.
Reconfigure, refresh, and upgrade
Just as companies are planning their future workplace strategies, landlords need to do the same, evaluating and surveying how their tenants’ needs are changing and how to stay current with their offerings. We anticipate businesses repurposing and reconfiguring spaces rather than increasing their footprints, so how can landlords and brokers adapt to the changing demands?
Mark Allen, CEO at Landsec, the UK's largest commercial property and investment group, suggests, “the landlord-tenant relationship will be redefined following the pandemic,” and landlords will have to collaborate with their customers—rather than tenants—to better understand their needs. This dynamic is based on being service-minded in addition to providing space. According to him, wellbeing and sustainability will also play a major role in commercial property decision-making going forward.
Jason Baggaley at Standard Life Investments Property Income Trust points to several reconfigurations landlords should consider. “If we provide energy efficient buildings, we not only reduce the carbon load, we also reduce operating costs for occupiers. There is a huge benefit to productivity and individual wellbeing if the work environment has good quality air, natural light, comfortable temperatures, great showers and changing facilities, and even add-ons such as yoga studios. We want to form a sense of community in a building.”
As Covid-compliance measures will likely be an ongoing commitment, tenants will have a duty to protect their employees and may need to consider such safety upgrades or different spatial configurations when negotiating leases.
Don’t panic, but act decisively
As business leaders re-evaluate their real estate portfolios and lay out plans for their future work environments, landlords can play a critical role in the evitable changes that lie ahead for commercial real estate.
“Ten years of workplace evolution has been compressed into less than a year. It’s a shock that the market didn’t see coming," explains Quick. “There are parallels to be drawn with the emergence of WeWork, which caused plenty of sleepless nights for landlords worried about the impact of co-working on long-term leases. In fact, what WeWork showed us was the desire for more office space flexibility, a trend that has been greatly accelerated by the pandemic.”
Contact us to learn more about how these post-Covid workplace trends may impact your real estate decisions and how you can position your services to understand and meet the needs of your tenants.