Whether fad, trend, or evolution, changes in the way we work are changing real estate needs and how we interact with each other.
This year marks my 27th year of exclusively representing the needs of the space consumer, the tenant. (It also marks a milestone birthday that I’m not too excited about!) Over the past 27 years, I have seen quite a few fads and trends that have evolved the way business is conducted. While you can harbor an opinion about whether business has evolved for better or worse, what’s most important is how you adapt to it. What does it mean for commercial real estate that many companies offer options to work remotely? As companies eschew hierarchical structures, how do we respond to their desire for open plan space? We need to be thoughtful about these cultural shifts in the lives of the working professional—be they fads or trends, or whether they are fundamentally altering the way we work forever—in order that we respond with the right solutions. Let’s look at several.
The “E”-Black’s Guide
The main disrupter out there is, you guessed it, technology! Remember Black’s Guide? Prior to CoStar, this big book (often comprising outdated information) was our source for understanding space availability in a given market. Consider for a moment how quickly space turns over and new developments pop up. How did we successfully navigate the competitive world of commercial real estate without up-to-the-minute access to this information and data? Well, we talked. Tenant representatives and leasing agents connected constantly and perhaps had a better appreciation of the market in those days. Now, it seems we find ourselves in an email banter regarding availability, appointments, and inaccurate CoStar listings. That said, we are infinitely more responsive and prepared to match client needs and requirements with available space. Combining real world connections with online resources may be the best of both worlds.
The Remote Worker
The sophistication and development of technology has necessarily evolved the concept of yesteryear’s Telecommuting Center. Perhaps you can recall about 20-plus years ago when corporations and government agencies in large urban areas strategically placed open concept offices in nearby suburban office centers so employees could take advantage of the option to reduce travel times to the office a day or two a week. Fast forward, and we have significant numbers of individuals working from home or other local spots. A Gallup survey released in February 2017 indicated “43 percent of employed Americans said they spent at least some time working remotely.” This is a true game-changer, impacting everything from a corporation’s footprint to an organization’s culture to transportation infrastructure.
The Open Plan
Arguably, technology has allowed us to be more social and connect more often, and this has allowed people to be disparate—and yet, in touch. Corporations, in the effort to be more collaborative, (to perhaps flatten the hierarchy and demonstrate goodwill toward all ideas) have embraced the concept and practice of the open plan, an important divergence from the cubicle farm. What does this mean for commercial real estate? It may mean that plans—and space—need to be flexible to encompass and encourage varied working styles. It could mean more space for sleek furniture that defines and enhances collaborative spaces within the space, while offering teams and individuals enclosed areas to meet, to have private conversations or to just find some peace and quiet for a few moments. How do you think office space will continue to evolve?
The Consolidation Trend
And what about the trend of companies questioning redundant functions and consolidating services and offices? It was actually not too long ago that sales offices, regional headquarters, and client proximity sites blanketed the corporate real estate landscape. But now, technology, as well as a focus on EBITDA-driven valuations, and a persistent driver to cut costs often has real estate on the cutting room floor. Today, office centers are centralized around a smaller labor force and the convenience of transportation, which necessarily means smaller corporate footprints. Let’s be honest with ourselves—this will not reverse course, so how do we capitalize?
The Commoditization of Outsourcing
Core to the original intent of the outsourcing solution was the promise that you could deliver value-added services to clients who needed to augment and improve their real estate operations. Unfortunately, over time the commercial real estate industry has cannibalized itself with low-cost solutions, inexperienced labor, and low margins. In such a climate, the client doesn’t see return on the promise and our industry’s reputation suffers. What can we do to reverse this trend? Actually, it’s a simple old-fashioned solution: be honest. Be honest about the true cost of service delivery and remind the client of the always-true you get what you pay for adage and practice excellence. Could this be a new adage: engage those with expertise and core competencies to find the right solution, not the cheapest?
The Casual Friday
And now to the most profound culture shift: the “dress down” day. Oh, not too long ago, I recall being told I could “dress down” on Fridays (assuming no client interaction was scheduled). I didn’t know what it meant exactly, so for the first year I went sans tie on Fridays. Now, it doesn’t matter what day of the week it is—cargo pants and flannel shirts are haute couture. Is the casual everyday here to stay? Likely. What does it mean for commercial real estate? It means we need to acknowledge that while the rising generation may eschew traditional formal business wear, they seed brilliant business ideas and need the space to invent them. (Still, could we start a new Throwback Thursday concept? Everyone wears a suit to work? I’m in.)
Those are just a few of the shifts I have witnessed and from which I felt an impact. Of course, I do not know what to expect 10 years from now, but I do caution that we embrace the world we live in and respond and/or adapt thoughtfully, as we want to be part of the evolution, not the devolution.
Frank McCafferty is the executive managing director and co-branch manager of Savills Studley’s Dallas office.