The last twenty years have brought regular warnings about the impending ‘death of the office’. The rapid onset of technology, its impact on the tasks we call work and the rise of an often remote, sometimes nomadic, workforce have all been suggested as forces of terminal decline. 

Yet such warnings have been misplaced. Occupation of, and investment in, office space continues to boom across global real estate markets. 

What has occurred, is not the redundancy of the office, but instead a shift in its form and function. Historically, investors have focused on driving investment returns rather than best servicing their tenants' needs. However, this is quickly changing as investment returns are increasingly becoming more aligned with the satisfaction of tenants within a building. 

Presently, the office is being reinvented in three ways:

1. The office as an experience: The key finding in our recent (Y)OUR SPACE report was that occupiers are using the office as a strategic device, and particularly in order to attract and retain talented workers. As they have done so, the office has become a highly curated, well-serviced experience supporting the well-being, productivity and creativity of staff. No longer a container in which to place people, the office is a dynamic, vibrant experience requiring active management.

2. The office as the nucleus of innovation: Business success today is contingent upon the ability to bring innovative products and services to market ahead of the competition.  As a result, occupiers are reinventing the office as the hub whereby that innovation – through increased interaction and collaboration – takes place. It is about social spaces whereby people collaborate to innovate.

3. The mixed-use, amenity rich office: Both of the above trends create a third source of reinvention. As the office becomes a people-centric experience aimed at driving productivity and innovation, it is dependent upon the ability to truly and broadly support people. Consequently, best in class offices are now rarely single-use assets but are instead, mixed in use and rich in amenity. Twenty years ago, many investors regarded the placing of retail on the ground floor plane of an office building as madness. Today, around the world, the office is an integral part of a richer urban environment whereby a variety of retail, leisure and non-commercial uses sit cheek-by-jowl with reinvented office spaces.

Investors are reacting to these trends and undertaking investment strategy reviews with this in mind. Whether this be by implementing their own co-working operation or rethinking the potential layout of future development, investors are focusing on trying to keep their investment relevant in today’s flexibility driven occupier market.

But it is not just the office market that is being affected by the changing dynamic towards real estate as a service. The residential and specialist sectors are evolving to become as much of an operating company play as it is a direct real estate play. Although this comes with an alternative type of risk, investors are realising that investment returns in these sectors have a large reliance on the performance of the service component of these sectors.

Amid all of these changes, technology is becoming more and more important for helping investors to undertake the service component of their real estate offering. Data driven optimisation is helping investors and occupiers alike to respond to the challenges and opportunities of the digital age. As disruptive co-working operators have already shown, building and occupancy data can be used to enhance the day to day experience of customers (occupiers). This is helping investors to make their space have the greatest appeal to current and prospective future tenants.

As the service components of real estate develop further and greater levels of data is collected, investors will be able to monitor the physical and financial performance of these real estate offerings. The result will be that investors will be able to better implement their investment strategies and provide their occupiers with enhanced customer experience.