(Y)OUR SPACE IS CHANGING

Real estate is a business critical issue and is at the forefront of corporate responses to the impact of digital disruption.
Written By:
Lee Elliott, Knight Frank
2 minutes to read
Categories: Offices

Real estate is a business critical issue 

The real estate decisions taken by occupiers have never had greater strategic significance than they do today.  An uncertain operating environment, characterised by relatively low levels of growth, when coupled with wide-ranging and game-changing technological disruption, compels business to do things differently.  As a result, business-planning horizons have shortened dramatically, business models and processes have become subject to more significant and frequent change, and the talent requirements of those businesses are now markedly different from those observed just a few years ago.  

 

(Source: Knight Frank 2018, Sample = 129 Global CRE Leaders)

In response, businesses are issuing new demands into global real estate markets.  The location of the workplace; the quantum and physical qualities of the space taken; the terms on which it is occupied; and the party from whom that space is leased are all undergoing significant revision across the world.

We are at a clear tipping point in respect of these issues.  

The last twelve months has seen co-working capture the headlines and become a more prominent feature across global office markets.  Over the same period, workplace strategies have become more attune to the needs and experiences of workers, rather than focusing on physical form and ruthless efficiency.  Occupiers have also become markedly more mobile in their search for real estate that presents a clear solution to a business problem. Linked to this mobility has been the realisation of the role that real estate plays in attracting and retaining the tech and creative talent so vital to modern business success. 

So what next?  

We do not anticipate wholesale changes in the direction of travel for occupiers, not least because the twin pressures of uncertainty and technological disruption remain firmly in place.  We will move beyond the tipping point and the innovative market responses that have emerged sporadically around the world will steadily become more commonplace and representative of global markets.    

We believe the following five themes will shape occupier behaviour and distinguish between those who use real estate effectively to tackle strategic challenges and those who do not:

1. The productivity push v2.0

2. New wave technologies break existing business models

3. Corporate constitutions change forever 

4. ‘Space as a service’ becomes the demand default 

5. Mobility and mergers condition market demand 

In short, these five trends will determine the future what, where, how and why of the global workplace.  Whether you are an occupier or an investor, they will shape your space.