In a world of clicks, what about the bricks? That’s the question at the heart of Workspace Reworked, a major new report on the future of commercial property by global property consultants JLL.
While the birth of the internet stretches back to the 1990s, it’s only now that the true scale of the fourth industrial revolution is being felt. By 2020, 80 per cent of people will own a smartphone – a device now central to our everyday lives.
By 2025, it’s reckoned that half of web traffic will come from the Internet of Things, that universe of Wi-Fi enabled sensors which will allow devices and buildings to communicate and be controlled and managed remotely.
Perhaps most significant of all for commercial property, JLL’s in-depth research suggests that around a third of corporate space will be in flexible use by 2030 as businesses seek to boost productivity and value by making the most of smart technologies, smart buildings and the ability to stay connected to the cloud wherever you are.
What does a new generation of tech and a new approach to workforce management mean for the current generation of commercial real estate? Is it facing an early retirement and a dramatic fall in value amid this workplace revolution?
“Right now, I’d say it’s more of an opportunity than a threat for cities like Nottingham,” says Mat Smith, JLL’s Lead Director in the East Midlands.
“There’s no question that there is major change on the horizon. But it will take time for the way we work now to alter significantly – and in the meantime, the drive for efficiency will see occupiers consider what the optimum geography is for locating certain functions.”
For an increasing number of corporates, that optimum geography may no longer be London. Commercial real estate remains expensive there, and the cost of living for staff can be punishingly high in the capital. “I think it’s going to be hard for London to reverse that trend,” Mat adds.
While lower overheads – in terms of both rents and salaries – put provincial cities in pole position to hoover up requirements from businesses looking to reduce the risks of growth, Mat says the Nottinghams of this world cannot sell themselves on cheapness alone.
“One of the key challenges lies in attracting and retaining the right kind of people in provincial cities,” says Mat. “That isn’t just a matter of the availability of specific skills, it’s also about having the right kind of workplace culture – which also includes the office environment itself.”
JLL’s research makes clear that millennials who have grown up with technology expect just as good a UX (user experience) from their working environment as they do from their smartphone or iPad.
Mat explains: “If you visit either of Nottingham’s universities one thing strikes you and that is the amount that they have invested in creating stimulating, attractive surroundings. They are not functional environments, they are aspirational destinations which can be sold to students nationally and internationally.
“The same principles apply to employers who want to attract and retain great talent. If a professional business serves up underwhelming premises what is it saying about its own ambitions?”
Flexible workspace and smart buildings which can be efficiently managed will be a central part of this new future, JLL’s research shows. Data demonstrates that chaining staff to a desk doesn’t necessarily improve productivity, while the drive to stay agile and efficient during a period of disruptive change is seeing more businesses keep a core workforce and supplement it with freelance specialists according to demand.
This is bound to impact on the nature and size of space requirements. “But it doesn’t mean older buildings need fall out of fashion,” says Mat. “We’ve already seen examples of smart technology being used to transform the operational efficiency of existing stock.”
He concludes: “We are going to see sweeping changes in business and industry in the coming years. We’re already in the throes of the ‘GAFA’ economy – Google, Apple, Facebook and Amazon – where large-scale ‘stack’ companies lead sectors and have smaller businesses developing products and services around them.
“We will also see data-driven machine learning and artificial intelligence transform the sway some products and services are designed and delivered.
“Revolutionary as these changes appear, they won’t happen overnight and need not be something occupiers or investors fear – provided, of course, they make sure the professionals they work with understand the data which matters most, and that is how workspace needs to be reworked to meet that challenge.”
The full report ‘Workspace, Reworked: Ride the Wave of Tech-Driven Change’ is available from JLL at www.jll.com