CRE & the Future of Office/Work - February 2022

These are my readings and takeaways from February 2022 on the world of corporate real estate, office space and work. They come a bit later than I planned as I was out of the office spending time with family. I'm anxious to share what I've come across this month (March) and I look forward to posting when the month wraps up. I look forward to connecting with the community of people interested in these topics. Until then stay safe & healthy.

1. US Office Market: The Mostly Good News. The Worst is Over. | U.S. National Office Market Report - 2021Q4 | Cushman & Wakefield
2. In this survey on employees & the office, it was surprising which demographic was struggling most with remote work and is thus the most promising driver for return to office. | June 2021 - Experience Per Square Foot (XSF) | Cushman & Wakefield
3. Design Forecast 2022: If you need more background understanding of what ‘human centric’ design is all about... | Gensler
4. 'The Workplace Leader' Podcast Bookclub. Because we're all short on time, here are quick summaries on these workplace books. | Remote: Office Not Required & The Reset: Ideas How to Change The Way We Work & Live
5. Top tech talent is not interested in the CRE sector & how to fix it. Ever since my time as a real estate student (I'm still student in many ways) I've heard real estate is ripe for disruption. Will the hybrid work evolution be the catalyst? First we have to attract and retain the best and brightest. But how?? | Words from Lauren D.'s 2021 Q3 & Q4 Professor, Antony Slumbers, co-founder of Real Innovation Academy
6. If you could work from anywhere in the world where would you go? Here's a guide on the best places to work remotely according to Kayak. Do you agree? Where does your country fall on the list? | Kayak Work From Wherever Guide

US Office Market: The Mostly Good News. The Worst is Over. | U.S. National Office Market Report - 2021Q4 | Cushman & Wakefield

Trends to what in 2022:

• Omicron variant delayed return to office
• Large occupiers continue to invest in the office
• Leasing activity still rising?
• Job growth & government infrastructure spending is increasing demand for office space
• Decreasing demand for office space is inflation (read my linkedin post about it) & covid uncertainty?
• Office space suppliers will have to respond to demand for office sustainability, building quality & amenities

The bad news:

• Net absorption remains negative meaning more office space is being vacated than office space being leased up
• For tenants/occupiers: you might expect rents to decline in this market, but rents are still high due to new construction coming onto the office market and, as usual, they’re being priced higher than the older inventory.? But no one says you have to pay asking rent prices.

The good news:

• Job growth is expected to continue and office-using employment is expected to reach pre-pandemic levels by midyear, if not sooner.
• office tour activity has returned to near pre-pandemic levels
• Throughout covid, occupiers were seeking long term leases.? Leasing activity 2021Q4 was 29%+ than 2020Q4 and net absorption was 75% higher for same period.
• The increase of vacant office space has slowed to the smallest increase since the start of the pandemic, so the office market might be making a turnaround. Vacancies may begin to decline.
• Positive net absorption in the US South and West.? More office space is being leased than vacated.? First time since the pandemic began.? Editor’s Note: could it be the nicer weather ?? for commuting to the office in the US-West & South.
• Office space across the entire US is being vacated at the slowest rate since the pandemic, so we may see the entire country again leasing more space than vacating.
• Tenants/occupiers have leverage in the market and concessions packages are looking nice right now to entice leasing activity.

Survey on Employees & the Office | June 2021 - Experience Per Square Foot (XSF) | Cushman & Wakefield

• 78% want remote work policies where the office remains a critical driver of culture, learning & personal connections.? The Americas region wants this the most (80%) and APAC region wants this the least with (70%), but still a majority.?

• People perform best when they are given the choice of where they want to work. Employee experience quickly deteriorates when employers try to control and schedule when employees come to the office
• Employees who frequently choose the office have the best experience.? Choice to return to the office is a part of the equation, they also need an office that supports access, productivity, connection to colleagues, engagement, energy and wellbeing.
• The newest hires are doing just fine with remote work.? It’s those with 3-5 years tenure at the company that are suffering the most.??3-5 year tenure employees are the largest group of employees and they are a positive driver for return to office.

Design Forecast 2022: If you need more background understanding of what ‘human centric’ design is all about... | Gensler

Human-centric design is...

• Pro-ESG (environmental, social & governance) buildings will be easier to finance and lease. #AttractsTenants

• Better for well-being → Example 1: better indoor air quality (IAQ) → =better employee performance & fewer sick days taken?
• Better for well-being → Example 2: ?? Biophilic design???? →can lower stress and anxiety and can also #attractsSought-afterTenants and higher rental yields
• Addresses equity & inclusion → Gender-neutral restrooms and other common areas #AttractsTenants

• Real estate is the stage on which life is lived?

'The Workplace Leader' Podcast Bookclub | Remote: Office Not Required & The Reset: Ideas How to Change The Way We Work & Live

• Recommendation from The Workplace Leader podcast episode #46 “The Rundown on how to prioritze workplace transformation with Sabine”
• Allowing employees to work remotely is a great way for companies to keep the best and the brightest employees.
• Remote work gives employees the freedom to be productive and have a life outside of the office.
• Remote work improves the quality of work done by eliminating common office distractions?
• Neither face-time nor desk-time = productivity so give remote work a chance.
• Take it slow. Test the waters to see if remote work really works for your company.
• Make sure collaboration is happening effectively between remote workers and other employees and clients.
• Remote workers can simply work 24/7.? Nurture social time and bonding too.
• While some believe that remote workers don’t work as much as in-office workers, the truth is remote workers have the risk of burnout from working too much because they aren’t bound to normal work hours.
• Modern technology allows both employers and employees to benefit from remote work.? However, the remote work dynamics differ from normal office routine so managers need to rethink how to keep everyone happy and productive while remoting.?

• The book came about after Elizabeth (the author) read a stat that people across all demographics were dissatisfied with work, leaving the workforce and starting their own businesses.
• She pitched the book originally under the title “Out of Office: When Work Isn’t Working”?

The book's themes: there’s no one size fits all, culture, we need a new social contract at work facilitated by community managers, the link between trust and productivity

• Being able to bring your whole self to work improves the quality of work overall.??
• How much of yourself that you bring to work is an individual choice.? Some people prefer to bring their whole self to work.? Others prefer to keep their professional life and private life separate.
• Having to perform a character at work takes a toll on mental health and wellbeing
• The culture chapter was the hardest for the author to write because culture is not tangible
• We can’t have a diversity manager doing one thing and the rest of the company is doing another.??
• But we tend to do this by mistake because culture, inclusion and diversity are not tangible, so we look to a person to be there for the company.
• You can have ping pong table, paid trips, fridays off, but if you turn up to work and don’t feel appreciated for the work that you do, if your boss doesn’t treat you right, then those things will never compensate for your lack of feeling like a valued employee.
• Good culture is feeling like you’re on the same page as your colleagues and working toward the same mission.
• Lockdowns & subsequent remote work revealed who had invested in good culture and who was just handing out perks.
• How to create good culture?? Democratization of information.? Everyone feeling informed and included in the communication about what’s going on in the company.? Information is currency in the workplace.??
• Exclusive conversations are okay if they’re water cooler conversations that lead to bonding.? But not good if they lead to siloed information.
• Top-down approach is not good if employees feel like everything is only going 1-way and that bottom-up communication is not an option.??

“Yes, we’re here to do a job, but we’re here to do a job where we’re both invested.”

• Community managers help create the 2-way social contract at work that employees need to feel engaged.
• We mistakenly value control more than we value trust and that’s a disservice to work.
• There’s a difference between checking in and checking up on someone.
• We’ve seen the increase of surveillance devices at work on employees.
• Employees always feel they’re in debt to their employers, there is some of that, but we are not just cogs in a machine.? You’re a talent.? Advocate for yourself.? If you don’t ask, you don’t get.? Match jobs with where you want to go in your career.

Top tech talent is not interested in the CRE sector & how to fix it? | Words from Lauren D.'s 2021 Q3 & Q4 Professor, Antony Slumbers, co-founder of Real Innovation Academy

• A “prominent, global tech venture capitalist” said the above on LinkedIN.
• Where does top talent go?
• Where the money is–Big Tech.? It has the most data and the biggest audiences so their talent can be leveraged most effectively.
• Academia
• Deep Tech–cutting edge areas of AI or synthetic biology
• Where the best storytelling is.? Where they believe they’re creating the future or changing the world.? E.g. The crypto industry

The case for why real estate should be more important...

• So the real estate industry should be awash with top tech talent. After all no industry has as direct an influence on the health, happiness and productivity of people as does real estate. All the people of the world are inside real estate some 90% of the time, and the space directly around them has a defining emotional, social and functional impact on them. If you want to change the world nothing beats real estate.
• Real estate is not more important because we only give customers what they need not what they want.
• Also to give the customer what they want, you have to envision for them what they want and then impose your will on the market, convincing it of the rightness of your vision.
• The real estate industry needs to start appreciating and encouraging its visionaries. We need people as committed and convinced of the rightness of their vision as Jobs was at Apple.
• The fundamentals are there:?

“We know how to design beautiful buildings. We know the desperate need to decarbonise the built environment, and we know how to enable people to be happy, healthy and productive, their best selves, inside real estate. We even know that, though rare, enlightened financiers do exist, and can make this happen.”

The best places to work remotely | Kayak Work From Wherever Guide