This isn’t an acceleration, it’s a revolution.
Antony Slumbers
Keynote Speaker. Creator of the #GenerativeAIforRealEstatePeople Course | Master Generative AI in Real Estate: antonyslumbers.com/course | AI won’t take your job—someone using AI will. @genaiforrealestate on Instagram
The office real estate industry is set to be transformed.
In the world of work and the workplace there is a fundamental misunderstanding going on. Many people are talking about changes to how we work, post pandemic, as being merely an acceleration of trends that were already underway. They are not. In fact, we are witnessing the start of a revolution that will utterly transform the dynamics of the industry.
Pre pandemic it is true that many companies had adopted a smattering of remote working and working from home. In a city like London it was common for many employees to only be in the office 4 days a week. And then the pandemic hit, and we all (with caveats of course) moved to five days a week working from home. A year later the common refrain is that when we return to the office we will adopt some form of hybrid working, where some are in the office and some not. A smorgasbord of working patterns will emerge.
And this is where the misunderstanding will rise up and cause chaos. Because we are thinking this is an acceleration, we think it's just an iteration of the way we worked, and companies operated, up to March 2020. Everything stays the same but we throw in a bit more flexibility and remote working. After all, haven’t we all been working like this for a year or more?
No is the answer. Today we are all working remotely, so the expectation is that everyone is easily contactable because they are at home. But when we return, and go hybrid, we will not know where anyone is. They might be at the office, or they might be at home, or in a coffee shop, a local flex space, a hotel, or a clients office, or wherever. And here the chaos begins. We could function easily remotely because all being at home was like all being in the office. We’d just reconfigured life as it was, as a fundamentally office centric company. Nothing really had changed. Hence the idea of an acceleration, just a bit more of what we were doing anyway.
But this is no acceleration. It’s a revolution. We are going to be moving from being office centric companies to WFA (work from anywhere) companies. And that cannot happen without major, disruptive, change.
Just look at the headlines about Zoom fatigue, back to back video calls, the merging of home and the office (‘I live at the office’ etc), an inability to turn off, to separate home and work life. These are all the consequence of the ‘acceleration’ misunderstanding. They are what happens when an office centric corporate way of live moves, en masse, out of the office. We are working to the same patterns, but somewhere these patterns should not be. It’s bearable when we are all in it together. It will cause chaos when we are not.
The revolution coming will be the result of having to change how we operate, as individuals, and as companies, when we move to hybrid working. When should we be in the office, when somewhere else, and where somewhere else? Who’s going to bring in and bring on new employees, who’s going to mentor them? Most of the senior management team are more than comfortable working mostly from home, whereas those in their earlier working lives want to be ‘in town’, not least because they are going out after work. Is the office just somewhere for the young? What about culture? That used to be understood through the acquiring of tacit knowledge, from just being around and seeing how things work. But people aren’t around so much now, and work is being done out of sight.
In every aspect of company life, being structured as an office centric company whilst not being in the office, is going to give us the worst of all possible worlds. No serendipitous meetings, no water cooler meetings, no overhearing that nugget of information, no learning from observing. During the pandemic it was fine. We knew where people were and we could get hold of them immediately. Even if that meant endless Zoom meetings, longer days, no separation of life and work, that’s what we did. Because in the office we could do this. See anyone straight away, tap them on the shoulder, disturb their flow, talk too loudly and ruin their concentration. Yes, everything we did was synchronous. I want to know this now. I want, I want, I want….. now.
It’s just not going to work is it? If we go hybrid post pandemic we need to rethink everything about how our companies work and operate. We need workflows that suit the way we work. And those office centric ones simply won’t cut it anymore. And, as we will see, our real estate won’t cut it anymore either. We are about to blow up the real estate industry. Without realising it.
Where to start? As Steve Jobs famously said ‘you have to start with the customer’. Within our companies, to understand what we need from our offices, those customers are our employees. Without knowing and understanding their needs your future office plans will be dead on arrival.
For every employee you need to first understand what it is they do, what are their ‘Jobs to be done’. Their job will be made up of various tasks, and each task will have an ideal working environment. Each task will also have other dependencies, such as the need for particular software, hardware or services. And, of course, each task will either be able to be carried out alone, or will require the presence of other people. Map these out for all your employees.
From data can flow action. With all this information you will be able to answer those questions about who needs to be where, and when. And what data they need access to, from where they can get it, and where does it need to go after they are finished with it. And from all of this it will become clear what systems you need, and what ‘jobs to be done’ need to be done synchronously or asynchronously.
This is how to think as a hybrid, non office centric company. Get this data analysed well and it will inform so much about how you need to operate. Not least of all it will transform how you think about your office needs. Almost certainly this will involve a realisation that you need less but better space (for which you will probably have to pay more), most likely in diverse locations and procured on different terms.
I would wager it would convince you that henceforth you should be thinking about ‘Space as a Service’, where you purchase what you need, when you need it. And that might be five days a week, or it might be 1 day a week. What you consume needs to reflect what the needs of your ‘customers’ are, your employees. Your aim is not to have to think about real estate, your job is to enable your employees to be as happy, healthy AND productive as they can be. You want to be people centric, not office centric.
When the above occurs, as it will, the current business model of the real estate industry falls apart.
The way it works today, and has done for decades, is that the customer of a developer of office space is not the occupier, but the investment community. Buildings get funded (largely) by long term investors, like Pension funds. They want income streams that are secure, steady and reliable. They don’t want risk, and they certainly don’t want any out of the box innovation or new thinking. They want to buy a Bond. And for decades that is what the industry has delivered. Buildings where large sums of money can be parked, secure in the knowledge of quarterly rents being paid.
See the problem? Given what we’ve discussed about what companies (occupiers) need in the future, these two requirements are about to clash. One wants steady inflexibility, the other dynamic flexibility. One side is not going to get what they want.
Hence the coming revolution. Because there is a confounding variable which tilts the balance strongly in one direction, that of the occupier. And that, of course, is that over the last year, with probably another 3-6 months more to go, almost every knowledge company (aka office centric company) has realised that they can, should they need to, run their businesses away from their offices. To many it has come as a huge surprise that that office they felt was an essential need, is actually not as needed as they thought. It is very likely that they still want an office, but want is a different driver to need. Things you want but don’t need demand different terms.
And flexibility is what the non office centric company needs. It is well known that flexibility always comes at a price but when it comes to real estate, for a company, flexibility probably trumps price.
So what happens now? Is the elephant in the room being addressed? I think not. The investment community is wedded to a business model that suits an increasingly diminishing section of the market. The real estate leasing industry is still, mostly, talking of occupier needs for workspace that don’t tally with reality. Or at least the post pandemic reality that is lurking unseen.
There is a square that needs to be circled. Structurally the industry is not shaped to provide what the customer wants anymore. As long as we pretend that what is happening in the market is just an acceleration of existing trends we can sleep tight and ignore the brick wall we are careering towards. But if we open our eyes and understand that the days of office centric companies are over, we can start planning for the revolution underway.
People are not, by and large, going to go back to being inmates of white collar factories. They want something better. They need something better. And, given time, they will get something better. But it’s not going to just happen.
Something always sparks a revolution. That spark will light when we ‘return to the office’. And discover, it’s no longer fit for purpose.
Antony
Join Dror Poleg and I on the #FutureProofOffice course which starts April the 5th - details here www.realinnovationacademy.com
Planning permission expertise | design sports facilities for schools+clubs | renovation+ retrofit for sport | design advisor | develop design briefs | best selling author | speaker | expert witness | lecturer | examiner
3 年Antony great article. I think your point about working from home and the lack of opportunity to collect nuggets of information or have serendipitous meetings especially applies to graduates, who need mentoring. I wonder if those large plate, central core, inflexible office buildings with natural light only at the perimeter and mechanical ventilation will need a complete rethink about how they are designed and how they can be adapted to meet customer needs and accommodate the space as a service idea? I also wonder if organisations will be split into smaller teams and work from hubs in the suburbs say where there is less commuting and the buildings can have smaller footprints and natural ventilation as there is less traffic, noise and pollution. Organisations could have a smaller central hub in the inner city which is redesigned with a special offer (ie a truly great designed environment) to attract employees to travel there.
Real Estate Portfolio Management and Transaction Services at Omnicom
3 年Anthony, plenty of points to ponder & digest as always.?Ubiquitous focus on customer centricity and digitalisation will undoubtedly help reorientate value chain over time around the end users of space.?Dichotomy in the disruption faced by the property industry and most other industries highlights potential for a major paradigm shift / revolution ahead … how long do you think it will take for investors to reorient from product centric to customer centric business models ??? ... does limited supply change timeline ? Many fascinating ideas being written about the future of work, will ability to balance talent in the cloud with meaningful physical interactions determine future success of WFA as a workplace strategy ? Has there ever been a better time for CRE executives to explore reimagination opportunities or to champion ideation / co-creation exercises with their peers ?? Best Stuart #occupierworld?
Senior Strategist + Passionate EHS & Sustainability Advocate + Global Belongingness Team Lead + Leadership Development Coach
3 年it certainly piqued my interest - an interesting read.
Strategic Account Manager at CORT
3 年The change is going to be driven by the employees. As employees start returning to work the most common thought that is going to happen. “Why am I here?” As this thought multiples across the workforce it will shatter the current office centric workplace. Commercial Real Estate is standing in front of a tidal wave!