The COVID-19 pandemic has dramatically changed where, when, and how people work. Most who have now experienced remote working are questioning the ways we used to work and the purpose of the office. Answers to these questions will have repercussions for the future of our cities.
Even before the pandemic, the traditional meanings of the workplace and the office had been reshaped by technology. With good connectivity widely available, easy access to the internet, and effective cloud computing, any space could become a workplace. Once the pandemic forced a work-from-home requirement, employees proved to holdout employers that they could meet their deadlines and work obligations while working remotely.
As a result, the pandemic is disrupting the commercial real estate industry that has long rested on its laurels, believing that businesses required roofs over their heads to carry out their operations. Just as other companies have had to grapple with changing customer needs, commercial office space providers have now been hit in a momentous fashion by the need to become customer-focused.
These days, consumers are less likely to take on long-term lease commitments and demand greater operational-type services based on user experience and well-being. For commercial real estate companies and corporate real estate departments, this will require a shift away from the long-running business model of “build it, and they will come” to taking on more responsibility for workplace effectiveness.
The emerging landscape of a “liquid workforce,” with companies becoming more reliant on talent who work on contract, has already reshaped how businesses consume office space and led to a burgeoning alternative office market. Witness the influx of flexible workspace providers, including WeWork (with 625 locations in more than 127 cities in 33 countries), Convene, LiquidSpace, Knotel, and The Office Group — all jostling to get a piece of the flexible space action. This trend opens up a completely different range of possibilities. For example, flex-space product offerings could run alongside traditional leasing models.
Commercial office space suppliers must now work in new ways with consumers to provide product offerings better suited to delivering tangible business value. This also means that, on the demand side, business leaders must focus on the actual needs of their enterprises — as opposed to simple headcounts. This will require reviewing how their internal support functions enable work and productivity. The status quo of static office buildings where workers are confined in a sea of cubicles needs to be reimagined with a people-centric focus that offers smart and agile alternatives.
In reimagining the post-COVID-19 workplace, characteristics of a new, responsive supply model can include:
1. Inviting input from a broad spectrum of stakeholders. A new office supply model that allows input from multiple perspectives can replace the outdated and one-sided landlord-tenant relationship. Instead of a linear process, it will enable a fluid and flexible system for the provision of offices that meets the demands of a distributed and engaged workforce. This will shift the paradigm to a more customer-focused relationship, and clients will receive real value-added services.
2. Creating alternatives to traditional leasing. While the conventional vanilla leasing system will continue, it likely won’t remain the market’s dominant component. Property owners could develop portfolio-wide propositions for customers as an alternative, or extension, to the long-term lease offer.
3. Looking beyond the building. Landlords tend to focus only on construction, build-out, and leasing of their office spaces. On the other hand, tenants need to understand better how a building enables employees to perform their best work. By closing this gap and shifting the thinking beyond a traditional deal-oriented mindset, landlords can offer space as a service that helps enable their tenants to work efficiently and effectively.
4. Upgrading property management services. Customers now expect a consumer-friendly digital presence to facilitate service delivery. International property databases such as Proptech are driving the availability of accessible information, including providing a reliable and accurate picture of the value of real estate. They have accelerated property transactions considerably, and expectations for digitalized services now need to be met.
5. Upholding corporate values. User experience and well-being and sustainability concerns — such as transforming buildings to reduce emissions or limiting the use of harmful materials — have become critical corporate responsibility considerations. The global community is increasingly discerning about the environmental and ethical practices of employers and auxiliary service providers, which extends to the real estate management industry.
Employees’ ability to work remotely during the pandemic signals that it’s now possible to consider various operating modes. Suppliers of office space, to remain relevant, must move from a building-centric mindset and come to terms with changes in customer needs. Reimagining the workplace in the post-COVID era will require applying a holistic perspective and providing choices for more agile 21st Century enterprises.