Tearing Up The Office Playbook In 4 Moves
There’s a lot of talk about reinventing the office to make it fit for the future. But what does that mean in practice?
For some of the speakers at Bisnow’s Office Politics: What Occupiers Want event, this is not a case of tinkering around the edges.
“We think that the playbook has been completely ripped up,” FORE Partnership Managing Partner Basil Demeroutis said. “And I think any sense that we're in an incremental or acceleration of existing trends, I think we've got to put those aside.”
So what's the new playbook? How should real estate be thinking about offices in a world fundamentally changed by new ways of working? Here are four key factors to consider.
Forget productivity and experience, and embrace the transformation economy
“We are moving from an experience economy, where we're trying to understand and share experiences with one another, to much more of a transformation economy, where the things that we really value, that the Gen Zers and millennials value, are the things that are or have the ability to improve them,” Demeroutis said. “So that's the things that they will pay for.”
It’s not good enough to go to the top of a skyscraper, take a picture and post it on Instagram, he said; now, younger generations want to learn languages or skills for self-improvement.
The upshot of this for real estate, he said, is that offices aren't really factories for productivity enhancement, an idea that has been trumpeted often during the pandemic.
That's an outdated vision that dates to the grey-suited man image of the 1950s, though it's sociologically underpinned by some powerful economics, Demeroutis said: Wage growth has only increased 97% between 1973 and 2013. Yet, productivity grew 75%, at a time when corporate profits went up by more than twentyfold.
“So if you were to ask the people who were the subject of that experiment around productivity, how did it work out from them, I think you pretty much know the answer: Not well," he said. "So I think that's where we need to start from in terms of really thinking about space, the role space has to play and and what our responsibility is as developers and investors.”
In practice, that means office space that is as sustainable as possible, has space set aside for cultural, educational or community uses, and allows workers to feel a connection with where the building is located.
Embrace your inner steampunk
When it comes to making buildings as sustainable as possible, speakers at the event were big proponents of combining the old and the new.
“It's a bit of a crude analogy, but it's almost a steampunk aesthetic that you're seeking,” Trilogy Head Of Asset Management Laurence Jones said, referring to the look, popular in comic books, in which artists and designers imagine futuristic technology in historical settings.
“You want to champion that incredible design, the legacy and the heritage of some of these buildings, but equally, you want to make sure that they're being run as cleanly and sustainably as possible,” Jones said.
That can mean simple solutions that decarbonise buildings, like natural ventilation, or adding more technological systems, like building management software and sensors, to older buildings.
The rationale is to avoid embodied carbon, the carbon created when a new building is constructed and can account for up to 75% of the carbon emissions of a building over its life cycle, according to data from the U.S. Energy Information Administration.
“As we've kind of begun to more deeply understand the embodied carbon of foundations, structure, facades, and understand and quantify the amount of carbon that can be emitted in construction, I think we've become a lot more sophisticated about how we can articulate that to the marketplace,” General Projects Development Director Ben Cross said. “We can say to tenants, we've retained 80% of this building, so we've managed to save 4,000 tonnes of carbon being emitted into the atmosphere.”
Learn to deal with the grads coming on the building tour
A common refrain in property for the past couple of years has been that it's no longer a question of persuading the chief financial officer to rent the space, it's the HR director who must be convinced.
Now, increasingly, it is someone else that needs persuasion.
“When we’re running tours, often, it's been delegated to the younger people to start doing that first look at offices in various areas,” Ethical Property Director of Finance Cate Teidman said.
“We hear stories of viewing inspections, of occupiers looking at buildings, they'll be bringing the graduates along to to have a view on what they think of a building,” VTS Principal, Global Solutions Consulting, Sebastian Abigail said.
That changes what occupiers value when they are looking at space.
“It's not so much about the rent, rates and service charge anymore, it’s the story that a building can tell, if that fits the values of that organisation, which is more important,” Abigail said.
A building needs to have roots
In order to appeal to those values, to tell those stories, to appeal to the younger worker looking for transformation, office buildings need to become part of their communities in a way that they rarely have before.
“If I look back to some of our developments like Broadgate, when that landed in the 1980s, it was built to be really inward facing, to keep all of the community out,” British Land Office Leasing Director Amy Hockley said. “We would never do that now. At Canada Water, with our 53-acre site down there, by the time the first buildings are delivered, we will have been engaging with the local community for 10 years.”
Some of that engagement asks what local residents want to see from the spaces on their doorsteps to make them permeable and bring people in who aren't necessarily part of the development, Hockley said.
“But it's also about how can we level up in London as well as around the country." Hockley said. "How can we make sure the places within which people are located are rising up alongside what it is we're developing?”
This kind of community engagement and making a scheme permeable doesn’t have to happen only on large master-planned schemes like British Land’s at Canada Water. It can work with individual buildings, too.
One way of doing this involves putting aside ground-floor space for community uses, including office space for local businesses, FORE’s Demeroutis said.
Developers shy away from this because they think it entails freely giving away office space that could have earned a rent, he said. But it can be done by taking ground-floor space that would once have been a large, imposing but little used lobby and making it valuable to the local community.
That can also help make money.
“We've actually created dynamic community spaces inside our buildings, where we've then curated that very carefully in collaboration with the other occupiers to create something of real tangible value for them,” Demeroutis said.
“And we find that, actually, occupiers are willing to pay for that, because you're solving a very strategic problem for them around brand, around purpose. It can be quite a powerful tool if you can weaponise that and use it to really drive rents throughout the rest of the building.”