This Is Where Office Occupiers Are Focusing Their Efforts In 2017
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There are many challenges weighing on the minds of office occupiers. From the uncertainties spurred by the political climate to the shift in office design and the amenities required to remain competitive, companies are juggling a lot as the search for qualified talent continues. Take a look at five things office occupiers are focusing on.
1. Political And Economic Uncertainty
Economic uncertainty is a top three concern of 52% of the CRE execs surveyed in a CBRE survey that tracked responses from 176 corporate real estate executives from around the country. Industries most impacted by the policies heralded by President Donald Trump include tech and finance, as the two depend heavily on the job market and are greatly impacted by any major ripples in the economy.
“Because we're late in the economic cycle, in a rising interest rate environment and have an unpredictable political landscape, a lot of industries influenced by economic shifts are being cautious now,” CBRE head of office occupier research in the Americas Julie Whelan said.
Healthcare is also an industry dealing with uncertainty. Whelan said this industry is not usually susceptible to the highs and lows of the economy and typically profits regardless of the economic cycle. But this year that is not the case, especially with Trump’s continued claims that the repeal and replacement of the Affordable Care Act is not dead.
Uncertainties surrounding the new administration’s push to repeal the law have resulted in many providers delaying plans to expand or move until they know what the replacement will be.
2. Skilled Labor
Across the board labor considerations remain at the forefront of employers minds, sometimes becoming an even larger concern than economic uncertainty, Whelan said. As the labor market tightens and the search for qualified talent in affordable markets continues, it is driving employers to secondary markets.
Another major challenge in regards to labor is the dependence of many employers on immigrant workers. As Trump’s policies regarding immigration continue to unfold, there is a great deal of uncertainty in the industry causing those jobs reliant on immigrant workers, such as the hotel industry or tech companies, to tread lightly.
“Certain industries are more dependent on immigrants than others, and tech is one of them. They use a lot of workers that come [to the U.S. on] visas; if there are any changes to those programs that could be detrimental to the tech market that has drawn job growth in an already tight labor market,” Whelan said.
3. Cost-Saving Initiatives
To remain ahead and competitive, companies are increasingly pursuing cost-cutting initiatives, such as downsizing their offices and getting rid of any unused space. This initiative is easier to pursue than in the past, Whelan said, as strong office fundamentals have made this a landlord's market.
“The likelihood for occupiers to reduce surplus space at this point in the cycle is stronger than in previous years,” Whelan said. “The supply/demand dynamic [within] most markets are landlord-favorable because supply is so limited this cycle.”
4. Search For Qualified Talent
Roughly 83% of those surveyed said they are focusing their efforts this year on talent-driven market selection.
As today’s young talent becomes increasingly more concerned with a city’s lifestyle offerings than its job market, this shift in priorities will continue to force companies to follow the talent. Office occupiers are investing millions in office development and expansion in the country’s leading and secondary markets in search of young, qualified talent.
“It really comes down to costs. Your secondary markets, from a labor and real estate perspective, are going to be cheaper from primary and gateway markets,” Whelan said.
5. Workplace Experience And Amenities
While remaining as cost-efficient as possible, 86% of those surveyed said they were working to reinvent and differentiate their workplace by promoting healthy environments and pushing for more service-oriented amenities.
Open-plan offices continue to gain momentum and remain particularly popular in Millennial-dominated workplaces where companies favor teamwork and open communication. Of the amenities most commonly provided in the workplace, those surveyed ranked the following within the top five — cafeterias, coffee bars, bike racks, showers and wellness services.
Office occupiers will increasingly look to provide under-provided amenities, which 2,000 Millennials CBRE surveyed regarding live/work/play preferences have come to enjoy. These include more green space, rest areas, on-site convenience stores, day care and other services.