I sketched this blog on paper. I wrote down the goal, wove the thread of the story and jotted down conclusions, with a blue fountain pen, on an A4 paper. Microsoft Word hasn’t replaced the hand written word.
Every now and then, a product that has served the same function for eons, will suddenly quake and tumble, and transform into a new beast. So happened to the concept of words on physical paper, and so is happening to corporate real estate (CRE).
I create content for REWORK events, summits that tackle the topic of future work and workspace. I’ve had a front row seat to the shift in CRE business, and what I’ve observed is a transformation from a commodity business into a service one. In a nutshell, CRE has, for centuries, been space to store the products of work, to store the tools of work and to do the work. Thus, simplified, the demand for space has been tied to a user organization’s number of people, products and tools. Simplified, the supply to the demand has been about accommodating that number of people, products and tools, in a set location.
But the need is fast changing. Number of people is no longer tied to number of people in one location, tools and products are mostly digital and bites don’t need real estate in the traditional sense. User organizations have a diminishing demand for space. Value of CRE is an important factor in our economy, and its devaluation, that would follow a declining usage of CRE, is not an option. We must inspire a demand and make sure our supply fits.
I’ve defined three key factors to the future of offices: What space could now be for users, the psychology of choosing a space and who can provide desirable space.
Space could, and should be, a tool for brand
Competition is tough and getting tougher. The global market place demands thought provoking personality for a company to stand out. Something that was not the requirement, and could even work against a brand, just a few decades ago.
Today is different: everything in a company should be reigned in and pushed to support a recognizable brand. As space has been freed from pure need, we can repurpose it for the use of internal and external brand.
Employees want to give their all to a company whose objectives they believe in, new talent gravitates towards enticing stories and clients want to work with organizations that stir feelings and inspire to innovate. A great way to remind employees of what they’re working for, is to create a working environment, that carries the personality of the organization, and reminds about larger objectives. The story-like quality will speak to new talents as well. New prospects are easy to get to a meeting, when the meeting premises’ visual identity reminds them of the people you are.
Certain elements in the workspace can also communicate your care for your employees. A Big mis-understanding of 21st century office design, is those ping pong tables and popcorn machines you see in big tech offices, like Google and Apple. They are not there to make work ’fun’, like fuddy-duddies tend to assume, but to demonstrate trust in employee’s ability to moderate and manage their own work. They’re a great way to visualize an otherwise hard-to-define concept.
When you don’t have to go to an office, which office do you choose to use?
As work becomes mobile, and teams decentralized, you have to consider which spaces the workforce chooses to work at. When satellite offices aren’t offered by the employer, home offices and nearby cafés are to norm. Their attraction is obvious: comfort, nearby location, services and people you like (neighborhoods and cafés have a well defined target group, after all).
People will choose workspaces after their own personal taste, and spaces that offer them something extra. A Thing to consider is, whether we could make a workspace the physical version of Facebook, a social network. ”Get work done, strengthen your existing relationships and make new contacts while your at it” makes for a great unique value proposition.
Another successful base for operations could be defined with this simple idea: people like products/services that are in line with their preferences but bring in something new and fitting regularly. We like it when our Netflix gives us things we rate high and search for, but we love it when they suggest something we’ve never heard of, that ends up being a perfect fit.
That’s the space people will choose.
The service and experience business is a new beast for CRE providers.
Soon CRE providers can no longer rely on just a good location. They will have to compete in an industry, where services and experiences provided, are the defining competitive edge. It’s a new business the CRE industry has very little idea how to work. Landlords will have to consider, are they up to the task? Do they know how to offer a personalized experience in an office? Do they know how to boost employee productivity with space services? It’s time to figure it out.
Many landlords have opted for one of three: lease to a coworking operator, collaborate with a coworking operator or create an in-house operating business.
The first is the easiest, as it allows you to continue business as usual, but bears risk. As Ilkka Tomperi, RE Investment Director at Varma, commented in his REWORK blog: ”It’s easy and the cash flow is typically seemingly secure and stable. The flipside is a business risk that follows a single tenanted building and leaving part of the upside to the operator who in practice is taking a cheaper per square meter lease on a “wholesale” basis with a long contract and plans to collect a premium rent to lease the space in smaller parcels on short term or flexible contracts to end-users.”
The second, the collaboration angle, is rather safe but demands reformation on your part as well. In a nutshell, it means you get together with a coworking operator and create attraction in collaboration. The model will eat the landlord’s profits ever so slightly and could potentially bring in new business, save the old one at the very least. You won’t be able to continue business as usual, but honestly, it’s time to change anyway.
The third option could be to go in-house all the way. That means completely transforming your old business models, hiring people proficient in CRE services, training your old staff to new business and rebuilding the product you offer. The full profit and gain will be yours, but the journey will be long and hard; there’s no guarantee it’ll work. But if it does, you’ll be one step closer to long lasting success, and you’ll know how to change, when the next disruption comes along.
There’s light at the end of the tunnel. Sure, we’ll have to try and fail, and try again, all of us. Both the user organizations and the CRE industry, will have to redefine their space. But when we do find our way out of the transformation phase, and into the new norm for corporate real estate, we’ll have space that, not only stores our people and work, but adds value.
Remember, just like the print didn’t die, neither will space – it’ll just look a little different and offer experiences in stead of necessities.
We’re discussing the future of workspace at REWORK Summit in Helsinki on October 24th. We’re proud to have seats2meet.com‘s very own Lenneke van Rossum on stage, amounts other industry leaders like Antony Slumbers, CEO at Estates Today and the #1 CRE industry influencer, and Ilkka Tomperi, RE Investment Director at Varma. Read more at: tulevaisuudentoimisto.fi
The writer is Isla Vainio, Producer at HUB13 and the Head Content Creator for their REWORK events.