(Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK - Knight Frank
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(Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
2 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
Commissioned by
WILLIAM BEARDMORE-GRAY
Global Head of Occupier Services & Commercial Agency
Written by
DR LEE ELLIOTT
Global Head of Occupier Research
View online at
www.knightfrank.com/your-space
Senior Partner & Group Chairman Occupier Services & Commercial Agency Continental Europe
Alistair Elliott Primary Contacts Colin Fitzgerald
alistair.elliott@knightfrank.com Global Head colin.fitzgerald@knightfrank.com
Head of Commercial William Beardmore-Gray Africa
Stephen Clifton william.beardmore-gray@knightfrank.com James Lewis
stephen.clifton@knightfrank.com The Americas james.lewis@knighfrank.com
Joey Vlasto Middle East
joey.vlasto@knightfrank.com Andrew Love
Mark Sullivan andrew.love@me.knightfrank.com
mark.sullivan@knightfrank.com
Asia Pacific
United Kingdom Tim Armstrong
Richard Proctor tim.armstrong@au.knightfrank.com
richard.proctor@knightfrank.com
Emma Goodford
emma.goodford@knightfrank.com
3 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
FOREWORD
(Y)OURSPACE
IS CHANGING
The majority of survey respondents, armed with the lessons
obtained from the great global workplace experiment of the last year,
have confirmed that they will embark on a rigorous reconfiguration
of their global portfolios and a remodelling of their workplaces over
the next three years.
New strategies will have workplace safety, sustainability and
smart technology at their heart. Across global real estate markets,
businesses will gravitate towards offices that are more user-centric;
reduce environmental impact and support corporate ambitions or
requirements around ESG; and which utilise technology and the
data it generates to measure, manage and curate what will be a more
dynamic workplace environment and experience.
This transformation is not without challenge, not least because of
the fragile operating environment and cost consciousness apparent
as we emerge from the pandemic. Exposure to expertise and global
best practice is essential if these challenges are to be met and the
transformation achieved.
Knight Frank is here to provide you with that expertise, advice and
support. We have made significant further investments in our Global
Occupier Services & Commercial Agency service line since the first
fter the challenges of 2020 and edition of (Y)OUR SPACE back in 2018. We have strengthened our
the ensuing debate about the consultancy teams to supplement our best in class transactional
future of the office, our latest survey of teams operating within and across global markets.
almost 400 global occupiers confirms
This second edition of (Y)OUR SPACE draws on this capability
that they continue to see real business
and shines a light on the key considerations and best practice
benefit accruing from real estate. It also
responses shaping global workplaces. We would be delighted to
shows, however, that there is a clear discuss any aspect of the research or our capabilities with you, so
and increasingly urgent requirement please do get in touch.
for the form and function of the office
WILLIAM BEARDMORE-GRAY
to evolve as the pandemic recedes and
Global Head of Occupier Services & Commercial Agency
the opportunity to ‘build back better’
presents itself to business leaders.
4 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
CONTENTS
03
FOREWORD
05
EXECUTIVE SUMMARY
08
CORE FINDINGS AT A GLANCE
10
STRATEGY IN STRANGE TIMES
16
SAFE AND WELL
20
SUSTAINING CHANGE
24
GET SMART
28
VIEW FROM THE GROUND
5 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
EXECUTIVE
SUMMARY
Four S’s will inspire the future form, function, quality
and quantum of the office as it is reset against the
backdrop of the Covid-19 pandemic, associated
changes in working styles and a more challenging
business operating environment.
STRATEGIC: A new strategic intent will be evident from office occupiers across global real estate markets,
as they seek to reconfigure their global portfolios and remodel their workplaces. There is no
There’s a new strategic question that real estate will continue to matter strategically to businesses as they build back
intent in corporate real estate better from the pandemic - 90% of our survey respondents regard the office as a strategic
decision making device for their business - but the form, function, quality and quantity of that real estate will
be significantly transformed.
Contrary to much of the recent debate, this transformation does not represent a point of
departure towards a new destination, but rather a more rapid transition along a path already
travelled, at least by some businesses, over recent years. For example, in the first edition
of (Y)OUR SPACE published in 2018, we wrote: “The aim is now to increase productivity
by strengthening the interaction between people and property via the creation of, and
investment in, a positive, serviced and well-supported workplace experience.”
In a post-pandemic environment, the need and means to achieve this compelling workplace
experience has become more pressing for more businesses. The same is true in respect of
the journey towards more collaborative workspaces, hot-desking, desk-sharing, flexible
space, increased and broadened amenity provision, and the growing mobility of occupiers
towards new locations or micro-locations. As these, and other, strategic responses emerge, the
remaining three S’s – safe, sustainable and smart – will come into greater consideration.
SAFE: An obvious and elevated business consideration will be the delivery of safe and secure
working environments. The Covid-19 experience has heightened our awareness of the role
Health and safety joins that workplace and building design can have in mitigating disease transmission, thus keeping
wellbeing at the heart of the employees safe and well.
workplace experience
Although vaccination programmes are now being rolled-out around the world, it is likely
that workplace safety will be a long-term consideration and obligation for both business
leaders and building owners. One implication of this will be the reversal of the ever-increasing
densification of office occupancy witnessed since the global financial crisis.
The provision – or at the very least the ability to reconfigure in order to provide – more
space per person within the workplace will become critical, particularly as it will be a clear
demand from employees. So too will deeper and more regular building cleaning regimes,
more frequent maintenance and management of HVAC systems, and the ability to rapidly
implement mitigation plans in the event of future viral outbreaks.
6 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
As is evident in those Asian markets first exposed to Covid-19, technology will be a key
weapon in the delivery of this safer workplace environment. This fundamental focus on
health will be supplemented by a continued yet stronger consideration of employee wellbeing
and the provision of office amenities that support both physical and mental wellbeing.
Not only will such amenities make the office more compelling in a working world
characterised by greater choice, they will also be central in the achievement of a new ‘contract’
between employer and employee, whereby staff wellbeing becomes viewed as a business
imperative.
SUSTAINABLE: Doing good also extends to greater care and consideration for the environment. This is a
pressing issue, with most science unequivocal in the fact that we have no more than thirty
Sheer criticality and corporate years to save the planet from a catastrophic climate crisis. The sheer criticality of this issue
commitment combine to means that businesses will not be able to distance sustainability considerations from their
finally force action real estate decisions, as most did in the aftermath of the global financial crisis a decade ago.
Given that real estate accounts for around 40% of global carbon emissions, parking
sustainability issues in the sidings is neither viable nor responsible. Furthermore, it goes
against the grain of significant and public corporate commitments towards becoming net
zero carbon – 77% of our survey respondents who have a publicly stated net zero carbon
target have a target date set before 2030. These pressures, together with the rise of a robust
ESG agenda within the investment world, will force action.
Yet our research shows that education is also required. The connection between corporate
real estate and these laudable commitments is not as strong as it should be. The level of green
building accreditations with global portfolios also remains low with a lack of targets in place
to raise the game. The evidence base and data to support the business case for occupancy of
sustainable real estate needs to be stronger and more transparent. The push factors towards
sustainable real estate solutions are certainly powerful enough to incite action, but more data-
backed pull factors would serve to increase the pace of change.
7 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
SMART: Data is central to the final emerging workplace consideration – the rise of smart buildings.
Management guru Peter Drucker famously once said ‘what gets measured, gets managed’.
To measure is to manage, In the context of future workplace strategies, this rings true, but the use of data has an even
curate and convince wider potential application. There are three clear and interlinked business rationales for
utilising the data derived by smart real estate.
First, and in keeping with Drucker’s sentiment, the ability to manage the workplace
environment. A basic example would be the use of building management systems and
sensors to flag when there is a faulty lightbulb that can be efficiently replaced without
reliance on a user logging the issue. This leads to a more efficient and effective workplace.
Alternatively, sensors within the fabric of the building or even within fixtures and fittings, can
allow businesses to identify what areas of their floor-plate are being utilised (and which are
not) for how long and even potentially by whom, presenting opportunities to intervene and
reconfigure or redesign accordingly.
Second, and linked, is the opportunity to utilise data to curate and sustain a strong workplace
experience. Again, this can draw on sensor material but might also see the use of building-
level applications to support users in finding a desk, locating co-workers for collaboration,
booking meeting or tele-conferencing rooms, booking classes within on-site amenities or
utilising concierge services. Engagement data with the app can also help determine what
works and what does not, or where to invest and where not to.
The third potential use of building data is to articulate the operational and strategic value of
There is no question that real the existing real estate portfolio or to strengthen the business case for further investment in
estate will continue to matter it. One of the greatest challenges faced by corporate real estate professionals to date has been
strategically to businesses the seeming inability to connect, through data, real estate to business productivity, efficiency
as they build back better or outputs. As a result, real estate is often measured by its required financial input – how
from the pandemic, but much it costs to procure and operate the office.
the form, function, quality
This is dangerous in a cost conscious operating environment but more worryingly, as we
and quantity of that real
have seen historically, it can also lead to the reduction of space without due consideration of
estate will be significantly
its wider business impacts on people, productivity, culture, collaboration or innovation – the
transformed.
very things that the real estate strategy is seeking to enhance.
The next three years will witness significant transformation in portfolio and
workplace strategy. A new strategic intent will be evident from businesses seeking to
adjust the where and what of the workplace to take account of a changing operating
environment and different expectations from current and future staff. A new
dynamic global workplace will emerge – one that is safe, sustainable and smart.
8 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
CORE FINDINGS TOTAL SPACE IN GLOBAL PORTFOLIO
3 YEARS FROM NOW...
AT A GLANCE
The following core results are based on the responses of 373 corporate real
estate professionals, drawn from companies employing more than 10 million
people worldwide. 30% 35% 35%
Increase Decrease Stay the same
GEOGRAPHICAL REMIT OF RESPONDENTS
COST SAVING TARGETS
38% 26% 36% No target: 34%
Reduction by 1-5%: 10%
Reduction by 5-10%: 21%
eduction by more than
R
10%: 34%
ro-actively increasing
P
real estate spend: 2%
Local / National Regional Global
OUTLOOK FOR NEXT THREE YEARS PROPORTION OF GLOBAL
IN TERMS OF PORTFOLIO & WORKPLACE PORTFOLIO THAT IS IN SERVICED /
DYNAMICS MANAGED OR CO-WORKING SPACE
Increase
Decrease
Stay the same
21%
14%
65%
Pro
12%
72%
po porti
20%
s rtfo on
57%
68%
loc uburb lio in of 5
47%
oc Dens 0%
cup ity
8%
atio of 3 years from now
45%
Qu n
al
ity
oc of sp
cup ac
ied e
9 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
TO WHAT EXTENT IS REAL ESTATE WHAT STRATEGIC AGENDA ITEMS DOES REAL ESTATE SUPPORT?
REGARDED AS A STRATEGIC
Corporate brand & image 49%
DEVICE WITHIN YOUR BUSINESS?
Cost reduction 43%
Not at all 10%
Employee wellbeing 37%
Talent attraction & retention 37%
Increased collaboration 37%
33% Operational restructuring & transformation 23%
Completely
57%
Increased innovation 14%
Diversity & inclusion 11%
To some extent
Talent management (education & development) 10%
ESG 8%
HOW INFLUENTIAL WILL WHAT PROPORTION OF YOUR DO YOU HAVE A CLEAR TARGET
SUSTAINABILITY CONSIDERATIONS GLOBAL PORTFOLIO HAS AN IN PLACE TO INCREASE THE
BE IN DETERMINING YOUR REAL ENVIRONMENTAL ACCREDITATION PROPORTION OF YOUR PORTFOLIO
ESTATE PORTFOLIO & STRATEGY (BREEAM, LEED, DGNB, GREEN THAT HAS AN ENVIRONMENTAL
OVER THE NEXT 3 YEARS? STAR, CASBEE, ETC)? ACCREDITATION?
The key influence
56%
19%
Yes
37%
No
31%
Somewhat
influential
63% 18%
13% 13%
Un
su re 3
No 2%
influence 18%
Less than 10-25% 25-50% 50%+
10%
SINCE THE OUTBREAK OF THE WHAT IS YOUR GREATEST FRUSTRATION AS A CUSTOMER IN GLOBAL
COVID-19 PANDEMIC, HOW WOULD REAL ESTATE MARKETS (ONLY ONE ALLOWED)?
YOU RATE THE FREQUENCY OF YOUR
Inability to offer flexibility 29%
ENGAGEMENT AND DIALOGUE WITH
YOUR LANDLORD(S)? Lack of innovation in product / service offering 21%
Increased
significantly: 24% None 16%
Increased
slightly: 18% Poor service delivery 13%
No change: 13%
Lack of meaningful and regular dialogue 10%
Reduced
slightly: 13%
Lack of understanding about us and our business 8%
Reduced
significantly: 13%
Other 3%
10 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
STRATEGY
IN STRANGE TIMES
The post-pandemic era will fuel a wide-ranging
business transformation agenda. Despite soundings
to the contrary, the office will be a key device in
successfully meeting the challenge. It too, however, will
need to transform.
Aside from the obvious, heart-breaking Facing up to a real test of operational
human tragedy of Covid-19, the pandemic resilience, most companies surpassed
has also served to challenge accepted norms their own expectations. Indeed, 59% of the
in how we live, work and interact. As we 400 global occupiers we surveyed for this
have gone through the crisis, governments, research rated their experience of working
communities and businesses have all from home as ‘positive’ or ‘hugely positive’.
channelled Einstein’s famous line: “In the
Yet, in contrast to much of the global
midst of every crisis lies great opportunity”
business newsprint produced in the early
to promote the prospects for positively
months of the pandemic, such a positive
‘resetting’ or ‘building back better’.
finding does not represent the death knell
Commercially, such thinking actually for the office. Such claims fall foul of three
predates the pandemic. The 2020 meeting common misinterpretations.
of the World Economic Forum in Davos,
First, they regard the choice between formal
for example, placed great emphasis on
office and remote working environments as
the emergence of ‘stakeholder’ rather than
a binary, either / or choice. Second, they take
‘shareholder’ capitalism – the notion that
short-term (and often enforced) adaptations
businesses could make a more positive
and extrapolate them into long-term trends
contribution to employees and wider
without sufficient consideration of how
society, as well as those invested in their
sustainable or accretive they actually are.
financial success. The pandemic has
Third, the rate of adoption of fully remote
served to amplify the opportunity for such
working models that negate the need for
transformations.
actual offices (although evident in a small
MISINTERPRETING THE FUTURE number of well-rehearsed examples) is not
59%
WORKPLACE representative of the mainstream business
This is particularly true in respect of response or aspiration, which has, to date,
work and the workplace. The onset of the been more cautious and guarded.
pandemic created the conditions for a global
In reality, the shaping of new working styles,
of the 400 global occupiers we workplace experiment, whereby businesses
surveyed for this research rated their and the consequences for the workplace,
were faced with little alternative but to
experience of working from home as implement remote or working from home
is in fact more varied, more dynamic and,
‘positive’ or ‘hugely positive’. hence, much more complex.
processes that had, until that point, been the
exception rather than the rule.11 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
EMERGING MODELS OF WORK
That complexity is evident in the range
of new working models emerging as
businesses begin to plan for the post-
pandemic era. In so doing, they are drawing
on the lessons – both good and bad – from
the global workplace experiment to create a
number of potential responses.
Three have been particularly evident. Most
common has been the notion of hybrid
working, the combination of in-office and
remote working in varying proportions,
as a means of employees and employers business responses, we have aggregated the
TOTAL SPACE IN GLOBAL
capturing the benefits of both. Some views of 400 global occupiers to understand
PORTFOLIO 3 YEARS FROM NOW
businesses, particularly within the tech how they are likely to reconfigure their real
estate.
30%
sector, have moved further still, adopting
‘work from anywhere’ policies that give COMPUTING QUANTUM
employees freedom to choose where they In keeping with the emerging models noted Increase
work and how. above, there is a more nuanced position
We have also seen choice offered through when it comes to the future quantum of
proposed ‘hub and spoke’ models of work. real estate that businesses will require. The
Here, traditional hub-offices, which are business reality is not as simple as the ‘slash
and burn’ of large swathes of office space
35%
HQ-type buildings fulfilling core functions
such as client engagement, are coupled with proclaimed in recent headlines. In fact, our
spoke offices, which are more geographically survey analysis finds that just over a third of Decrease
dispersed. Naturally, spoke offices present respondents (35%) expect to see a reduction
opportunities for employees to work closer in the size of their global portfolios over the
to home and for employers to potentially next three years, the very same proportion
mitigate environmental impacts through that expects to see their portfolio size remain
reduced commuting, build operational stable. In contrast, some 30% actually expect
resilience by being multi-locational and also to increase their global quantum of space on
35%
make savings on real estate costs. the back of business growth, transformation
and entry into new markets. It is important
The commonality between each of these to note that such growth is often in Stay the same
emergent models? None dispenses with preparation for longer-term ambitions
the office but instead serves to alter the within the business rather than as an
form, function and location of the formal immediate response to the pandemic. In this
workplace. While we recognise there will regard, almost half of our respondents (48%)
be a considerable variance in individual view Covid-19 as a medium term influence12 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
on their real estate plans, with the remaining
half almost evenly split between seeing
Covid-19 as either leaving a lasting legacy
on real estate strategy (27%) or having no
impact at all (25%).
Although more nuanced, one thing is
apparent from respondents. Whether the
quantum of space in global portfolios
is forecast to increase or decrease, the
magnitude of change is significant. Some
69% of respondents anticipate their
portfolios resizing in either direction by more
than 10% of their existing scale. The future
reconfiguration of real estate portfolios by
businesses is not going to be a marginal play,
and this will fuel renewed activity levels
across global real estate markets.
CONSIDERING COST
A great point of departure in this latest
all respondents noting that their cost saving
survey, when compared to that undertaken
targets have increased since the onset of the
for the first edition of (Y)OUR SPACE, is the
pandemic.
elevated cost-consciousness that is shaping
the real estate decisions of businesses. While DRIVING MOBILITY
38%
we maintain that simply seeing real estate The adoption of new models of working may
as a cost rather than an investment that actually serve to support this re-emerging
supports wider business strategy is myopic cost saving agenda, whether it is through
and a false economy, there is little doubt that the provision of more space in lower-cost
real estate transformation strategies will ‘spoke’ locations or the adoption of hybrid
of our respondents rate the likelihood
occur against a more challenging financial working, which essentially means that the
of relocating their HQ within the next
backdrop. Once again, this is borne out by same envelope of office space can be utilised three years as either ‘definite’, ‘very
our survey. Although more than a third more efficiently by a greater number of likely’ or ‘fairly likely’
have no cost saving target for real estate, the people. This interplay between costs and
same proportion are seeking to reduce real changing workstyles also appears to be at
the heart of prospective HQ relocations. 38% of our respondents rate the likelihood
estate costs by more than 10%, with 54% of
of relocating their HQ within the next three
years as either ‘definite’, ‘very likely’ or
COST SAVING TARGETS ‘fairly likely’ with only 15% viewing such a
No target move as impossible. As businesses reset
34% their real estate portfolios, the relocation
of hub offices will be actively considered,
Reduction by 1-5%
10% with two dominant drivers at play. 59%
see the opportunity for cost savings to be a
Reduction by 5-10%
noteworthy driver, whilst 54% see relocation
21%
as a potential outcome of new working
Reduction by more than 10%
styles and an associated change in the
34%
quantum and quality of space their business
Pro-actively increasing real estate spend
requires.
2%13 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
REAL ESTATE MATTERS
WHAT STRATEGIC AGENDA ITEMS DOES REAL ESTATE SUPPORT?
The balancing act between transformed
working styles, budgetary compliance Corporate brand & image
and having the right amount of space to 49%
address both, leads to a further strategic Cost reduction
consideration: what function does real 43%
estate play? Employee wellbeing
37%
When it comes to offices, the narrative of
need has strengthened as the pandemic Talent attraction & retention
has progressed – a case perhaps of ‘absence 37%
makes the heart grow fonder’ or ‘you don’t Increased collaboration
know what you’ve got until it’s gone’? As the 37%
honeymoon period of remote working drew Operational restructuring & transformation
to a close for many, and concerns about 23%
productivity and staff wellbeing (particularly Increased innovation
for younger staff) increased, so too did the 14%
strength of voice from business leaders Diversity & inclusion
restating the case for the office. 11%
Although there is recognition that the Talent management (education & development)
office may not be a fixed, five days a week 10%
requirement, it has been firmly positioned ESG
as a valuable contributor to organisational 8%
culture; client interaction; staff development,
Although there is recognition
that the office may not
be a fixed, five-days a
week requirement, it has
been firmly positioned
as a valuable contributor
to organisational culture;
client interaction; staff
development, recruitment
and on-boarding;
collaboration and
socialisation.14 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
recruitment and on-boarding; collaboration prospective) – something that is difficult that we outlined in the first edition of (Y)
and socialisation. This tone is supported to achieve in a fully remote world with a OUR SPACE continues, but with a greater
by our survey results. 90% of respondents dispersed workforce. The office presents urgency for action.
regard real estate as an important device an identity and profile that is invaluable
Indeed, our latest survey respondents point
that supports, facilitates or portrays commercially. It is also integral to forging
to a clear appetite for the workplace to be
business strategy – an increase, despite inter-relationships with both clients and
elevated in quality and richer in amenities
the challenges of the last twelve months, on colleagues.
in order to attract existing employees who
the 85% subscribing to this point of view in
In this respect, the interaction between have choices as to where they work and to
our original survey back in 2018. Real estate
the people and property serves to support prospective employees who see the working
continues to matter to business. It matters
and galvanise the culture that is crucial environment as a differentiator amongst
because it supports a wide array of corporate
to an authentic brand position. Employee potential employers. But our findings also
agenda items. More than 10 specific items
wellbeing is also particularly noteworthy as point to two areas where the qualities of
were identified by our survey respondents,
an emerging strategic function – particularly the workplace are set for a more significant
chief among them corporate brand and
given the opportunity for business to build reset.
image, cost reduction and employee
back better – and we will return to this
wellbeing. 55% of survey respondents believe that
aspect elsewhere within this report.
there will be an increase in the proportion
While cost reduction has already been QUALITATIVE CHANGE of collaborative space found within their
discussed, the elevation of corporate brand The strategic motivations providing a portfolios over the next three years. The
and image and employee wellbeing as continued rationale for corporate real office will further its role in bringing people
strategic items are interesting barometers estate, coupled with a highly transformative together to interact, collaborate and, yes,
for the future function of the office. The business agenda, will serve to reset the to socialise. This again is at the very heart
office will take on a greater prominence in qualities of office space over the next three of the creation, curation and sustenance
promoting the values and qualities of the years. This resetting is evolutionary rather of a corporate culture. It creates a strong
occupying business to their customers, than revolutionary. Much of the direction distinction between the function of the
clients and staff (both existing and
office and the role of more remote or home
settings, which will be more about focused
and individual work.
This is not to say that remote working
cannot be collaborative, it can, but the ease
of that collaborative effort is improved
with physical proximity. The rise of
collaborative space also drives the reversal
of the increasing occupational density that
has characterised the office environment
over the last ten years. 36% of respondents
believe that occupational density will
decrease in their portfolio over the next
three years, while a further 40% expect it
to not deviate from existing levels. These
figures align with respondent expectations
of the amount of personal space allocated to
individual occupants – reflecting the refocus
of the office from ‘me’ to ‘we’.
This transition also points towards real
estate strategy seeking to extend beyond
the short-term horizon of the pandemic.15 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
55%
of survey respondents believe that
there will be an increase in the
proportion of collaborative space
found within their portfolios over the
next three years.
Clearly, a world characterised by lockdowns
and social distancing protocols has made
office-based collaborations impossible
to achieve but, in time, as vaccination
programmes take effect across the world,
they will represent the strongest rationale
for the office. A similar sentiment underpins
OUTLOOK FOR NEXT THREE YEARS IN TERMS OF PORTFOLIO &
the other major reset in office space over WORKPLACE DYNAMICS
the next three years. Just over half (54%) of
Amount of collaborative space
survey respondents anticipate extending
hot-desking and desk-sharing regimes, as 55%
our relationship with the office becomes 9%
more fluid, as space becomes more 36%
collaborative and as cost alone prevents the Average lease length
provision of dedicated personal space for
10%
most.
34%
Indeed, 77% of respondents expect to either 56%
decrease or stabilise the number of desks
Desk-sharing & hot-desking
per person within their offices over the next
54%
three years, with almost six in every ten
12%
respondents foreseeing desk to people ratios
34%
of 50% or below. Once more, this is difficult
to marry with the current workplace where Amenities provided within our workplace
fears over disease transmission have 46%
prevented the sharing of space. Again, we 10%
expect this to pass, but as the second theme
44%
of this report explores, the shift towards
Use of data to make real estate & workplace decisions
more temporary and shared spaces will
place health and safety at the very heart of 51%
the future workplace experience. 6%
43%
Percent of respondents
Increase Decrease Stay the same16 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
SAFE AND WELL
As they adapt to a post pandemic world, businesses
will need to pay greater attention to the health, safety
and broader wellbeing of their employees. The office
will be a crucial theatre with success reliant upon
increased interaction with building owners, the greater
application of technology and the provision of a broader
array of building amenities.
There have been many bold claims in In fact, the all-consuming focus on Covid-19
relation to the long-term influence of already feels somewhat incongruous in
Covid-19 on the workplace. Whilst there is those parts of the world, notably in Asia,
absolutely no doubt that the pandemic has which appears to have gotten to grips with
elevated the discussion about the office, its the virus. This is evident in the findings
contribution to both business and wider of our occupier survey. At a global level,
society, and the trajectory of its future 27% of respondents believe that Covid-19
evolution, much of the debate has been will influence their real estate strategy
extreme and one-dimensional. Although in forever, but when the sample is limited to
recent months it has not felt like it, Covid-19 those respondent companies whose global
is in fact only one of a range of influences headquarters are within Asia Pacific, this
shaping the future progression of the global number falls to just 12%.
workplace.
Furthermore, some 35% of these same
Those wide-ranging challenges that pre-date respondents actually stated that Covid-19
the pandemic – such as the push for greater has no influence on their real estate strategy
productivity, digital disruption, changing at all (compared to 25% globally). One of
geo-politics, the diversity and inclusion the failings of the debate of the last year has
agenda, skills-shortages, talent attraction been the sheer dominance of on the ground
and retention, and financial pressures – have views from the UK and the USA. There is,
not subsided. They all remain in place and in fact, a more nuanced position across the
have become, arguably, even more critical. world, whereby Covid-19 is an important but
While not receiving the same attention, they not all-encompassing consideration on real
will in our view, exert growing influence estate decision-making. This geographical
on corporate real estate decision-making variance is important to note in charting the
as vaccination programmes take effect, as future trajectory of the global workplace.
the pandemic subsequently becomes more
controllable and as the gaze of business
leaders turns towards the process of building
back better.17 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
At a global level, 27% of
respondents believe that
Covid-19 will influence their
real estate strategy forever,
but when the sample is
limited to those respondent
companies whose global
headquarters are within
Asia Pacific, this number falls
to just 12%.
A NEW ‘CONTRACT’ BETWEEN
EMPLOYER AND EMPLOYEE
One area in which the recent experiences of
Asian-based businesses does have strong
global resonance is that of workplace safety.
This issue will be at the very heart of the
ability to re-occupy global workplaces over
the short-term, but will also become a long-
term workplace consideration as employers
react to heightened anxieties or expectations
from their employees in respect to their own
health and safety. It will also, of course, be a
key consideration of future workplace plans
(again pre-pandemic), which revealed Asian markets such as Singapore and Hong
in order to mitigate risks associated with any
that 48% of the C-suite executives they Kong, SAR working together to prioritise
additional waves of Covid-19 or indeed any
surveyed were concerned about supporting the safety of the office environment. Body
new viral outbreaks in the future.
employee’s health and wellbeing – which temperature scanners, holographic keypad
We believe this is one aspect of a new made it the poll’s top-ranked workforce entry systems, enhanced building cleaning
‘contract’ between employer and employee concern. regimes together with restrictions on seating
in the post-pandemic world, where greater arrangements, one-way systems around
The onset of a global health crisis is
consideration and support is given to the office floor-plates and, of course, capacity
hardly likely to have lessened this focus.
wellbeing of all staff. It has been evident in constraints to support social-distancing
It is therefore imperative that building
the appointment of a Chief Medical Officer measures, have all been in evidence over
owners and occupiers look for ways to
at Morgan Stanley (pre-pandemic) with a the last 12 months within workplaces in
safeguard those employees and optimise the
specific focus on wellbeing programmes, Asia, and have become more commonplace
workplace experience to ensure that they hit
and Amazon’s recent announcement of around the world. Occupier expectations for
the ground running as offices reopen and re-
a telehealth support service – Amazon enhanced building safety are high. This will
establish a place in our working lives.
Care – for both their employees and now, drive a much stronger interaction between
increasingly, the staff of other companies. SAFETY FIRST building owners and occupiers.
At the most rudimentary level, early in
This aligns with the broader findings from the pandemic we saw growing evidence Only 14% of the occupiers we surveyed
Mercer’s 2020 Global Talent Trends report of occupiers and building owners in key around the world believed it was their sole18 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
floor-space is allocated to collaborative-uses
WHAT DO YOU EXPECT YOUR LANDLORDS TO DO TO MAKE YOUR
and there is a greater adoption of hot-
WORKPLACE SAFER GOING FORWARDS?
desking and desk-sharing programmes.
More rigorous / frequent building cleaning regimes At present, this feels somewhat at odds
67% with a world that has become used to social
Less physical touchpoints / use of contactless entry systems distancing measures.
60%
As the pandemic subsides and we return to
More regular change / maintenance of HVAC systems
offices, our interaction with the office, and
60%
indeed with other office users, is likely to
Temperature scanning of building occupants become more flexible and fluid. This will
43%
heighten the risks of more rapid contagion
Better / more regular dialogue and engagement in the event of another viral outbreak.
40% Technology will be applied, alongside
Contactless rest rooms enhanced cleaning regimes – and the other
38% strategies already outlined – to support
Use of new materials / cleaning overlays that are COVID-19 safe companies in reducing health risks and
37% delivering a safe day-to-day workplace
Facial recognition technology experience. But at the same time, our return
19% to the office will serve to accelerate a broader
Nothing. It is our responsibility. concern – that of staff health and wellbeing.
14%
responsibility to make the future workplace
safer. Of the remaining 86%, a range of
expectations were referenced, with more
regular building cleaning, less physical
touch-points and increased maintenance
of air-conditioning systems being the
most popular interventions being sought
from building owners. We expect further
mobilisation of technology to support the
monitoring and consistent delivery of a safe
workplace. It will be one of the key reasons
underpinning the greater adoption of
building sensors to support track and trace
and a critical driver of the increased delivery
and occupation of so-called smart office
buildings.
These technology-based interventions will
be necessary to manage and mitigate the
risks inherent in the workplace of the future.
As we have already noted, the majority
of occupiers responding to our survey are
anticipating a reconfiguration of the form
and function of the office whereby more19 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
WELL, WELL, WELL an estimated US$1 trillion per annum in
Pre-pandemic, the office environment was lost productivity – a number that may well
increasingly being mobilised to support the have inflated further since the onset of the
physical wellbeing of its users. Results from pandemic, while one in four of us are likely
our survey show that, far from lessening as to experience mental illness during our
a corporate concern since the pandemic, working lives. In the first edition of (Y)OUR
employee wellbeing has actually risen up SPACE we made the case for the provision
47%
the list of strategic agenda items that the of sanctuary space within office buildings
office can support or facilitate. Employee to allow people to escape ‘the grid’ in order
wellbeing ranked the third highest strategic to refocus or reconnect with themselves.
issue identified by our respondents (37% Interestingly, the experience of the last
citing it directly) meaning the issue has risen of our global survey respondents year, and notably the cabin fever induced
two places in the rankings after placing 5th expect the quality of their office by enforced remote working, has brought
space to further increase over the
in our 2018 survey. greater attention to the issues of mental
next 3 years.
wellbeing at work.
As some question the future role of the
office, and as cost consciousness rises up Mental wellbeing will feature heavily in the
the corporate agenda, it would perhaps be best in class workplaces of the future. They
logical to regard this focus as frivolous or will offer direct access to green spaces; to
marginal. Yet the wellbeing of employees fresh air through the provision of winter
has been amplified an emerging leadership gardens and terrace spaces; to sanctuary
concern by the isolating experiences of spaces, such as contemplation rooms that
lockdowns and remote working. offer solace from Wi-Fi connectivity and
allow workers to focus or reconnect with
In a future of work which is likely to be more
themselves; and to educational events
hybrid and more flexible, business leaders
programmes that seek to promote better
will be increasingly compelled to utilise the
life and workstyles. Once seen as the
office to provide the quality of space and the
facilities, or the delivery of amenities that domain of the individual, employers are
range of amenities conducive to a productive,
support mental wellbeing. increasingly concerned with – and ready
enjoyable and, ultimately, healthy workplace
This clear wellbeing focus aligns with our to take responsibility for – employee
experience. This will fuel the further flight
first edition of (Y)OUR SPACE where we wellbeing. This is not a purely philanthropic
to quality witnessed in global real estate
advocated the idea of the corporate spa endeavour. It is an effective way of reducing
markets over the last five years. Indeed, 47%
as a central element of the future office the financial and operational burden caused
of our global survey respondents expect
experience. Intended as a provocation, it by absenteeism or high staff turnover. The
the quality of their office space to further
is today a growing reality as evidenced, for office will be the mainstage on which these
increase over the next 3 years.
example, by 101 Collins Street in Melbourne. interventions will play out.
More directly, we will also see occupier
This 57-storey iconic tower, built in the
requirements that seek to go further
early 1990s, has a dedicated amenity floor
in supporting staff wellbeing – 46% of
offering high-quality end-of-trip facilities,
respondents maintain that the amenities
as well as a premium retreat, Rise by Studio
expected by their employees will increase
PP. The studio provides two multi-purpose
over the same three-year period. What is
activity studios, four consulting suites and This is not a purely
telling is the elevated position of wellbeing
a relaxation area that makes full use of philanthropic endeavour.
related amenities within the listing of those
biophilia and natural light. It is an effective way of
amenities most likely to be in demand. The reducing the financial and
top four amenities identified by at least 45% The rise of amenities focused on mental operational burden caused
of respondents are all wellbeing related, wellbeing is a clear point of departure. by absenteeism or high
whether that is a healthy food and beverage Recent estimates suggest that depression staff turnover.
offering, the provision of gym and changing and anxiety alone cost the global economy20 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
SUSTAINING
CHANGE
Central to ‘building back better’ is the opportunity to
alleviate a deepening climate crisis and meet stated
net zero carbon targets by occupying sustainable real
estate. And yet, our survey of global real estate decision
makers highlights a disturbing disconnect between
corporate ambition and real estate strategies.
The last time we emerged from a global crisis Although the portents are not particularly
– the Global Financial Crisis – there was an good, the outcome absolutely needs to
undeniable regression in business attitudes be different. The science underpinning
to the workplace. The urgent requirement to climate change is unequivocal. As David
Wallace-Wells argues in his disturbing but
reduce costs and the narrow depiction of real
essential book, The Uninhabitable Earth,
estate as the most attackable of those costs,
we have no more than 30 years to save the
ultimately, led to the creation of more densely planet from unsalvageable damage. This,
occupied offices and poorer workplace in turn, has forced the hand of business
environments and experiences for a larger leaders. They recognise that addressing
number of workers. the issue of climate change and
sustainability equates to good business,
Crucially, this sweeping concern with costs not just good branding. They realise that
also served to terminate mounting business it is their responsibility to act in order to
interest in premium rate sustainable real reduce the corporate carbon footprint,
estate – often colloquially termed ‘green thus alleviating growing environmental
buildings’. For the majority of businesses, pressures.
sustainability considerations (particularly Accordingly, they have moved en masse
in respect of real estate) were shunted to the to make bold and clear public statements
side for the best part of the following decade. about their intentions to do so through
Arguably, they have only recently entered ambitious targets to reduce carbon
back into the corporate consciousness amid emissions. Indeed, 40% of the businesses
that we surveyed for (Y)OUR SPACE
Business leaders recognise growing interest and pressure from business
noted that they had a net zero carbon
that addressing the issue leaders, employees, clients and, notably,
target in place. What is more astounding
of climate change and investors. is the urgency of these targets. More than
sustainability equates to A CASE OF HISTORY REPEATING three-quarters of those with a target in
good business, not just good ITSELF? place have a target date of 2030. Against
branding. As we emerge from the latest global this backdrop, a failure to act in the
crisis – the Covid-19 pandemic – will years ahead would not only create huge
this re-emergent interest in sustainable reputational damage, it would lead us all
real estate be choked-off amid growing further towards a point of no return.
cost consciousness and the prospect of
management by spreadsheet? In essence,
will history repeat itself?21 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
DOES YOUR BUSINESS HAVE A STATED NET ZERO CARBON EMISSIONS
TARGET? TO WHAT EXTENT DO
If yes, when is the target date? YOU BELIEVE YOUR
ORGANISATIONS
COMMITMENT TO
BECOMING NET ZERO
Yes 77% CARBON WILL CHANGE
40% By 2030 YOUR REAL ESTATE
CHOICES
No
38% 13%
By 2040
Don’t know
22% 10%
By 2050
REAL ESTATE – A DEVICE FOR One would assume, therefore, that
17% To a great extent
CHANGE OR A MARGINAL PLAY? sustainability will be a core driver of future
It is widely acknowledged that real estate corporate real estate strategies, influencing 41% To a moderate extent
is responsible for around 40% of global both the reconfiguration of global portfolios
27% To a small extent
carbon emissions. As such, it is something and the resetting of individual offices. What
that cannot justifiably be ignored or kept appears from our global survey, however, 15% Not at all
outside of corporate (or for that matter, is an apparent disconnect between wider
governmental) attempts to attain a net corporate sustainability concerns and future
zero carbon position. The need for more real estate strategy, with the latter viewed
sustainable real estate – both in terms of as having only a marginal influence on the
its base build attributes and its day-to-day former.
operation – should be an essential and
pressing business consideration.22 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
Almost 60% of respondents
maintain that there is only a
partial recognition from their
wider business of the role
that occupying and utilising
real estate differently could
have on the achievement of
net zero carbon and wider
sustainability targets.
Slightly over one quarter of our respondents
believe that their company’s commitment
to a net zero carbon future will have a small
effect on their future real estate choices,
devastating consequences of inaction, does described. This, of course, is a subjective
with a further 15% believing that it will
not sit well with current levels of sustainable view open to enormous geographical
have no impact at all on those choices. At
real estate found within corporate portfolios. variation and bias. Yet, when respondents
best, this transition to net zero carbon is
Businesses are facing up to a challenge of were asked to quantify the proportion of
viewed as only a moderate influence on
building back better, building back more their global portfolios that are officially
the what, where and why of future real
sustainably, but from a particularly low base. accredited as sustainable via formal
estate requirements. Similarly, 63% believe
accreditation systems such as BREEAM,
that sustainability considerations will be Some 64% of survey respondents believe
LEED, DGNB, CASBEE or Green Star, the
only ‘somewhat influential’ in determining that less than a quarter of their global real
numbers are even lower. Three quarters
their real estate strategy and portfolio over estate portfolio is ‘sustainable’ with only 15%
of respondents have less than 25% of their
the next three years, with only one in five of respondents believing that more than
global portfolio with an official sustainability
regarding sustainability as the key influence. half of their existing portfolio could be so
This may reflect the dominance of Covid-19
on current thinking, or an acceptance that HOW MUCH OF YOUR CURRENT WHAT PROPORTION OF YOUR
a broader church of influences will be at GLOBAL PORTFOLIO WOULD GLOBAL PORTFOLIO HAS AN
work in the future. It is more likely, however, YOU REGARD AS GREEN OR ENVIRONMENTAL ACCREDITATION
SUSTAINABLE REAL ESTATE? (BREEAM, LEED, DGNB, GREEN
that such a finding is illustrative of a clear
STAR, CASBEE, ETC)?
disconnect between real estate and wider
corporate thinking on sustainability. Almost 38%
60% of respondents maintain that there is 56%
only a partial recognition from their wider
business of the role that occupying and
utilising real estate differently could have 26%
on the achievement of net zero carbon and
wider sustainability targets, with a further 21%
15% arguing that there is no recognition at all.
15%
Our survey also shows that only a small
amount of the global portfolios occupied 18%
by respondent companies are perceived as 13% 13%
sustainable or is more formally accredited
as such. Again, the urgency emanating from Less than 10-25% 25-50% 50%+ Less than 10-25% 25-50% 50%+
corporate target setting or the potentially 10% 10%23 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
EDUCATION, EDUCATION, that highlights the opportunity that
37%
EDUCATION sustainable real estate can present to
This last point – a lack of awareness – is achieving wider ambitions.
arguably the key take-away from our global
2. The opportunity to build a stronger
survey in respect of sustainability issues.
understanding of current accreditation
of our survey respondents have a If we are to build back better and ensure
clear target in place to increase the systems, their compatibility and
that businesses play their part in protecting
proportion of their global portfolio comparability, so that targeted and
the planet, it is clear that sustainable real
that carries an accreditation, with the consistent action is possible across
estate will need to become more prevalent
remaining two thirds having no target global portfolios. In so doing, practical
or, perhaps worse still, being unaware within corporate portfolios than it currently
guidance and hard evidence that better
if such a target exists within their is. It is also clear that the greater uptake of
articulates the value proposition of
organisation. sustainable real estate is contingent upon
occupying an accredited building in
raising awareness and educating at all levels.
accreditation and just 13% have more terms of both meeting net zero carbon
Three areas of education are particularly
than half of their portfolio bearing such and financial targets should also become
important:
credentials. more readily available, thus supporting
1. The opportunity for corporate real estate an increase in accreditation levels.
Clearly, there is some way to go to build
leaders to educate business leadership
corporate real estate portfolios that are more 3. Similarly, there is an opportunity for
on the potential and opportunities
replete with effective, sustainable real estate those developers of offices to move
presented by real estate, both tactically
solutions. It is questionable whether such beyond the ‘green washing’ often evident
and strategically. For many years,
increases can be delivered prior to the 2030 within marketing collateral for new
corporate real estate teams have been
net zero carbon target date facing the bulk of buildings. There must be a greater onus
seeking – largely unsuccessfully – to
our respondents. Corporate ambitions might on the supply side to sell a sustainable
occupy a more elevated position
also be tempered by the fact that only 37% of solution to an occupier rather than
within their organisations aligned to
our survey respondents have a clear target simply a sustainable product. An
the strategic contribution that real
in place to increase the proportion of their essential element of this ‘sell’ is to
estate can, and does, make. Perhaps
global portfolio that carries an accreditation, articulate how sustainable buildings
sustainability presents the opportunity
with the remaining two thirds having can both optimise real estate spend and
for such a role – a role that gets business
no target or, perhaps worse still, being support wider ambitions.
leaders firmly switched on to what is
unaware if such a target exists within their Sustainability, as has been evident with the
at least 40% of the challenge; a role
organisation. rise of the broader ESG agenda within the
investment community, is a fast-moving
frontier. The pace is likely to quicken as
the pandemic subsides and the climate
crisis captures more of our attention,
more frequently. It is clear that, at present,
growing business ambitions towards
sustainability are not as aligned to their real
estate strategies as they could, or indeed
should, be. There is an opportunity to move
faster. Education, greater awareness and the
exchange of best practice will all be required
to narrow the dangerous gap between
ambition and action. With the clock ticking,
there is no time to waste.24 (Y)OURSPACE DISCOVER YOUR NEW WORLD OF WORK
GET SMART
The tech sector has set the tone for the global
workplace over the last decade. This influence will
continue, but the office itself will become more
technologically sophisticated – or smart – as occupiers
utilise technology to support decision making, manage
the workplace environment and proactively curate the
workplace experience.
It would not be an exaggeration to say that it could have a more dramatic impact on the
technology has been the greatest influence long-term nature of jobs and job creation
on the global workplace over the last decade. than the virus itself.
There are four key reasons. A DYNAMO FOR GLOBAL MARKETS
Firstly, the emergence of a new set of tech In our view, the influence of technology will
titans has fuelled office demand, both not lessen post-pandemic. Tech companies
directly and indirectly, across global real will continue to set the tone for the global
estate markets. Secondly, the workspaces workplace. The largest of these companies,
that these titans have designed and emboldened and enriched through the
delivered, whether in Kings Cross, Sydney or widespread adoption of their technologies
Silicon Valley, represent a significant step- during the pandemic, will continue to
change in what we define as best-in-class expand and diversify their activities. Indeed,
workplaces and have served to elevate the 39% of those global occupiers surveyed
workplace discussion occurring across who anticipated an increase in the size of
other industries. their global footprint over the next three
years identify as Technology, Media &
Thirdly, the hardware and software created
Telecommunications (TMT) businesses.
by these titans has revolutionised how we
In our view, the influence of work, where we work and, indeed, what we
Tellingly, of those, 70% are planning to
technology will not lessen increase their global footprint by more than
work on – never more so than over the last
post-pandemic. Tech 10% of its existing size.
twelve months. Fourthly, new technologies
companies will continue to The tech sector remains on an expansionist
such as Artificial Intelligence (AI), Virtual
set the tone for the global footing and will therefore function as a
Reality (VR), Augmented Reality (AR),
workplace. dynamo for global real estate markets.
automation and robotics – what we referred
to as next wave technologies in the first Even during the last year, major tech
edition of (Y)OUR SPACE – will continue to companies continued to make commitments
force structural change within businesses to the office with Facebook, TikTok and
and across the global labour market. This Netflix all completing significant deals in
last trend has been somewhat neglected in major markets.
recent debates about the future of work, butYou can also read
