The New Office Space Paradigm

by CoyDavidson on May 22, 2011

Will the Traditional Workplace Become Extinct?

News-flash, the world didn’t end yesterday and traditional office space and the workplace as we know it is not going away anytime soon. I came across an article yesterday that was posted on Twitter titled, Is the Traditional Office Becoming Extinct?

I have seen a headline similar to this before and while it certainly going to capture my attention; I have learned to expect it to come from either a temporary office space provider or someone whose technology product will support the home or flexible workplace environment.

The argument to the premise that demand for traditional office space will dramatically decrease is the fact that the United States economy continues its shift from a manufacturing to a service based economy, which will increase demand for office space, despite a trend of allocating less office space per employee by corporate office space users.

Searching for Reality

I have found in the past in instances where you have bold predictions that are on polar opposite ends of the spectrum, that reality typically ends up somewhere in the middle. Case in point, you will remember as recent as a year ago when many voiced the opinion that commercial real estate was going to be the last and final death blow to the United States financial system. Today you can observe people who give the impression from their words both written and spoken, that the commercial real estate markets are healthy and booming. The reality is the commercial real estate markets are improving, but not exactly at a robust pace and many commercial real estate assets remain in a distressed state.

What I like about the previously mentioned article was the fact it was grounded in reality and emphasized the point that while new workplace strategies are emerging, it acknowledged that traditional office space is not a dinosaur. There are factors that will shape the new office space paradigm, these include:

  • The cost of energy and the initiative to reduce the overall carbon footprint
  • Technological advancement that reduces the volume of space needed per employee
  • Cost-cutting and efficiency initiatives by corporate office space users
  • The arrival of the Millennial to the workplace

This particular article cited research that most people want a more flexible workplace, but do not want to work from home: “ We identified only 12.3 percent of people want to work from home, but you can also see in the research that people want a very short commute.

The premise of the article outlines the emergence of “third space” provided from shared office space service providers as an increasingly utilized workplace strategy by corporate employers. I tend to agree with this premise that many companies will look for ways to offer a more flexible workplace. Corporate office space users will continue to look at and utilize alternative workplace strategies. However the fact remains that:

  • Corporations are not going to give everyone flexible working options; and
  • “Face to Face” remains a critical component of collaboration on projects and we no longer work in silos.

How does this impact office space demand and market dynamics?

While I believe many companies will be able to reduce their overall real estate footprint through the use of technology, innovative office space planning and flexible workplace strategies, the growth of the service economy will create demand for more space that includes greener and more technologically advanced office buildings. These new buildings will be located in the urban core markets in major cities as well as highly desirable suburban submarkets that offer the dual amenity of a great place to live and work. There will be some suburban office markets and obsolete real estate that suffer, yet we will still be building new office buildings in this country for some time to come and while there will likely be more shared office space providers within those buildings, most of us will still get up and make the shorter commute to our traditional workplace at least most days of the week.

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