Office Space Trends will Continue to Change
Earlier this week there was an article in the Wall Street Journal that created some buzz for those following the ailments of the commercial real estate market. The thrust of the article was questioning the velocity of the rebound in the office market sector based on premises that corporations are looking reduce the amount of space per employee. This trend is not news to those of us who represent tenants or landlords in office leases. What did come to mind for me is how we as tenant representatives would adapt to serve the shifting space needs of our corporate clients.
Increasing Focus on Real Estate
Today Corporate America is getting smarter and more focused than ever on cost effective solutions to reduce real estate expenses as well as looking for new ways to utilize real estate to increase productivity and attract the best human capital to their organizations. For most companies particularly service industries, the three biggest costs incurred are the workforce, real estate and technology which together have close interplay on the impact of the operational and financial results of an enterprise.
Historically speaking corporations made real estate decisions based on financial and operational objectives and a Tenant Rep’s job was to get a handle on their client’s space requirement, identify their best options in the marketplace, create competition for their client’s tenancy and negotiate the best deal possible. Successful tenant representatives knew the market inventory and were effective negotiators. We basically would find acceptable office space, at a location the CEO liked and negotiate a price the CFO blessed. Along the way we learned a little about space design, office furniture, fiber optic telecommunications and managing construction costs.
What’s different today than say five or ten years ago for the tenant rep broker? Well for starters, the required knowledge base is extending beyond real estate and construction to include technology and human resources. Today we are learning along with our corporate clients about subjects such as cloud computing, sustainability initiatives as wells as what makes the facebook/twitter generation tick.
Three factors changing the workplace today
- Evolving Workforce: Today’s workforce primarily encompasses three generations Boomers, Gen-X and the newly arriving Millennial who comes to the workplace with a different mindset. The shifting demographics of the workforce are changing how companies design and use their space with a trend towards more open collaborative environments.
- Technology: The pace at which technology evolves is almost mind blowing and it’s having an impact on how we use office space and the volume of space that is required. The initiative to do more with less is enabled by the rapid development of technology and advancement in communications.
- Sustainability: Not only are corporate clients more motivated to be good stewards of the environment, they are recognizing sustainable workplaces are not only cheaper to operate than traditional buildings, but also important in attracting employees.
Broker or Consultant?
The Tenant Rep team of the future will still provide the brokerage role but also that of a workplace consultant required to look beyond the client’s space needs and consider the client’s core business issues. Yes we will still have to manage and execute real transactions, but the part about getting a handle on our client’s space requirement will become even more sophisticated requiring knowledge in a new set of disciplines.
Two years ago nobody was touting their knowledge of how to negotiate a green lease, few had heard of cloud computing and the word tweet was not in our vocabulary. We will learn and adapt to meet the changing needs of our corporate clients. I view Corporate Americas increasing focus on their office space as a tool in their business strategy as positive news. I will be happy to show them how to do more with less and negotiate a green lease in a LEED Certified building. They need guys like me.