The future of work impact on Commercial Real Estate
In a recent survey, KPMG explored post-COVID-19 real estate plans in Australia, the future of work and the role the physical office will play.
Whatever the new workplace will look like, it will lead to a greater collaboration between landlords and tenants as businesses respond to changing employee expectations, economic pressures and a more volatile world.
KPMG surveyed senior decision-makers from 12 of Australia’s largest commercial tenants, and four of Australia’s leading commercial landlords to understand their considerations on their post-COVID-19 real estate plans, the future of work and the role the physical office will play in that.
They found six key learnings from the research:
- No one-size fits all workplace
- Tenants will favour hybrid workplaces
- Flexibility will be key
- Offices will provide data and technology as core
- Physical office will evolve into collaboration hubs
- Tenants and Landlords will be collaborating
1. The workplace will evolve over the next five years, but there is no one-size-fits-all approach.
Prior to COVID-19, Australian businesses already had some flexible workplace solutions in place, with almost 50 percent of their workforce incorporating some degree of remote working into their week. Since the COVID-19 shutdowns, 50 percent of companies think that over the next five years that the middle and back office roles will be working remotely 51-80 percent of the time. Unsurprisingly, 73 percent are now accelerating their work from home strategies. This increase in remote working will naturally impact how much office space businesses will require. KPMG found that 58 percent of respondents were expecting to decrease their need for CBD office space in the next five years.
2. Tenants will favour hybrid workplaces
Hybrid models that combine remote working with some form of hub and spoke model (CBD headquarters and smaller offices in local and regional areas) will be increasingly favoured over the next five years with 83 percent of all respondents saying they will move to this type of model in the next two years. The vast majority of organizations interviewed feel that the under 50 demographic within their workforce, will in the future prefer a hybrid model (100 percent felt this would be favoured by those aged under 40 years).
3. Flexibility will be key
Flexibility will underpin hybrid workplaces of the future – shaping both the employee experience and the tenant/landlord relationship.
For 91 percent of respondents surveyed, the employee experience/value proposition is the key driver for them to re-evaluate their future of work strategy, and 45 percent claimed cost pressures are driving their considerations. Employees want to retain these new ways of working and decide to work in the office or remotely depending on the activity being performed. This desire to implement change was clearly reflected in our report showing that 83 percent of organizations won’t maintain their current leasing strategies and 58 percent reporting that they will be seeking more flexibility in their leases moving forward.
4. Offices to provide data and technology as core
Transition to hybrid workplaces will see a flight to quality prime assets where offices are expected to deliver data and analytics as a core offering.
Offices with assets that offer workplace analytics, a range of different working spaces and technologies to connect will be well placed for the required hybrid models of working. And what that workspace will look like is also different, with 92 percent requiring a range of spaces to do different types of work within, 83 percent requiring technologies to connect with remote workers and clients and 67 percent requiring personalised communications to keep people informed and updated on changing circumstances.
5. Head offices become collaboration hubs
Physical head offices will evolve into teamwork and collaboration hubs that drive organisational productivity. The physical office will be reshaped to drive organisational productivity and culture, with 67 percent of respondents believing the office will be a place to collaborate, innovate and solve problems with their teams, 67 percent believed it will be for interacting and problem solving with clients and alliance partners, and 42 percent using the space to connect and socialise with work colleagues. Only eight percent believed the office would be a place to do deep thinking work that can’t be done at home.
6. Tenants and landlords to collaborate
Tenants and landlords will need to come together and collaboratively shape and deliver the future of work. Defining the future of work and the long-term role of the physical office building is challenging. To find a way to move forward together, 66 percent believe that the role the landlord plays with their business will change to some extent, or somewhat, in the next five years.The report found that 83 percent of respondents imagine that there will be a more collaborative relationship with their landlords where jointly, workplaces will be updated and made more flexible as business needs evolve over time.
For the full article please click link below:
https://home.kpmg/au/en/home/insights/2021/05/commercial-real-estate-future-of-work.html
