While the retail landscape has experienced a dramatic evolution over the past two decades, commercial real estate, particularly office space, has been notoriously slow to adapt — that was, until March 2020....
These past eight months have propelled office real estate 10 years into the future. Where retail transformed from brick-and-mortar businesses to online to omnichannel, a similar trend is happening as office spaces are adapting from a core office to a hub-and-spoke workspace experience with dispersed physical spaces.
-
This research piece was originally featured on Forbes.com as part of the Forbes Real Estate Council.
While the retail landscape has experienced a dramatic evolution over the past two decades, commercial real estate, particularly office space, has been notoriously slow to adapt — that was, until March. These past eight months have propelled office real estate 10 years into the future. Where retail transformed from brick-and-mortar businesses to online to omnichannel, a similar trend is happening as office spaces are adapting from a core office to a hub-and-spoke workspace experience with dispersed physical spaces.
In retail, even brands that built themselves as e-commerce companies went from “clicks to bricks,” evolving from online-only to include a physical presence. So, too, will our current remote work landscape as it morphs into a full-scope workplace offering with office space experiences that meet employee needs in core business districts, in shared spaces near home, and yes, within homes for remote work, too.
Here are a few things those in charge of leasing office spaces for their business can learn from retail’s adaptation:
Your industry may become unrecognizable.
Just as pre-2000 retail would be unrecognizable to today’s consumer, so too will the 2019 office workplace be to employees, tenants and landlords of 2030.
In the late 2000s, large-scale retail stores were experiencing unprecedented competition from an unlikely bookseller in Seattle, who emerged from behind the shelves to offer consumers everything from A to Z — note Amazon’s arrow in its logo. There was a monumental shift to online shopping and mobile consumption and suddenly, brick-and-mortar stores were not the only place to shop. Yet, many brands that built themselves up as e-commerce companies — like Rent the Runway and Warby Parker — eventually added physical retail stores to their company strategies.
Similarly, the office will embrace its own version of omnichannel: a dispersed workspace portfolio. This will enhance employee experience through smart workspace design and a strategic mix of flagship offices, flexible office space, collaborative environments and virtual office. The combination creates purpose-driven workspaces where employees can have the authority and agency to choose where to work based on their needs in any given day or week.
Employees are becoming the consumer.
In retail, consumers spend money in a multi-channel world. They have autonomy and can control what they want, when they want it and how they want to get it. With the click of a button, we can order food, watch a movie or grab a ride. Employees are now akin to the consumer and expect — or rather, demand — choice.
Consumer behaviors now bleed into how we work. This has accelerated in the post-lockdown world. PwC’s survey from June 2020 indicated that employees are keen on the flexible workweek concept, and that “while the COVID-19 crisis showed that staff can interact well when apart, people still want to engage with colleagues in person. It’s why 50% go into the office.” That said, the survey found that more than half of executives anticipate offering an option to work remotely at least one day a week.
Given these changing headwinds, employers and executives will need to be nimble in their thinking and flexible in their workspace offerings to keep employees engaged, secure and motivated. Real estate, human resources and information technology teams will be working together more closely than ever to manage this monumental transition.
There is no one-size-fits-all approach.
All these dynamics are forcing companies to address a key question: What is the office of the future? Yet there is no one answer. It will depend on company, culture, type of work, where that work can be performed and overall wellness initiatives.
For retailers, the line between physical and digital diminished and led to the rise of the omnichannel retail experience. Retailers focused on creating personalized experiences through email, website, social and in-store activations. Understanding the behaviors of their shoppers and engaging them with a multichannel approach has been a key shift in the past decade. This has led to greater brand loyalty and increased store traffic. While the pandemic is straining the overall retail sector, the ability to shift back to a digital environment has helped to sustain some retailers during the pandemic, while those who relied on their physical retail presence over digital platforms are struggling to make it through this challenging market environment.
The office will likely follow the same approach. Call it the omnichannel office. Employees’ ability to work where they want, when they want and with the ability to have digital and in-person collaboration all within an engaging experience is the next normal. HR and IT will help staff deploy the right tools to increase productivity across all workplaces. In “hub” locations, we will see more collaboration areas, increased amenities, contact tracing and touchless technologies. Real estate leaders will look to measure these shifts to inform the future of what kind of space is needed, how much and where. More built-in flexibility will allow for more dynamic portfolios to scale up and down when needed.
Embrace the experience.
Take inventory of your people instead of place. Creating partnerships across functions to address and track employee engagement, retention and productivity will help establish focus areas for your workplace. Model your real estate portfolio to understand the art of the possible. Leverage data to help define the mix of hubs, spoke, homework and roam spaces required to meet employee needs. Establish an agility plan. Real estate has a long lead time, so work must be done now. Defining a plan to inject agility from leasing activities through to delivery enable those new ways to work. New technologies and workplace models are rapidly evolving, and finding the right mix will help drive efficiencies, cost reduction and sustainability.
Creating an omnichannel experience with a focus on employee experience is the future.
