Global Trends that are Determining the Workplace of the Future
Flexible space is a generating plenty of conversation about new ways of working, but demographic, cultural and corporate evolutions are the real agents of change at work.
At The Executive Centre we are incredibly proud of the team we have assembled who are responsible for growing our network, developing exceptional new experiences for our Members and leading the charge as our industry continues to rapidly evolve and change. In this new series of ‘Executive Opinions’ we will be inviting Members of our HQ and regional teams to share their insights and expertise on different aspects of our business and we are excited to launch with a piece by Todd Liipfert, Senior Development Director – Expansion.
Flexible space is generating plenty of conversation about new ways of working, but demographic, cultural and corporate evolutions are the real agents of change at work. Flex space is not a new concept in the commercial real estate industry, but conversations about new ways of working have become increasingly mainstream as part of a global shift toward more agile and innovative space solutions. The flexible workspace industry is changing and growing, shaped by four key global trends; urbanisation, technology, flexibility and an evolving workforce.
The Future of Flex
As the world’s largest asset class, real estate is worth several times the global GDP. Predictions vary on the outlook for flexible uptake, but JLL asserts that by 2030, up to 30% of corporate commercial property portfolios could be made up of flexible space. In short, it will remain a significant option for anyone seeking commercial space in the future. The industry has helped shape new strategies for landlords and tenants, and engineered a solution that provides customised, collaborative, and efficient spaces. This said, there are external factors driving changes to the industry that have significant global reach beyond the rise of flex spaces and providers. Changes in the market are thanks to the emergence of four overarching global trends.
As the global population continues to concentrate in cities, the things we demand from our living, working and recreational spaces change. Asia is highly indicative of this and by extension is the fastest-growing coworking market globally. As reported by the UN, between 2000 and 2016, the world’s cities with a population of 500,000 or more, grew at an average annual rate of 2.4%. Of these, 47 cities grew at more than twice that rate with an average growth rate in excess of 6% per year. Significantly, 40 were in Asia with 20 in China alone.
Innovations in mobile technology and cloud storage have had a significant impact on how much space businesses need and how they choose to use the space they do have. Cloud services offsite mean smaller and more efficient offices without large server rooms. Colliers predicts that by 2020, 60-70% of all software services and spending will be cloud-based. Research by Deloitte asserts that by 2020, nearly 50 billion connected devices will have the capability of plugging into an office building with sensory deployment in the commercial real estate industry expected to boom.
If the rise of flex has shown anything, it is that corporates need tailored leasing terms and diverse spaces that align with their precise and individual business requirements. The Global Coworking Survey found that corporations grew from making up 20% of the coworking market in 2010, to 61% in 2017. Already, 70% of Microsoft’s New York City cohort use flexible spaces, enabling teams to work from a variety of locations based on demand, work flows and personal preference.
A Changing Workforce:
Retaining top talent and enabling best results requires an updated approach to workspace strategy. An increasingly millennial workforce has been key in shaping expectations about how and where people want to work. Additionally, competition for talent and the need to increase efficiency are driving corporations to seek desirable and collaborative workspaces for their teams. No longer are individuals tied to offices and cubicles – a modern workforce has a modern outlook. Globally, 67% of business are choosing some form of flexible workspace as a long-term strategy and not simply as a temporary solution to their workspace needs.
Putting It All into Perspective
As reported by JLL, at its peak, Kodak employed more than 145,000 people before disruptions to the sector forced it to declare bankruptcy in 2012. A few months later, photo-sharing app Instagram was acquired by Facebook for US$1 billion. The irony is that even with its billion-dollar valuation, Instagram, staffed by just 13 people at this time would not have met the minimum requirements for premium office space under a traditional leasing model. Flexible workspace is uniquely able to bridge this gap and provide adaptable and modern workspaces to quickly growing, high-value corporates in the world’s best buildings and locations.
Flexible workspace as an option in the commercial office playbook is here to stay. Whether it is used as a primary office, temporary project office, or as part of a flex-and-core strategy, these spaces provide unique flexibility and access to spaces for high-value companies who would otherwise be relegated to second-class space. Businesses are no longer looking purely for office space, but for communities where their business can grow and thrive. As the fastest growing flexible office market in the world, Asia is a living, breathing realisation of these trends and is well placed to continue leading the charge toward a truly innovative workspace culture.
The Executive Centre is able to support Members throughout Asia Pacific, China, Australia and the Middle East through a carefully calculated centre network that meets our Members where they need us most. The year ahead will be an exciting period of continued growth and we look forward to entering new markets, expanding in existing localities and supporting our network with exceptional spaces and a rich digital ecosystem.