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Three years after the COVID-19 pandemic reshaped global working behaviours, a new report illuminates what the future of the sector holds — and what tenants are wanting from their workspaces.
Working in unison, the Urban Land Institute and the Instant Group compiled a research project featuring a global survey of 285 participants, highlighting how changed occupier behaviour and broader macro trends continue to impact workspace demand, as well as how landlords can navigate shifting sector sentiment.
The report’s results produced four key takeaways: offices are here to stay; occupiers and providers of space need to come together on office priorities; the demand for shorter and more flexible leases and per-per-use services calls for business model reinventions; and the time for landlords to improve energy efficiency is now.
Shifting occupier activity has been no secret, with the myriad of COVID-19-related restrictions and lockdowns forcing many businesses into remote working arrangements that, in most cases, seem to have stuck around.
Despite this trend, the report detailed how physical office spaces remain a core component of operators’ business strategies due to their position as “not just a valuable pillar for productivity, but also a crucial resource for binding employees to a company’s brand, philosophy, and mission.”
A core consideration for the future of office space is the stance of many occupiers desiring increased employee-to-desk ratios as opposed to the pre-pandemic norm of one employee per desk.
Furthermore, it found that “businesses are placing significant value on buildings that operate as well-serviced social hubs designed around functional and social areas,” with meeting rooms, collaboration areas, and event spaces all listed among tenant requirements.
A consideration for building owners is the growing trend among occupiers to hunt for offices that offer a range of amenities, including on-site gyms and childcare facilities, outdoor spaces, and food and beverage options, amongst others, with a willingness to pay extra for spaces offering such services present among respondents.
There does, however, remain a disconnect between tenants and landlords: 20 per cent of occupiers rate collaborative spaces as their top office priority, as opposed to 14 per cent of landlords.
On the other end of the space spectrum, 11 per cent of occupiers noted quiet spaces for concentration were valuable to them, over double the 5 per cent of landlords who responded similarly.
All in all, over 80 per cent of landlords expect a reduction in occupier requirements over the next five years. But, this figure reduces to 30 per cent of occupiers expecting a change in the next 12-to-18 months, while just 15 per cent view this shift occurring over a five-year period.
One thing both stakeholders are able to agree on is the importance of energy efficiency in leasing choices, with 72 per cent of occupiers and 75 per cent of landlords labelling energy efficiency as the primary factor in their ESG strategies.
“Incorporating technology, such as smart sensors and advanced AI platforms, into offices to help occupiers track the efficiency of their workspace use, in terms of occupancy, collaboration, and energy use, will be vital for landlords to provide the workspace of the future,” it found.
Occupiers remain concerned about the embodied carbon of a building, with 18 per cent of tenants selecting this factor as a crucial factor while indicating it doesn’t drive leasing decisions to any great extent.
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