We are all digital now. Will our offices follow?
Paul Cuatrecasas, CEO of investment banking firm Aquaa Partners says that ‘Covid-19 has just slapped everybody in the face so get ready because what’s coming is going to be even greater disruption in different forms[i].’ One vector of this disruption lies with commercial real estate.
Even when lockdowns are lifted and commercial space reoccupied to some degree, it is likely that many people and companies will be less eager for the previous status-quo of densely packed workplaces. For CEOs, decisions regarding the future of commercial real estate (CRE) will be ever more strategic. Barclays, for example has suggested that big offices ‘...may be a thing of the past[ii].’ This would seem especially so if the remote work experiment proves successful[iii]- the solutions implemented during crises often endure.
Smart cities could become key talent magnets in their own right, with 43 percent of business leaders are looking to move offices to cities with a compelling smart city vision[iv]. Bain suggests that to survive many CEOs will need to explore ‘...public-private partnerships wherever applicable. Companies' best partner in recovery may be a local municipality, mayor, governor, a regional committee, or a country’s governing body[v].' Smart cities could be a key intersection of such partnerships. Emerging examples are already visible, with Chicago having announced plans that require EV charge capability for new buildings by 2040[vi]. The role, connectivity with other infrastructure and purpose of buildings are set to change, perhaps fundamentally.
‘Office design...must be responsive to the speed of change[vii].' If it isn’t, the economics and rationale for a return to normal would appear diminished, especially if COVID remains without a vaccine for a prolonged period. With work from home increasingly viable, CEOs will look at buildings as needing to do more. Data management and performance management[viii] will likely become critical levels of future CRE success. CEOs will need to examine their likely future environment carefully when regarding CRE strategies. Scenarios accounting for future workforce needs, composition, digital work delivery capabilities and more will need to be considered.
Foresight seeks to redress the dangerous, short-term weighted imbalance evident in traditional planning by providing a systemic framework for thinking about, imagining, and planning for the future. At its core, foresight allows stakeholders to have structured conversations about uncertainty, which is perhaps the only certainty right now. Done correctly, it can reveal challenges and opportunities inherent in CRE that are easily dismissed in a business-as-usual environment.
The need to justify CRE footprints.
As new formats of work prosper, physical spaces will need to become ever more strategic and enablers of wider workforce strategies.
New partnerships, standards and direct to end-user relationships will likely appear.
At CEOforesight - https://www.ceoforesight.com/ - we are here to help CEOs change the way you think about the future with detailed, personalised data, foresight and implications for your organistion.
[i] Source: Ship Technology, 2020 https://www.ship-technology.com/features/impact-of-coronavirus-on-shipping/
[iv] Source: Cognizant, 2018 https://www.cognizant.com/futureofwork/article/smart-cities-are-smart-business
[v] Source: Bain, 2020 https://www.bain.com/insights/the-great-retooling-fm-blog/
[vi] Source: Conduit Street, 2020 https://conduitstreet.mdcounties.org/2020/04/28/chicago-to-require-ev-charge-capability-on-new-buildings/
[vii] Source: Economist Intelligence Unit, 2018 https://perspectives.eiu.com/infrastructure-cities/workplace-evolution-empowering-employees-flexible-work-environment