Yesterday, 18 January 2022, I attended JLL's virtual Perspectives for Enterprises 2022, where key industry speakers explored the future of work in a hybrid environment and shared what developments they expect to see in your workplaces.
If you have time it is well worth checking out, but if not, here are my key takeaways:
JLL's research division has identified that business in all industries are planning for growth, which is a sign that economic recovery is on its way. However, supply chain pressure will remain in the short term, which may dampen any uptick in certain sectors.
It was also predicted that there would be strong recovery in leasing volumes, but demand will be focused on locations and buildings that meet occupier requirements. This builds on the existing trend of a two tier market, as best in class buildings out perform the rest. Landlords may need to be flexible to preserve yields and are expected to need to focus on new leasing models, such as on-demand offices and consider offering plug and play fit outs. A rebound was also predicted for flex office providers, as traditional stock failed to meet the short term needs of demand.
Hybrid is here to stay.
Businesses should now be looking to optimise their hybrid models, rather than considering if hybrid is here for the long term. Employers should take this opportunity to question what work is done from where and experiment with how their hybrid model functions. The pandemic has acted as a catalyst for new management culture, new technology, new office layouts - but employee demands are also higher, requiring amenity rich and sustainable spaces.
Michelle Hey said that HSBC didn't want to revert to the old ways. To be successful, she suggested, the future of work must be different, or they will have missed the opportunity. This means being flexible, not uniform and being guided by staff and not dictated from above. The challenge of hybrid is the lack of face to face contact, the need to collaborate effectively and to avoid isolation. It is not about productivity any more, that question has been answered. The aim therefore is to maintain a strong culture through hybrid, rather than seeing the only solution as being to force people back into the office.
Jeri Ballard of Shell caught my attention with her suggestion of how to get people back into the office: "food works". Ice cream with leadership and speciality coffee days were a couple of suggestions that have been successful at Shell. Where is my Oyster card...? But she concluded it was all about employee experience and allowing them to be at their best.
With the built environment accounting for up to 40% of global climate emissions it should come as no surprise that ESG was high on the agenda. It was predicted that 2022 will be the year we will see ESG strategy change into ESG action.
JLL's researchers predict that the number of occupiers adopting net zero commitments will double over next three years. Few offices are expected to meet the sustainability standards that occupiers want, with the amount of net zero office space in the pipeline failing to match the number of upcoming expiries. We can therefore expect to see net zero buildings command a significant premium and faster leasing times.
With embodied carbon increasingly being under scrutiny, developers are going to have to give this greater consideration if they want their buildings to be easy to let and achieve the best rents. Retrofitting, refurbishing and reusing will all be challenges and opportunities. Joanne McNamara indicated this was already on Oxford Properties' radar, with just in time retrofitting creating significant opportunities for their business.
JLL predicted wellbeing of the workforce would be a big trend, with a third of employees not currently having any form of wellbeing offering.
Shell are focusing on employee experience and removing barriers, by making workplaces truly inclusive. This is not just about mobility, but also considering the differing needs of all employees, such as women and LGBT+ people. Meta are also focusing on wellbeing, with food, amenities and more outdoor space high on their agenda.
Technology will be a big disrupter and we should expect to see the rise in "climate tech" to monitor emissions. We should anticipate that the carbon footprint of buildings will become more transparent and measurable.
Rob Cookson of Meta expects that technology will impact real estate strategy and is an important part of attracting and retaining the best talent. Meetings, he suggests, will move from video to virtual reality, as businesses strive to connect people. The increased use of workplace sensors will become necessary, so that use of space can be measured and the data used to make better decisions. He also expects to see AI within the workplace, assisting with a variety of functions, including sorting the recycling.
The big challenge that Oxford Properties identified, from an Internet of Things perspective, is the integration of different systems. This will be a big issue as landlords seek to harness technology in their buildings and it will take collaboration with their tenants to achieve. Another trend predicted was the increased use of data scientists within businesses and their greater integration within teams.
It is an exciting time to be operating in the real estate market, where external factors continue to cause disruption and create both challenges and opportunities. I will look forward to the next Perspective for Enterprises event to see how these trends continue.
- Jeri A. Ballard, EVP, Real Estate, Business Operation Centres, and Corporate Travel, Shell
- Joanne McNamara, EVP, Europe & Asia Pacific, Oxford Properties
- Michelle Hey, Global Head of Corporate Services, HSBC
- Rob Cookson, VP, Real Estate and Facilities, Americas, EMEA and APAC, Meta
- Mark Caskey, Work Dynamics CEO, EMEA - JLL
- Tom Carroll, Head of Research & Strategy – EMEA, JLL
- Jon Neale, JLL, Head of UK Research