Location Loses Prestige as Workplace Experience Pivots Towards Technology Advancements and Mobility; Landlords Best Positioned as Enablers of Change
Sydney, November 16, 2017 – Technology has emerged as the primary catalyst for a long-term commercial real estate revolution in Asia Pacific. Increasingly, corporations in the region are recognising that the time to restructure their operations around new technology is now, and this will require innovative talent to facilitate the change. According to CBRE’s research, advances in technology are breaking the traditional expectations on location and placing employee experience at the centre of major real estate decisions across the region.
CBRE’s WORK_IT: Technology | Workplace | Jobs survey—the inaugural report within a broader series—concludes that technology will redefine Asia Pacific’s corporate real estate order in the coming years, with landlords likely to emerge as the greatest enabler of change. Employees’ preferences are rarely included in the corporate real estate decision-making process, however, according to CBRE Research, rapid technological advancement is reversing this process and individuals are increasingly acting as workplace influencers. As a result, corporations’ decisions are being informed by connectivity and accessibility as well as talent attraction and retention.
“The transitional role of technology in commercial real estate will continue to enhance and influence an evolving employee experience across Asia Pacific. While location will remain important, the changing order of real estate will require buildings and work spaces to be far more flexible and adaptable than before,” says Steve Swerdlow, Chief Executive Officer, CBRE Asia Pacific.
Major findings of the report:
- Location is no longer everything: Location has long served as a major determinant of where business is conducted but technology innovation and availability of human capital are changing locational preferences.
- Technology puts people at the centre of the workplace: The move towards a tech-enabled workplace is driving a stronger emphasis on improving the end-user experience. More than half of occupier respondents want a more customised workplace environment that adapts to the needs of their people.
- Mobility is rewriting office demand: As mobile working takes hold across Asia Pacific, companies will create office environments that improve staff satisfaction and comfort. The user experience will influence real estate strategies, and technology will enable employees to customise their working location, allowing them greater flexibility in choosing, how, when and where to work. Based on CBRE research, corporates will increase headcount in IT professionals and outsourcing/offshoring, whereas a net decline is expected in the back office function.
- Landlords are the enablers of change: Occupiers are the activist in changing the workplace environment. Landlords must partner more closely with tenants when developing smart buildings, engaging with tenants at the planning stage to ascertain the features and technology they require. Incorporating technology in new buildings will be relatively straightforward, but retrofitting older properties will be more challenging.
As a result of this growing awareness, approximately 50% of occupier respondents expect to require less office space in future, primarily because of improved space utilisation and a reduction in headcount.
However, while the volume of space required will decrease, CBRE expects to see occupiers demand higher quality space capable of encouraging greater collaboration, innovation and employee wellbeing. Landlords are comparatively more confident about the outlook for demand as the shortage of demand will come from co-working and start- up companies, with only 32% of respondents expecting to see a decline.
“Technology is enabling a more mobile workforce and requiring companies to build more agility into their headcount planning. As better space utilisation, and weaker front and back office headcount growth will reduce overall demand for office space, landlords must act now to ensure they remain competitive. In time, they will emerge as the real catalyst for meaningful change,” says Dr Henry Chin, Head of Research, CBRE Asia Pacific.
From a Pacific perspective, the report highlights that the major upside for business is to drive greater labour productivity through the automation of repetitive tasks. However, CBRE’s Head of Research, Australia, Stephen McNabb says the key will be to balance this against the total return on the CAPEX related to technology to ensure the end result is higher output for the same level of business inputs.
“This represents technological progress and is the fundamental productivity challenge across Australia,” says Mr McNabb.
“Technology is expected to have a positive impact on businesses across the APAC region, but Australian respondents tended to feel more strongly about the positive impact of technologies on their business in comparison to the APAC average – that’s across all specific areas of technology ranging from smart phones, automation and Big Data, being the big three in terms of impact, through to the Internet of Things and AR/VR. The automation of tasks will lead to some fundamental changes in roles and functions and while 50% of occupiers expect this will directly reduce space, there will be some offsets through functions or tasks which are outsourced or new ways of sourcing expertise locally through emerging creative industries which will occupy more space, including co-working spaces.”
- Mobility as reality: 85% of respondents expect to see an increase in mobility in their future workforce via workplace formats such as Activity-based Working or AGILE Workplaces.
- IT rising: IT headcounts will increase and more multinationals are likely to use co-working spaces and incubation centers to improve their access to IT talent and innovative ideas.
- Internet of Things (IoT) gap: Most landlord respondents (84%) believe that technological innovation will drive stronger demand for smart buildings. In comparison, just 56% of occupier respondents indicated the same, reflecting the fact that tenants retain the view that smart buildings are nice to have but not essential.
CBRE’s WORK_IT: Technology | Workplace | Jobs report was based on the findings of approximately 100 face-to- face and phone interviews conducted by CBRE Research between June and August 2017. Respondents comprised 69% of occupiers and 31% of landlords to ensure a balanced view from both groups. Most respondents were senior corporate real estate staff. Also interviewed were individuals responsible for technology innovation within their organization. The marquee report is part of a wider series that will continue into 2018, examining the transformational impact of technology in the workplace. The report series includes country-specific survey reports for China and India, and a collection of articles on technological impact. More details here: https://www.cbre.com/TWJ