Corporate Real Estate Leverages Hybrid Office Environments to Win with Cost, Talent and ESG
Cushman & Wakefield (NYSE: CWK), in partnership with CoreNet Global, the global professional association for corporate real estate, has released new survey results showingsome key shifts in occupiers’ approach to workplace decisions.
“Our survey, in cooperation with CoreNet Global, provides a detailed look at what is driving workplace, location and portfolio decisions by tenants around the world – and the findings demonstrate movement in thinking and approach in the aftermath of the pandemic. Moreover, our special topic in this edition is on how occupiers are reacting to the rising importance of business objectives associated with Environment, Social & Corporate Governance (ESG), as climate change continues to affect our lives and businesses. In summary, our findings show that real estate goes flex, to win on cost, talent and ESG,” said Dimitris Vlachopoulos, Partner and Head of Total Portfolio & Location Strategy, EMEA at Cushman & Wakefield.
Key Findings:
- Cost, talent and operational excellence are the top three strategic drivers that inform key real estate decisions.
Occupiers consistently identify cost, talent, and operational excellence as the top drivers of their real estate strategy and decisions. The exact order of these has shifted somewhat in 2023; talent continues to be very important, but cost has also risen in importance. This is not surprising given the elevated uncertainty since mid-2022 as inflation peaked and, in response, interest rates began to rise.
- ESG is rising in importance, and most CRE teams have defined ESG goals with underlying drivers varying by region.
Since the last survey, ESG moved from No. 8 to No. 5 globally as a key corporate real estate (CRE) driver, with two-thirds of CRE executives indicating their firm has ESG goals that they have already begun to implement or are planning to implement.
- The targeted amount of communal space within the office has doubled compared to pre-pandemic levels (40-50% vs 20-30%), with the majority of occupiers (89%) seeing the office as a place for creativity, innovation, osmosis and as a planned meeting point. With office occupancy generally lower than pre-pandemic levels, there has been a clear trend towards occupiers reducing their overall footprint, while simultaneously optimising their current space with amenities and services to increase office usage and experience.
“The purpose of the office is clearly changing but occupiers have not fully adapted to the future ways of working. The office is now a destination to connect people, place, and purpose. Employees will learn, innovate and socialise in an engaging workplace,” said Cameron Ahrens, Head of Global Occupier Services, Asia Pacific. “To cultivate a workplace environment that is flexible and collaborative, occupiers are looking to adapt their spaces and rethink the way they engage with people. This not only help to motivate employees, but also aligns with their social pillar goals.”
“The report confirms what we hear on a daily basis from clients – that occupiers continue to juggle many important, and sometimes competing, priorities. As the role of the workplace continues to evolve against a backdrop of global economic uncertainty, organisations are doing their best to reconcile cost, talent retention, employee wellness, carbon reduction targets, and operational efficiency through their real estate. With so many changing variables, decision making is as complex as it has ever been,” Ahrens said.
According to Cushman & Wakefield’s research, office space is still in demand with Asia Pacific in the lead. With a favourable long-term outlook for the region, the office demand growth drivers in many Asia Pacific markets are so strong that they will more than offset the impacts of flexible working, resulting in ongoing positive net absorption. As such, it is important for occupiers to ensure that workplace not only leads to increased efficiencies in the use of assets but works to drive increased business innovation and productivity while allowing real-time flexibility to move with the speed of business change.
The survey also explored the rise of ESG factors as drivers of office space demand, and occupiers’ willingness to pay a premium to incorporate sustainability into their workplaces.
“Companies are working hard to adapt to an evolving landscape and shifting priorities post-pandemic. Finding the right balance is critical to making smart decisions about their workspace needs, and also for attracting and retaining the right talent, in the right location,” said Sonali Tare, Vice President, Strategic Content at CoreNet Global. “There is no one-size-fits-all solution – what works is using data and metrics to devise a solution on an office-by-office basis.”
Note to Editors:
Cushman & Wakefield partnered with CoreNet Global to conduct this survey. It was distributed to CoreNet Global’s membership and data was collected February through March 2023.
Responses were received from over a dozen countries across the Americas, EMEA and Asia Pacific. Respondents came from firms that identify as end users, economic developers and service providers/consultants. The views represent approximately 9.6 million employees globally and 741 million square feet of real estate.
