Occupancy Efficiency

While talent continues to reign supreme on the list of top concerns for companies today, a new survey of corporate executives underscores the challenges they are facing in today’s economic environment. Of the 176 Americas executives surveyed by CBRE Group, Inc., 52 percent named economic uncertainty as a top-three concern, up from 36 percent in 2016.

As a result, 87 percent of corporate occupiers report that they are managing to this uncertainty by disposing of surplus space and/or implementing more efficient workplace designs to prepare their portfolios for the future. Further, only 26 percent of respondents expect to expand their portfolios over the next two years, down from 38 percent in the 2016 survey. Approximately half of the 2017 survey’s respondents indicated the size of their portfolios would remain stable with 2016 levels.

Other key priorities for occupiers in 2017 include:

Workplace Experience

While uncertainty is driving many real estate decisions, creating a workplace experience focused on talent remains top of mind for the majority of occupiers surveyed. Sixty-seven percent of respondents cited employee satisfaction as the key measure of the success of their workplace strategy programs. This is a higher percentage cited than occupancy cost per square foot (56 percent), occupancy cost per employee (53 percent) and target cost reduction (42 percent). Further, 55 percent of respondents said talent attraction or retention was among the top three drivers of their organizations’ workplace strategy, and 53 percent said promoting collaboration was the most important driver. Only 40 percent cited operating expense savings as among the top three drivers.

“Mobile and cloud technology has made it efficient to work from anywhere, so the office is becoming an optional place,” says Julie Whelan, Americas head of occupier research, CBRE. “Employees must be drawn to the workplace through a positive emotional connection. In turn, employers benefit from a collaborative and cohesive culture because both formal and informal communication are more powerful when face to face.”

To motivate employees to come to the office, occupiers are turning to a range of amenities and services that support the integration of the workplace into both their personal and professional lives. Sixty-four percent of respondents said amenities are most important to their labor forces, with food offerings being the most prevalent (81 percent) and hospitality services on the cutting edge (32 percent).

“Improving the workplace experience is certainly a priority we are hearing about from local Phoenix companies and something we are putting into practice right here at CBRE. Our new Workplace360 office, opening later this year, embraces a new approach to how the workplace should function — from unassigned work stations to a paperless environment to a focus on collaborative spaces,” says Craig Henig, senior managing director and market leader for CBRE’s Southwest Region. “As this latest CBRE research shows, companies are gaining a better understanding of the role a strategic workplace design like Workplace360 can play in promoting employee choice, enhancing flexibility, increasing productivity and, ultimately, improving retention.”

Employers are also increasingly placing importance on developing a workplace culture that enhances employees’ health, with 76 percent of survey respondents reporting running an employee wellness program.

Elevating the Corporate Real Estate Function

The management and operation of corporate real estate departments is continuing to centralize and rise in importance within corporations. While there is clear recognition of real estate’s impact on employees, the prevalent organizational structure remains cost-centered, with 66 percent of respondents reporting to finance, operations or procurement departments.

“Today’s top companies are shifting the traditional view of the physical space from a mandatory cost toward a customizable, revenue-enhancing tool,” says Matthew Toner, managing director, Global Workplace Solutions, CBRE. “Business leaders clearly accept that a well-designed and managed office can enhance their employees’ collaboration, engagement, health and productivity. However, empirically demonstrating CRE management decisions drive improved metrics in these areas remains the holy grail.”

“Regardless, there’s no question CRE tech has entered the mainstream,” Toner adds. “The new breed of technology provides previously unfathomed abilities to efficiently monitor buildings, optimize space utilization and engage employees.”

What Cost-Reduction Initiatives Have Had the Most Impact in the Past Year?

(Percent of respondents who placed the response in their top three)

What Is Most Important to Your Labor Force?

What Type of Shared Workplace Do You Use Today / by 2020?

Source: CBRE Americas Occupier Survey Report 2017

CBRE Group, Inc. serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide, with a broad range of integrated services that include facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.