The way in which real estate technologies, financial compliance, and an increasingly dynamic workforce are evolving will be at the heart of most global Corporate Real Estate (CRE) strategies in 2019—along with the need to meet the rising demand for flexible workspaces and enhance employee productivity and wellbeing.
But underpinning these developments will be a growing awareness among CRE managers that their efforts are under the spotlight like never before.
This is because company leaders and finance teams will be taking an even greater interest in the performance of their CRE holdings in order to minimize the financial and tax impacts of the new lease accounting standards. They are likely to challenge CRE teams to improve the optimization of workspace and achieve further reductions in the total cost occupancy. And they’ll require more detailed CRE reports and accurate metrics to support their strategic decision-making.
So for this article, we’ve highlighted the 5 key trends set to dominate global real estate strategies in 2019. The 5 key trends are also summarized in an easy-to-digest infographic, which you can download here.
1. Adoption of Connected Real Estate Solutions to Manage Space
The real estate life-cycle is being transformed by advances in connected CRE technology. A recent global survey by KPMG found that 89% of real estate decision-makers felt they needed to engage more closely with CRE technology companies in order to adapt to the changing global environment.
Adopting a connected strategy—and deploying the latest smart CRE solutions—will not only help to save money and make a portfolio more cost-efficient and profitable, it will also enable CRE managers to optimize the workplace experience and enhance performance and productivity.
Smart technologies such as KNX and Bluetooth Mesh are becoming increasingly common in the workplace, along with facial and voice recognition, advanced digital signage, and wayfinding/location-based services. Sensors and automation are progressively being used to control lighting and heating to reduce energy costs and improve sustainability. Connected real estate technology can also help to cut waste and minimize environmental impact.
At the same time, the Internet of Things (Iot), Artificial Intelligence, machine learning and virtual beacons are helping to deliver more accurate analytics that will enable you make more informed decisions about your CRE portfolio.
According to leading IT analysts, more than half of major business processes and systems will incorporate some element of IoT by the end of the decade—with PricewaterhouseCoopers (PwC) predicting that businesses’ investment in IoT could almost quadruple (to $832 million) by 2020. Research and advisory company Gartner estimates that about a third of organizations have already introduced IoT solutions.
Smart buildings use connected real estate technology to make the physical work environment ‘intelligent’, so that it can adapt to individual employees’ needs. This can have a significant impact on workplace satisfaction and employee retention. In a 2017 study by the Buildings Performance Institute Europe (BPIE), some 81% of respondents reported that connected technology helped them hold on to their best talent because it made their organization a better place to work.
So it’s no surprise to find that a growing number of companies are now looking to align their CRE strategy with enterprise-wide digital workplace transformation—harnessing connected technology solutions and rich data to introduce more automation, help measure actual space utilization, enhance workplace experience, and drive intelligent decision-making.
2. Increasingly Dynamic Workforce
Technology has not only changed the way we work, it is at the heart of a fast-changing workforce environment.
With the latest mobile and cloud computing technology, it is now possible for staff to carry out their work almost anywhere. And the resulting growth in flexible working and shared workspace has fundamentally changed the way the office environment is perceived and utilised by many organizations.
The office is no longer seen as just a place we go to work. It’s a collaborative space where people come together in the right space at the right time to enable them to maximize their performance and increase creativity and innovation.
According to research by global real estate company JLL, 47% of workers aged under 35 (and 27% of over-35s) now work in a shared workplace. This rise in flexible working and coworking is leading to a more liquid and contingent workforce that is driving corporate real estate transformation.
A study by global management consulting firm Accenture found that 60% of today’s workforce tends to switch employers after only four years (compared with the 80% of employees in the 1980s who often stayed with the same company for over 15 years). Further research by McKinsey & Company revealed that between 20% and 30% of the working population is now operating in the on-demand or gig economy.
To hold on to their best talent, organizations are having to respond by adopting a more technology-led, user-centric approach that focuses on the needs, wants and motivations of individual employees. As mentioned, the spread of connected real estate technology in buildings is enabling CRE managers to develop an ‘intelligent’ work environment that can adjust to the workforce’s needs.
Adapting team competencies—or rethinking the skills base to meet future CRE challenges—could help to enhance CRE performance. And constant training to keep the workforce up-to-date with the latest technology will help them to adapt and thrive in a volatile operating environment.
Indeed, many business leaders are now realizing that embedding an agile culture–and nurturing a liquid workforce capable of rapidly changing and adapting to digital transformation—could give their organization a new competitive advantage.
3. Data-driven Decision-Making
With senior executives paying closer attention to the performance of their CRE portfolios because of the financial implications of the new lease accounting regulations, fast and easy access to accurate data will play an increasingly important role in strategic decision-making.
To meet these challenging reporting requirements—and to help make smart data-driven decisions about their portfolio—CRE managers will need to be able to:
identify accurate benchmarks
conduct comparative analyses
access granular property details
achieve a 360-degree view of their portfolio
Spreadsheets, manual processes and disparate sources of information will no longer be enough. To make sound decisions and recommendations, managers will require a central source of reliable information that is fully integrated with their organization’s workflows, finances, workspace, and facility management capabilities.
They will need to have critical performance data at their fingertips via easy-to-read dashboards and standardized reporting tools that will enable them to easily analyze real-time information and identify opportunities to lower their occupancy costs. This information will then allow them to make data-backed decisions about their entire portfolio or an individual site, or even a single floor.
4. Rising Demand for Flexible Workspaces
New workplace management challenges are being created as flexibility and remote working become increasingly important to today’s workers.
According to research by JLL, 54% of employees now work from home at least once a month while 34% work at least one day a month from third places (such as internet cafes, public libraries or coworking spaces). Some experts predict that, by 2021, the increase in the number of employees who prefer to work remotely will allow organizations to support 40% more workers in the same amount of space as they use today.
This shift is leading many organizations to change the way they look at space. Many companies are now committed to providing a wider variety of workspaces—such as open bullpen areas, open cafe-style seating or small phone booth spaces. More firms are incorporating ‘flexspace’ (flexible workspaces and coworking spaces) as a core part of their workplace and portfolio strategy. As a result, the proportion of flexspace within CRE portfolios is expected to continue to rise in 2019.
Historically, about 30-40% of workspace has tended to be under-utilized on a typical workday. However, company leaders and finance teams are likely to start paying even closer attention to the performance of their real estate portfolios in future because of the far-reaching financial and tax implications of the new lease accounting regulations. CRE managers will be expected to put an even greater emphasis on increasing the efficiency and utilization of workspace in order to reduce CRE expenses and lower the total cost of occupancy (TCO).
IWMS software has been designed to provide a way to measure space efficiency more accurately. It enables CRE teams to quickly identify vacant and under-utilized properties, and then refine their usage and allocation of flexspace through detailed analysis of actual utilization data.
And with CRE managers having to manage an increasing amount of flexible workspace in their portfolio, some IWMS software solutions also provide a fast and efficient way to enable employees to find and reserve these spaces at any time, and on any device.
5. Employee Productivity Driven by Experience, Community and Wellbeing
Studies have shown that nurturing a sense of community, inclusion and belonging in the workplace can have a positive impact on both employee engagement and productivity. Research by Deloitte Consulting, for example, has found that inclusive workplaces are six times more likely to be innovative and twice as likely to meet or surpass financial goals.
As a result, more organizations are aiming to turn their buildings into centres where communities can come together to share experiences and ideas. The aim to is build a work environment that supports creativity, innovation and cross-collaboration both within and outside the organization.
The latest CRE technology is being used to seamlessly connect staff and create networks of interdependent individuals who can communicate and collaborate more effectively with each other.
At the same time, technology can streamline every stage of the workplace design process to help designers create spaces that are more people-orientated, experiential and personalized (and therefore more likely to enhance the employee experience, and increase staff retention and productivity).
More attention is also being paid to supporting mental and physical health at work by aligning workplace and HR strategy—with workplace designers increasingly focusing on ‘wellness architecture’ that pays greater attention to factors such as indoor air quality and ventilation, thermal comfort, lighting, noise and acoustics.
If your organization is looking for integrated real estate management software to meet your leasing, accounting, space management, maintenance, and financial reporting needs, we encourage you to contact us to explore our proven system.
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