Working in small cubicles has become a thing of the past as new office trends shape the demand for office space. A lot has changed in the past two years, including our lifestyles and the way we work, thanks to the COVID-19 pandemic.
The US corporate magnates are reshaping every vertical of the global office real estate sector to gear up the return to offices. As the WFH schedules slowly fade away, the future of work seems to rely entirely on how swiftly organizations can adopt flexibility and creativity as the best way to accelerate their business survival.
With the introduction of remote working back in 2020, commercial real estate witnessed a drop in demand for office spaces. The trend quickly gained popularity among employees and businesses. As it kept operations running despite the ongoing pandemic and was also a convenient choice of working.
Although this doesn’t mean that companies and organizations will no longer need office spaces to rent anymore. CRE office investors must embrace the new normal and emerging trends in the infrastructure, interiors, and so on.
Here are 7 trends that will shape the demand for office spaces that every investor should keep in mind.
1. Employees prefer working part-time from offices
Working from home has been a popular and convenient choice of working amongst employees. The majority of the employees are not willing to return full time to their offices. Therefore, to slowly facilitate employees’ return to their offices, the hybrid work model was introduced.
The hybrid work model allows employees to have a comfortable lifestyle by splitting their office work and remote work time. However, businesses will require changes in interior designs to implement a hybrid workspace.
Collaboration is an important factor in hybrid working. To properly implement a hybrid work model, offices must have proper collaboration tools in order to connect with employees working remotely.
By implementing ideas like desk or room booking systems, employees can reserve their workspace ahead of time. And also lets others use the same workstation when not in use. As a result, it enhances resource utilization in the workplace.
2. Co-working Spaces/ Shared workspaces emerge as a crucial office trend in 2022
Co-working spaces or shared workspaces are trending right now in commercial real estate. With the high demand for flexible spaces, most landlords are transforming their properties.
So, the co-working model is appropriate for companies expanding to the countryside. Instead of renting a large office building for a team of 15-20 people. It is more sensible and economical to rent a coworking space.
Startups and small organizations prefer affordable workspaces. But they also require multiple utilities to collaborate with remote working employees or connect with clients virtually. In shared workspaces meeting rooms can be redesigned into video conferencing rooms with virtual collaboration tools like webcams, high-speed wifi, etc. Hence, co-working spaces are just the right property for them.
For example, Regus provides office space, virtual office, co-working space, and meeting rooms in more than 400 cities. It is a hotspot for startups as well as large companies. Moreover, it provides a pay-as-you-go option or you can reserve space as long as you want.
3. An Open office space provides a more comfortable and safer feeling
This is perhaps the one trend that you will notice in every workplace. The pandemic has led people to ditch enclosed workstations for open spaces. Employees are taking physical distancing practices seriously and it doesn’t look like it’s going away anytime soon.
Open offices provide better utilization of floor spaces. Instead of working in cubicles or secluded rooms, businesses can occupy maximum space by eliminating the walls in between. Making open space offices practical and economical.
Moreover, offices are being equipped with better amenities like better ventilation ducts, efficient air-conditioning systems, installing indoor plants, etc. Thereby providing a cleaner work environment.
4. Landlords are willing to offer more flexible lease terms
Since remote working has become a huge deal in the working sector. Most office tenants are reluctant to continue renting office spaces. Thus, office landlords are willing to offer tenants flexible short-term leases to prevent vacancy loss.
Generally, office spaces were long-term leases. But with the remote working/hybrid working trend, flexible and short-term leases are growing in popularity among rental properties.
Flexible leases are generally coupled with higher rent prices than normal leases due to higher risk factors for landlords. Shorter lease terms also benefit landlords by providing opportunities to increase rent at frequent intervals.
5. Smart office space for smarter employees
The pandemic has forced us to adopt technology like never before. Internet of Things (IoT) devices and automation technologies improve the office environment and free employees to focus on their work. Thereby, providing a better workspace environment.
Furthermore, using artificial intelligence(AI) in offices eliminates risk, and repetitive tasks and lets employees focus on work. It also helps in optimizing office workspace and automating project management. Thereby, saving time and effort and also reducing operational costs.
Incorporating efficient and automated lighting systems, thermostats and sensors provides a better feeling and a sense of satisfaction in employees.
Landlords also have an opportunity to set higher rent by including all these amenities for smart offices.
For example, E-commerce giant Amazon uses AI tools to ship things even before you placed your order. During the pandemic, the famous snack food brand Frito Lay incorporated AI to reduce production time and predict top-selling products. By incorporating AI it managed to compress 5 years’ worth of plans into just 6 months.
6. Mental well-being is a priority for employees post COVID
After the pandemic, employees have become more aware and conscious of their mental and physical well-being.
Factors like proper sanitization, clean environments, and a balanced work-life lifestyle are something that employees desire. In the light of recent events, people have prioritized their health first. Office spaces must be equipped with proper sanitization stations and clean air quality.
A person’s well-being is ultimately determined by both biology and psychology. Facilities like gyms, food courts, relaxation, and play areas help employees reduce stress and a getaway from work overloads. Modern offices are designed keeping these factors in mind.
8. Initiatives for better employee engagement
Companies and organizations are constantly implementing strategies that help in retaining talented employees. According to the Bureau of Labor Statistics, 2021 was the year of “Great Resignation”. Over 40% of American employees are searching for jobs that provide better work-life balance.
Modern workplaces need to embrace trends like flexible terms and work schedules, better health care services, private office space for single-parent employees, wellness areas, and others. Global Human Capital trends portray that 79% of companies witnessed an increased efficiency and productivity by implementing these trends.
The future of work seems will be disrupted by emerging trends in the office real estate market
As we are coming out of Covid, this year holds a lot of changes for office spaces. Companies have taken the good initiatives of re-introducing employees to the office environment using these above-mentioned trends.
The new trends and changes have become the new normal and will likely stay for the long term. Therefore, both real estate investors and landlords must commit to these new trends that will drive the demand for office spaces in the coming days.