Dec 14, 2017, 4:21 PM
These will impact real estate decisions in 2018 and beyond.
Talent is the target
As the economy continues to expand, competition for the best and brightest is at an all-time high—and it won’t be slowing any time soon.
Take a look at job openings. On one hand, the numbers are very uplifting. Job openings hit a new record in October at 6.2 million, with no signs of a slowdown. On the other hand, low unemployment (4.2 percent) paired with low labor force participation (63.1 percent) are hurdles for the economy at large, and employers are getting increasingly more creative. Because of this, we expect to see more corporate expansions in secondary and tertiary markets. This should continue to spur tech clustering and allow smaller startups to stay local in the future.
Cost is irrelevant
Well, that’s not exactly true… and we all know good financial decision-making is key to smart growth. But the future of work is changing, and making good investments in the workplace is increasingly critical to a company’s success. The adage “it’s all about location” is truer now more than ever, but equally critical to the real estate discussion is the human experience.
Companies who want to invest in the experience they offer to employees can focus on three tenets of our Human Experience model: engagement, empowerment and fulfillment .
When all three pillars are activated, employee productivity, innovation and retention can be significantly improved. So while a nicer office, location and amenities may cost more, the payoff is worth every penny.
Reversal of density
Trends toward efficiency have reigned supreme throughout these economic and real estate cycles. From micro apartments to car sharing, to coworking and beyond, the drive toward a “less is more” ownership mentality has completely transformed the way things work.
As a result, the concept of the personal office has pretty much disappeared from a tech company’s space design, and personal workspace has been reduced by almost 600%. We all know the adage of “too much of a good thing” and early anecdotal evidence suggests that companies have become too efficient.
While we knew that the all-open workplace was hindering productivity, the all-shared workspace also has its downside. Companies will be looking closely at the optimal space utilization ratios moving forward.
Flexible space evolution
Coworking is here to stay whether you like it or not, because as it turns out, a lot of people like it. Companies are now setting up shop in coworking centers, placing teams of all sizes into these spaces for a variety of reasons.
The “third space” will be considered the third pillar of sound real estate strategy, especially as companies consider these other trends mentioned. How do you attract and retain the best workforce, for the best cost, in the best market? And how can you prepare for the generational shift, too? Flex office options offer flexibility on short notice, without sacrificing culture.
Expect to see a blurring of lines between not only traditional coworking centers and the traditional office, but also some surprising places like hotel lobbies, coffee shops, retail banking centers and office common areas emerging as informal third spaces.
The baby boomers caused major changes in our society that no one could deny. But millennials now outnumber the boomer generation and the youngest of those are just now graduating high school. Sure, all the first-wave millennials want to live in cool downtown lofts and ride their fixie to work... or do they?
As millennials come of age, they will be buying homes. They will be settling down. They will be raising children. It may not look the same as their elders’ generation, but they will need housing, and they will want to ease their work-life balance. What should companies be thinking about when considering long-term moves?
The suburbs are not dead, and even though we’ve seen a lot of shift toward downtowns across the country, don’t count the suburbs out just yet.
Cost of living: A top concern
Housing is expensive, especially in markets that have benefited from booming economic conditions thanks to an expanding tech industry, California, New York City, Boston and now Seattle. It seems that young talent can’t catch a break. New grads are bunking up with multiple roommates, converting living rooms into bedrooms or renting micro apartments. Sure we all had to stretch when we got our first job, but in some cities it’s getting to be too much.
Markets with the greatest tech job growth this cycle have also seen the greatest increase in the cost of living. How should you be thinking about this issue? Many a talented tech professional will remain in the top markets, but there are many more that want all of the quality of living without the cost. Since we already mentioned earlier that talent will remain the key target for companies, it’ll also be important to understand where that talent wants to live.
Miss any of our 2017 Tech Office Trends snapshots? Want to read them again? Dig in below.
- Where to find top tech talent (that might surprise you)
- Create cool space that attracts top talent
- What’s that cool space going to cost you?
- Tech – CRE’s biggest customer: An economic revolution
Researchers: Julia Georgules, Amber Schiada | Editor: Alaina Kleinman