When the winds of change come, you can’t hide your head in the sand. The business landscape is scattered with former companies that didn’t keep up with the times, favoring to keep running their operations as they always have — because it was working and there was no need to change.
Technology and e-commerce trends recently have been changing patterns and channels of distribution, which is affecting the size, make-up and location of distribution and manufacturing real estate.
These same advances in technology, combined with the generational shifts in the workforce are also having an impact on office and commercial real estate.
Smart Business spoke with Bob Brehmer, CCIM, SIOR, principal at NAI Daus, about how important it is to consider what your office of the future will need for the employees of the future.
What is the first approach a company should take to prepare for its facility of the future?
Our firm, for instance, is evaluating its future real estate needs. We are balancing what we know are our needs for our current workforce while trying to project our needs for the future, considering our anticipated younger, technology-savvy workforce.
One of the steps to take is to examine where people fit in the age spectrum. I happen to fit in the middle of the baby boomer generation. Take, for example, someone born between 1946 and 1964 who maintains a certain perspective on success and the manifestation of it as well as perhaps a reluctant embrace of technology. When it comes to the utilization of commercial real estate, this group views a large private office as a designation of status and achievement.
When combined with support functions, the old paradigm drove space utilization rates from 250 to 350 square feet per person. The space could be positioned in the central business district or suburbs, but was clearly dependent on car access.
That’s the former viewpoint, which fit the Boomers. What about for the up-and-coming workforce?
Contrast the boomer viewpoint with the emerging future workforce, the Millennials, or Generation Y, born after 1980. They have a completely different perspective. These employees prefer to work collaboratively and in teams both inside and out of the office. They prefer a less-structured, more casual work environment complemented by robust technology and principles of green design. This has driven space utilization to the range of 150 square feet per person.
The location today is more likely to be in the central business district or trendy area in close proximity to educational facilities, sports venues, restaurants and hospitality establishments.
Public transportation is a must as well as bike accommodations and pet-friendly environments.
In our case, we have determined that we need about 20 percent less space. The investment in additional furniture, equipment and technology, however, will likely offset the savings on rent, at least initially.
What should tenants, as well as property owners, do?
Contact an experienced commercial real estate broker. The broker will introduce you to a team of space planners, furniture vendors and contractors to help you program your space needs and to put a price on the project. Consider starting this process nine months to a year before your lease expiration.
Most owners of well-capitalized buildings have already begun the process of enhancing the infrastructure of their buildings from a technology standpoint and environmental perspective. Your broker can identify buildings and landlords who are prepared to embrace the future.
Bob Brehmer, CCIM, SIOR, is a principal at NAI Daus. Reach him at (216) 455-0920 or [email protected].
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