The future of global office demand | 2
Contents
Setting the scene 5
Executive summary 3
The external environment 6 Officemarkets,employmentandindustries
Function of the office 9 Corporateoccupier Employee
Factors shaping the future of office demand 13 Remoteworking Officedesign Technology Commutingpatterns
Spatial patterns of office demand 22 Ongoingurbanization Distributedurbanizationanddistributedworkplaces Officedemandinthehyperconnectedcityregion
Final thoughts 25
The future of global office demand | 3
Executive summary
Demandforofficespaceisintrinsicallylinkedtotheeconomy;generallyinadownturn,officedemanddropsoffasemploymentlevelsfallandcorporatesmoveintocashpreservationmode.Theglobalpandemichasundoubtedlypushedusintoaglobalrecessionandintheshorttermthiswillhaveadirectimpactonofficedemand.However,inlightofthesuccessofwholescaleworkingfromhome,thequestionisnowbeingasked–overthelongerterm,willthisbethecatalystfortheendoftheoffice?
Thisisnotthestraightforwardequationitisoftenportrayedas;increasedworkingfromhomedoesnotdirectlyequallessdemandforofficespace.Thereareamyriadofotherfactorswhichneedtobelookedat,includingdensity,financialreturns,productivityandtechnology.Beforeexaminingthesefactors,itisworthtakingastepbacktolookatthefunctionandpurposeoftheofficefromboththeemployerandemployeeperspective.
Fromacorporate occupier perspectiveofficesprovideaphysicalspacetobringpeopletogethertocoordinateactivity,outputandperformanceandtoboostcreativity.Alongwiththis,theyshowcaseacompany’sbrandandcultureandplayakeyfeatureinattractingandretainingthebesttalent.Thefunctionoftheofficewillcontinuetoevolve,acceleratingtrendswhichemphasizetheimportanceofcollaborationandinnovationtoemployeeproductivity.
Fromanemployee perspectivetheofficeprovidesaplaceforface-to-faceinteractionsthattechnologystrugglestoreplicate,suchassocialinteraction,face-to-facecollaboration,mentoringandmanaging.Evenaftertherecentsuccessofworkingfromhome,employeesstillstatetheywouldliketobeintheofficeforthemajorityoftheweek.
Fourkeyfactorswillhaveamajorroleinshapingthefutureofofficedemandinboththeshortandlongerterm:
Remote workingThereareclearemployeebenefitstoworkingfromhome,notleastamongthemis‘nocommute’andflexiblehours.However,formanypeopletheirhomelivingarrangementsmakeworkingfromhomeabelowoptimalchoice,withitslimitedspace,lackofprivacyand/ormoredistractions.Additionally,employeesmissthesocialinteractionthatofficelifebrings.Maintainingproductivityawayfromtheofficeoverthelongertermisalsoyettobeverifiedandislikelytobeboostedbyregularofficeinteraction.Flexibilitywillbekeytoemployeesatisfactionandthebalanceofofficeandremoteworkinganywherewillbebasedaroundtheindividual.
Office designThereislittledoubtthatCOVID-19isgoingtoacceleratesomechangesinofficedesign.Themostevidentisoccupationaldensity.Theupwardtrendhasgonesharplyintoreverseassocialdistancingisadheredto.However,onceavaccineoreffectivetreatmentisavailable,thereislikelytobeamovementbacktowardthedensitiesrecordedpre-COVID-19,butnotalltheway,ashealthandwell-beingwillremaintopofmindforoccupiers.Agreaterfocusonspaceswhichemphasizeface-to-faceinteractionislikelyasofficespaceisredesignedorrepurposedawayfromindividualfull-dayoccupancydesks.
TechnologyTechnologyonitsownisunlikelytohaveasignificantimpactonoverallleasingdemand.Overtheshortterm,theadoptionofnewtechnologieswillbothfacilitateremoteworkingandalsoensureworkers’well-beingandefficiencyontheirreturntoofficebuildings.Overthelongerterm,occupierdemandisexpectedtogravitatetowardtechnology-heavysmartofficebuildings,reflectingtheirabilitytosupportcompanies’environmental,sustainability,healthandwellnessinitiatives.Therefore,reduceddemandforlower-qualityassetsoverthelongertermseemslikely.
The future of global office demand | 4
Commuting patternsThelackofcommutingisthemostquotedbenefitofworkingfromhomeanditisoneoftheareasthatiscausingthemostconcernonre-entrytotheoffice–particularlyinthosecitieswhicharehighlydependentonpublictransport.Aslowerre-entryislikelyinmanyofthosecities.Somecitiesarepushingthebenefitsofcyclingorwalking.Overthelongerterm,face-to-faceinteraction(bothinternalandexternal)isstillexpectedtogravitatetowardcentrally-locatedandhighly-amenitizedurbancenters.Thesefactorswillunderpindemandandthevalueofurban,transit-servedmarketsoverthelongterm.
Thefinalpieceofthepuzzleiswhereofficedemandwillbefocused–thespatial patterns of office demand.Theinherentattractionsofcitiesintermsofeconomicopportunities,socialconnectionsandquality-of-lifeofferarelikelytoprevaildespiteshort-termconcernsregardingsocialdistancing.TheforcesthatwerealreadytransformingourcitiespriortoCOVID-19willcontinuetodrivechangeandboostofficedemand-digitizationandautomation,theResponsibleCityandglobalization.
Thespatiallogicofourcitiesandtheirsurroundswillevolveinresponsetodigitization,newlivingandworkplacepreferences,anddemandforamoresustainableandresilienturbanmodel.Thetrendof‘distributed urbanization’willaccelerateintheaftermathofthepandemicwiththefast-trackevolutionofdigitallyenabled,hyperconnectednetworksofcitiesthatrevolvearoundmajorcitiessuchasNewYork,ParisandTokyo.
Theriseofthehyperconnectedcityregionwillgraduallyshiftthespatialpatternofofficedemand,pushingittowardadiverse office market ecosystemcomprisingthreemajorelements:
1. Risingdemandinlivable,well-connectedsuburbsandsmallcities
2. Areimaginedandincreasinglymulti-useurbancore3. Newclustersofinnovation-basedactivities
TheCOVID-19pandemichasbeenanotherunforeseenextremeshocktoourworldwithfar-reachingconsequencesovertheshortandlongterm.Therewillbeaninevitablecorrectionintheshorttermastheeconomicimpactofthepandemicflowsthroughtocorporateactivity.However,overthelongertermtheofficewillremainafundamentalpartofourcorporatecultureandwillplayanessentialroleinourworkandproductivity.
Followingthepandemic,therewillbeaninevitablecorrectionintheshorttermforofficespaceastheeconomicimpactflowsthroughtocorporateactivity.Theflexibilitytoworkfromhomewillbeseamlesslyintegratedintoworkinglife,benefitingbothemployeesandemployersalike.Afocusonwell-beingandsomede-densification,alongwithimprovementstodesigntoencouragetheinteractionthatisdifficulttofacilitateathome,areallelementswhichmaychangeandthatarelikelytooffsetadeclineinspaceasaresultofincreasedhomeworking.Officespacewillcontinuetoevolve;itisfarfromoverand,asresultofthiscrisis,isarguablygoingtoplayanevengreaterroleindrivingcorporatewell-beingandproductivity.
The future of global office demand | 4
The future of global office demand | 5
Setting the scene
Workingfromhomehasquicklybecomeaubiquitouspartofcorporatelifeformanypeopleacrosstheglobe,withcompaniesquicklyadaptingtothepressingneedforemployeesto‘shelterinplace’.Thesuccessfulimplementationoflarge-scalehomeworkingandwidespreadadoptionoftechnologiesforremoteworkingarenowcausingcorporatestore-evaluatetheirfuturespacerequirements.Additionally,anumberofhigh-profileemployershavemadeboldstatementsregardinghomeworkingbeingamuchbiggerpartoftheirlong-termcorporateoccupationplan.So,itleadstotheemotivequestion:‘Isthisthecatalystfortheendoftheoffice?’
Theofficeisnotfinished-thiswouldbeasimplisticconclusionbasedonearlyandincompleteevidence.Althoughhomeworkinghasbeenmoresuccessfulintheshorttermthanmanyexpected,theofficeprovidesamuchbroaderroleincompanycultureandproductivitythancanbeexaminedinafewshortmonths.Questionsregardingthepurposeoftheoffice,itsroleincorporatecultureandemployeepreferencesallstillneedtobeanswered.Theofficehaslongprovidedaplaceforconcentratedworkandincreasinglyaplaceforcollaboration,connection,innovationandsocialinteraction,andthedesireforthesecharacteristicshasnotdiminished.
The current discussion is too simplistic...
Intheshortterm,mostcorporatesaresignificantlyreducingofficedensityofexistingportfoliosandcontinuingtoembraceremoteworkinguntilthereisavaccineortheriskofinfectionhasrecededconsiderably.Asyet,fewappeartobetakingthisopportunitytoreducefootprints,althoughthismayincreaseasoccupiersreachleaseexpirydates.Inthelongerterm,thesituationismuchmorecomplexandweareseeingtheaccelerationoftrendsalreadyinevidenceoverthepastfewyears,suchasincreasedemployeeflexibility,fasteradoptionofremote-workingtechnologiesandtheimportanceofinnovation.Ultimately,theneedsofemployeesandcompanieswillshapethequantum,designandlocationsofofficespacerequired,whichwillbebalancedbytheneedforfinancialprudence.Inthispaper,weanalyzethesebroaderquestionsandoffersomethoughtsonthefutureofofficedemand.
Increaseinhomeworking Decreasein
demandforofficespace •Companyculture
•Realestatecostvtalentcost
•Economicgrowth
•Technology
•Employmentlevels
•Governmentguidelines
•Innovationneeds•Publichealthsituation
•Sharingvdedicated
•Footprintgeography
•Productivitymetrics
•Commutingbehavior
•Newlegislation •Spacedesigntrends
•Densityofoccupancy
•Returnoninvestment
Assessing future office demand will be more complex, with a broad mix of factors at play...
The future of global office demand | 6
The external environment
Link between employment and office demand Thatofficemarketdemandfollowseconomiccyclesisundeniable–thereisastrongrelationshipbetweeneconomicgrowthandthelevelofofficedemandinmarketsacrosstheglobe.Lookingglobally,therelationshipisevidentwithasharpdropinnetofficedemandduringtheGlobalFinancialCrisisfollowedbyafairlyswiftrecovery.
Office markets, employment and industries
Asignificantrecessionisforecastin2020withafullrecoverytakingtime,butrisksexistaroundthisscenario.TheOECDhasreleasedadouble-hitscenariowherethereisasecondwaveofinfectionsbeforetheendof2020substantiallyprolongingtheimpactandrecoverytime.1Ineitherscenario,unemploymentwillrisesharplyandemploymentgrowthwillbenegative.Thisimpliesaslowdowninofficedemandovertherecoveryperiodsimilartootherdownturns,butabouncebackisforecastoverthelongerterm.
Global net absorption and GDP growth
Source:JLL,OxfordEconomics,June2020*Q12020netabsorption
1OECDEconomicOutlook,June2020
- 6
- 4
- 2
0
2
4
6
-5,000
-
5,000
10,000
15,000
20,000
25,000
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
*
% p.a.000s sq m
Net absorption (LHS) Global GDP growth (RHS)
Q1
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The London office market
TheLondonofficemarketisoneofthemostglobalandtransparentofficemarkets,withthelongesttime-seriesofdataemphasizingthisrelationship.Downturnsintheeconomyandfallingemploymentlevelshavebeenassociatedwithlowervolumesoftake-upacrossthelastthreeeconomiccycles.
London take-up and total employment growth, 1985-2020
Source:JLL,OxfordEconomics,June2020*NotatechnicalrecessionintheUK2020-propertydatareferstoQ12020;employmentgrowthisaforecast
- 6%
- 4%
- 2%
0%
2%
4%
6%
-18,000
-12,000
- 6,000
0
6,000
12,000
18,000
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Take-up total Long-term average take up Employment growth
Early 1990s recession
GFCDot.com crash*
Q1
% p.a.000s sq m
Case Study
The future of global office demand | 8
Office-based employment and industry riskDuringadownturnthereareclearrisksofstructuralchangesorreallocationsofoffice-basedjobs.However,inthelongertermallindustriesshouldexperiencepro-cyclicaljobgrowthasthemacroeconomyrecovers,withpositiveflow-througheffectstodemandforofficespace.Butunderstandingthepotentialriskinindividualindustrieswilltakeonincreasingimportancewhenforecastingfutureofficedemand,evenastheeconomytransitionsfromcontractiontorecoverytoexpansion.
Financialactivities,businessandprofessionalservices,andinformationservicesconstitutethebulkofoffice-basedemployment.However,office-usingemploymentdoesnotendattheboundariesoftheseindustrygroupings.Otherindustries,seeminglydevoidofofficeusers,alsocontributetodemandforspace.Evenmanufacturingandconstruction
haveemployeeswhoworkinanoffice,eventhoughtheyrepresentasmallpercentageofofficedemand.Therefore,whenthinkingaboutthefutureofoffice-basedemploymentanddemandforofficespace,ithelpstothinkofindustriesinamatrixoftwovariables:theconcentrationofoffice-basedemploymentwithinanindustryandtheriskthatindustryfacesinapost-COVID-19world.
Thematrixranksindustriesinthreeconcentrations–low,mediumandhigh–representingtheshareofofficeemploymentaccountedforbyeachindustry.Itranksthemsimilarlybytheirindustryrisk(andthusrisktooffice-usingemployment)inapost-COVID-19world.Thatriskstemsfromstructuralchangesattheindustrylevel,whichcoulddampendemand;essentiallythelikelihoodthatofficejoblosseswillbecomepermanentand/orthatthesejobswillreturnbutnottoanofficeonafull-timebasis.
Office demand matrix
Overall implications for the future of the officeShort term: The cyclical downturn triggered by the COVID-19 pandemic will undoubtedly have an impact on short-term demand for office space, as rising unemployment levels and falling output flows through to demand for office space. Some sectors may be more affected by the immediate impact of lockdown measures (e.g. leisure and hospitality), while others may be more resilient (e.g. healthcare).
Long term: Procyclical growth should provide a boost for the office market as the economy transitions toward a recovery. Risks remain around the timing of the recovery and whether a double-dip recession will occur following further outbreaks of the virus, though once a vaccine or treatment is made widely available there should be a resurgence in demand. The speed and magnitude of the recovery will vary by industry sector, but sectors based around the innovation and knowledge economy are likely to be among the first to rebound.
Hig
hM
ediu
mLo
w
• Transportation and Utilities• Construction• Mining and Logging• Healthcare• Manufacturing
Low HighMedium
• Leisure and Hospitality• Retail trade
• Energy• Aviation
• Education• Healthcare• Government
• Business and Professional Services• Information and Technology
• Financial Services
Indu
stry
risk
Percentage of total office-using employment
Source:JLL,June2020
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Function of the office: Corporate Occupier
Implications from the innovation economyOfficesprovideaphysicalspaceforcompaniestobringpeopletogethertocoordinateactivity,outputandperformance,andtoboostcreativity.Companyexpectationsfromofficespacehavechangedconsiderablyovertime,withautomation,outsourcing,offshoringandworkforcemobilityjustafewofthedriversthathaverecastofficeportfolios.Inrecentyears,theknowledgeandinnovationeconomyhasplayedanincreasinglyimportantroleacrosstheglobe,andofficeshavebecomecentraltoitsdevelopmentandgrowth.Thecontinuedgrowthofthesetrendsandmanyotherswillseethatofficerequirementswillcontinuetoshiftdynamically.
The future shape, purpose and function of officesAscompaniesbegintheprocessofreturningtotheoffice,somearenowquestioningthefutureshape,purposeandfunctionoftheoffice.However,corporatecultureiscreatedandstrengthenedwhenpeoplecometogetherinperson:theofficeisnotfinished,itjustneedstobeadaptedasanecosystem.
Collaboration, innovation and brand Thedesignandpurposeofthecorporateofficeenvironmenthasalsoadaptedoverrecentyearstosupportcorporateobjectivesofcollaboration,agilityandinnovation,andweanticipateanaccelerationofthistrend:agreatermixofexperientialspacestowardsupportingteamsandcollaboration,aswellasheavilyamenitizedsocialorclientspacewhichactsasashowcaseforacompany’sbrandandculture.Full-daydeskoccupancytogetherwithindividual-focusedandprocess-drivenworkwilllikelydeclineasaproportionofspaceassomeoftheserequirementsshifttoahomeworkingenvironment.Ultimately,theofficewillremainthekeyphysicalspace,althoughitwillbeintegratedwithinawidercorporateecosystem.
Talent attraction and retentionCorporateperceptionshaveshiftedawayfromofficerealestateaspurelyastaticexpensetowarditbeingastrategicdriveroftransformationandenterpriseperformance.Assuch,theworkplacehasbecomepartoftheemployeevaluepropositionascompanieshavecompetedtosecurethebesttalent.Moreover,theroleoftheofficewhenitcomestomentoring,teamspiritandastrongcorporateculturehasprovencrucialtoemployeeloyalty,commitmentandultimatelytalentretention.Realestatecostshavelongbeenacriticalfactorindecision-making;however,realestatecostsaretypicallyonlyaround10%-15%ofpeoplecosts.Weexpectthedriversoftalent,experienceandemployeehealthandwell-beingtocontinuetoshapeofficedemandinthefuture,albeitwithanevolvedfocus.
Changing requirements of office occupiers
Desired outcomes from enhancing the employee experience
Source:JLL,June2020
19%
26%
33%35%
42%
48%
55%
0%
10%
20%
30%
40%
50%
60%
Lead
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ip tr
ansf
orm
atio
n
Com
pany
cul
ture
Empl
oyee
wel
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ng
Empl
oyee
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ivity
Inno
vatio
n
Attr
act /
reta
in ta
lent
Flex
ibili
ty /
agili
ty
Colla
bora
tion
42%
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The financial impact of COVID-19 Nexttosafetyprecautions,economic-drivenchangesaremostlikelytobetheprimaryenginebehinddecision-makingintheshortterm.Corporatesarelookingtobalancecompetingprioritiesinintegratingphysicaldistancingwhileminimizingthecostsofredrawingfloorplates.Anysignificantcapexprojectswillruncountertonear-termobjectivesaroundcashpreservation.Manycompanieswillfixtheirattentiononcostcuttingtoimproveliquidityandputthemselvesonamoresolidpathofprofitability.Forthatreason,weareunlikelytoseeanetincreaseinrealestatespendintheshortterm.
Overall implications for the future of the office Short term: On initial re-entry, the function of the office will be to support the people who cannot work effectively from home or those who want to be in the office, while providing and maintaining a safe and healthy environment. Demand for new office space may temporarily reduce as occupiers look to reconfigure existing space and renegotiate extensions to existing leases. Furthermore, any capex will be under heightened scrutiny for the foreseeable future, and any demand for new spend is expected to be focused around pre-built space on flexible lease terms.
Some corporates will look to free up cash, but much of this will depend on lease events and will therefore not cause a supply shock in the short term. Elevated levels of sublease space coming to market will push up vacancy in some markets; however, the quantum of space added to the market will probably be restrained as unfavorable market conditions are projected for the next six months. The majority of pre-COVID requirements have now been put on hold with some being canceled.
Long term: The function of the office will continue to evolve, accelerating trends which emphasize the importance of collaboration and innovation to employee productivity. The changing needs of office occupiers are unlikely to have a considerable impact on the aggregate level of space required, although the function and design of their space will change. More exactly, some companies may reduce space requirements, but job creation and de-densification is likely to balance this out, so at the aggregate level the impact is minimal. The office will enable face-to-face interaction, while remote working and technology will become an embedded part of flexible corporate life.
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The future of global office demand | 11
Function of the office: Employee
Increasingly distributed corporate ecosystemTheworkthatcompaniesdoandthewaytheydoithaschangedsignificantlyoverthepastdecade.Acontingentanddistributedworkforceofoutsourced,offshoredorcontingentworkershasbecomemoreandmorecommon,withimplicationsformorediversecorporateofficeportfolios.Thepotentialupsurgeinremoteworkingwillbethelatestfactortodrivedispersionandmobilityinwhereofficeworkisconducted.
Mobility, flexibility and agilityEmployeemobilitybothwithinandoutsidetheofficehasbeenanacceleratingtrendinrecentyears.2The
proliferationofcloudcomputing,VPNs,superfastWi-Fi,and4Ghasenabledoffice-typeworktobecarriedoutanywhere.Thistrendisnowlikelytogatherspeed-with5Gconnectivityenablingevenmoreefficientremoteworking.
Ourrecentglobalsurveyof3,000officeusersshowsastrongaffinityfortheoffice,althoughwithanincreasedpreferenceforanintegrationofmoreworkingfromhome–averagingaround1-2daysaweek.3Employeeshaveclearlymissedthehumanandsocialinteractionthattheofficefacilitates.Theofficealsoprovidesanimportantfacilitatortoaclearroutineanddistinctionbetweenpersonalandprofessionallives.
The rise of the liquid workforce
Source:JLLHumanPerformanceSurvey,May2020
What employees miss most about the office
2WorkplacePoweredbyHumanExperience,JLL,2017https://www.jll.co.uk/en/trends-and-insights/research/workplace-powered-by-human-experience3JLLHumanPerformanceSurvey,May2020
19%
21%
23%
25%
26%
29%
29%
31%
44%
A daily office routine
An ergonomic workstation
A good internet connection
An environment that helps me focus on my job
Informal communications that give me the big picture about my company
A clear distinction between personal and professional lives
Collective face-to-face work that favors common understanding
Human interaction, socializing with colleagues
Professional environment supporting access to everything I need
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Lessons from the growth of coworking Overthelastdecadethismobilityandflexibility,combinedwithadesireforexperience-ledofficedesign,manifestedinthedramaticriseofcoworkingandflexiblespace.Thesustaineddemandseenforthistypeofspaceprovidessomeusefulevidenceontheunderlyingappealofofficespace.Feedbackregularlyfocusesonthesenseofcommunityandhowthevalueofthenetworkbenefitsindividualsandteamsworkinginasharedphysicalspace.Whiletheflexiblespacemodelsofthelastcyclewillundoubtedlyevolveandthemarketwillconsolidateandtransform,thedemanddriversthatledthisboomareunlikelytodisappear.
Employee productivity and performance Datafromavarietyofsourcesincreasinglypointstothedirectimpactoftheworkplaceonindividualproductivity.However,manyofficesdonotdelivertheoptimalmixtodriveemployeeperformance.AJLLsurveyofover7,000officeusersglobally4identifiedconcernsaroundworkplaces:
60% of employees are not fully engaged at work
50% say their working environment does not
enable them to work effectively
66% lack spaces where they can be creative and feel inspired at work
Thisunderlinesthepotentialtodesignandcurateanofficeexperiencethatmaximizesemployeeperformance.Whenrespondentswereaskedwhichworkplaceenvironmentshavethebiggestimpactontheirproductivity,theyhighlighted,inorderofimpact:coworkingspaces,incubatorsandaccelerators,creativespacesandcommunityspace.Inaddition,85%ofemployeessaidthatitwas“important”or“apriority”thattheirworkplaceoffersspacesforconcentration.
WhenaskedwhichspacesthattheydidNOTcurrentlyhaveaccesstowouldhavethegreatestimpactonproductivity,theyhighlighted,inorderofimpact:spacesdedicatedtohealthandwell-being,communityspace,andspaceforcollaboration.Healthandwell-beingisagrowingconcernforemployeesandemployersalikeandonewhichisonlylikelytoincreaseinthecomingyears.
ThecurrentCOVID-19crisisisrevivingthesetrendsandamplifyingthem.Allthispointstoasustainedlong-termemployeeappetiteforeffectivelydesignedofficespaceaspartofanincreasinglyintegrated,liquidandflexiblerealestatestrategy.
Overall implications for the future of the office Short term: Employees will naturally be reluctant to return to the office until COVID-19 health and safety concerns are fully mitigated. Corporate occupiers’ ability to instate more flexibility regarding working hours and instill a sense of safety will help to encourage workers back to the office. Well-being will remain a key focus and many companies will operate offices below capacity to allay these concerns, while technology will be used to facilitate meetings and collaboration.
Long term: Employees are proving keen to return to the office once a vaccine or treatment is available. At the same time, they are looking to offices to provide human interactions in a way that technology cannot replicate. In addition to the office being a place for those unable or unwilling to work from home, social interaction, face-to-face collaboration, mentoring and managing are all elements where office space provides a superior offering. Maintaining productivity away from the office over the longer term is also yet to be verified and is likely to be boosted by regular office interaction. Flexibility will be key to employee satisfaction and the balance of office and remote working anywhere will be based around the individual.
4WorkplacePoweredbyHumanExperience,JLL,2017https://www.jll.co.uk/en/trends-and-insights/research/workplace-powered-by-human-experience
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Factors shaping the future of office demand
Whilethefunctionoftheofficeiscontinuingtoevolve,thereareotherfactorsimpactingwhatthefutureofofficedemandwilllooklikeinthecomingyears.Wehavefocusedonfourkeyfactorswhichwillhaveamajorroleinshapingthefutureofofficedemandinboththeshortandlongerterm.
Wehavealsoanalyzedhowthesedemandfactorsandtheongoinginfluenceofchangesinurbanizationandurbandesignmayimpactthelocationsofcompanies’spatialfootprintovertime.
Remote working
Office design
Technology
Commuting patterns
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The future of global office demand | 14
Remote working
Working from home turns mainstream overnightTheimpactofthepandemiconglobalofficemarketswasimmediate,withworkingfromhomebecomingthenormforthevastmajorityofofficeworkers.Thesuccessfuladoptionofhomeworkinghascausedemployeesandemployersaliketoquestionthefutureoftheoffice.Canemployeesbecomeasproductiveworkingfromhomeand,ifso,whatdoesthismeanforthefutureoftheoffice?Althoughnecessityisforcingmanyofustotestthistheory,theanswerisalotmorenuanced.
Physical distancing highlights the value of human interactionWithmostofficeworkersgloballyconfinedtoworkingfromhome,thereasonsforcommutingtotheofficearebecomingmoreandmoreclear.Aspreviouslystated,twoofthethreetopreasonsformissingtheofficearearoundsocialinteraction–thelong-talked-abouttrendofcollaborationandinnovationisclearlybackedupbyoursurveyevidence.Thissuggestsinthelongtermthatworkingfromhomewillcausediminishingreturnsasinteractioniskeytoideagenerationandteambuilding.
Althoughtechnologyismuchimprovedfromthefailedworking-from-homeinitiativesinthe1990s,onitsownitdoesnotcreateacrediblesubstitutetoactualhumaninteraction.Productivitythroughface-to-faceinteractionwillincreasinglybethepurposeoftheofficeandwillshifttherisk-rewardbalancefirmlytowardareturntotheofficeinapost-COVID-19world.
Inadditiontomissingtheoffice,formanypeopletheirhomelivingarrangementsmakeworkingfromhomeabelowoptimalchoice,withitslimitedspace,lackofprivacyand/ormoredistractions.Thisringstrueespeciallyfortheyoungergeneration,withglobalJLLsurveydataindicatingthat64%ofmillennialsaremosteagertoreturntotheoffice,thehighestpercentageofanyagegroup.Humaninteraction,collaborationandinformalcommunicationsaremoreimportanttoover50-year-olds,whiletheprofessionalsetupwasmostmissedbymillennials.Furthermore,gatewaycitiesareoftenexpensiveresidentialmarketswhichleadstosmallerhomes.Workingfromhomewillnotprovideapracticallonger-termoptionforsome.
Is working from home the ‘new normal’?
Source:JLLHumanPerformanceSurvey,May2020
Most missed elements of the office
Average Under 35s Over 50s
Human interaction, socializing with my colleagues 44% 37% 54%
Collective face-to-face work 29% 28% 34%
Informal communications 25% 22% 29%
An environment that helps me to focus on my job 23% 25% 17%
An ergonomic workstation 21% 23% 17%
The possibility to work in different spaces and choose the most suitable space for each task 14% 16% 9%
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Flexibility and control Priortothepandemic,flexibilityintermsofwhenandwherepeopleworkedwasanincreasingtrend,withacombinationofworkingfromhomeandalternatesitessuchasflexspace.Therecentmasswork-from-homeexperimenthasacceleratedthischangeandprovidedmostworkerswithfirsthandexperienceoftheprosandcons.Areductionincommutingisunsurprisinglythemajorbenefit,followedbygreaterflexibility.Thesealsospeaktoamoredistributedworkforce,opposedtopurelyhomeworking.
Top benefits of working from home
Source:JLLHumanPerformanceSurvey,May2020
ArecentJLLsurveyshowedthat,priortoCOVID-19,69%ofpeopleinEMEAworkedfromhomelessthanonceaweek.5 Nowjust11%expecttodosointhenexttwoyears.Thepandemicisprovingtobeacatalystfortheaccelerationofmorewidespreadadoptionofflexibleworkingaspartofabalancedemployeeoffering.Insteadofworkingfromhomebeinganaddedbenefittosomeroles,itislikelytobeastandardelementofmost.
Thesesurveyresultsbackuptheevidencewearewitnessingacrosstheglobe.Onaverage,weexpectworkingfromhometoincreasetoanaverageof1-2daysperweek,althoughtherateofadoptionwilldependheavilyongeography,sector,individualrolesandindividualemployeecircumstances.Rolesinwhichcollaboration,communication,innovationandcreativityarecrucialwilloftenbefocusedaroundthephysicalofficeenvironment.However,backoffice,adminandsupportrolesmaybemorelikelytoseeamorebroad-basedshifttoworkingfromhome.
Overall implications for future office demandShort term: Working from home will remain an option for many employees, reflecting safety and well-being concerns in the absence of a vaccine or an effective treatment. However, we are seeing tentative steps back to the office, with certain functions and sectors returning before others. Reflecting the need to adhere to social distancing, utilization rates remain low, often maxing out at 50%, although this is heavily dependent on the location and how far lockdown has eased. Cultural expectations of office attendance may push utilization rates back up quicker in some markets than others. Leasing volumes are likely to be impacted in the short term as companies opt for higher levels of homeworking instead of adding new space to their portfolios. In the U.S. we have observed a rise in subleasing availability. Corporates in EMEA and Asia Pacific seem to be holding to existing footprints for now.
Long term: Work from home or, more broadly, work from anywhere will gather pace, but more to accommodate employee preferences for flexibility than as a far-reaching and permanent decline in office consumption. Wholesale working from home, as per some of the more dramatic news headlines, will not be the ‘new normal’ in a post-COVID-19 world. Most employees welcome the flexibility to work from home but have a desire and/or need to be in the office for the majority of their workweek. In the long term, an increase in homeworking will potentially drag office demand down slightly on pre-COVID-19 levels, although other impact areas, such as changes in office design, are likely to offset this.
5JLLHumanPerformanceSurvey,May2020–3,000surveyrespondentsglobally
49%Less or no commute
45%Flexible
hours
31%Enhanced work-life balance
The future of global office demand | 16
Office design
De-densification in the short term Workplacedesignhasshiftedconsiderablyoverthepastcoupleofdecades.Office-intensivemodelswithfullyassignedworkstationshavemadewayforunassignedworkstationscomplementedbysharedspaceandamenities.Consequently,floorspacedensitiesanddeskutilizationrateshaverisen,withthistrendevenmorepronouncedinmajorgatewaycities.Desksharingandratiosoflessthanonedeskperemployeearenowcommonplace.Therationalebehindthisshiftisthreefold-collaboration,employeeexperienceandcost/ROI(i.e.productivity).
Change in office density, 2010-2019
Source:JLL,June2020
COVID-19hasputintoquestiontheappealofhighlydense,large,open-planoffices.InChina,thereturn-to-officeratevariesacrosscities,withmanycorporatesimplementingde-densificationprotocolseitherthroughsplitteams,increasedhomeworking,light-touchspaceredesignor,insomecases,theacquisitionofshort-term(flex)space.Onaverage,companiesgloballyindicatethattheyarelookingtoavoidexceedingoccupancylevelsof50%inmajorcitiesuntilavaccineissuccessfullyimplementedorlocalguidelinesarerelaxed.
Variation between sectorsOccupationaldensityvarieswidelyacrosssectors,reflectingfactorssuchasbuilding(design)preference,workforcemobilityanddigitization,aswellasrequirementsaroundsecurityandprivacy/confidentiality.Somesectorswillstruggletomovetowardlower-densityoccupationandmaythereforeencouragehigherlevelsofhomeworkingorwillleaseadditionalspace.
Forexample,ashareofthecoworkingindustrywillrequireradicalspaceredesigntoaddresssocialdistancingatanexistingaverageof5-10sqmperperson,whilethelegalsector(30-35sqmperperson)willfindthisshiftlesschallenging.
Industry density by sector
Legal
Government
Finance
Tech
Consulting
Coworking
Higher-density markets more resilientSimilarly,occupationaldensitydifferssignificantlyacrossgeographiesduetolocallegislationandculturalnorms,alongwithfactorssuchascost,spaceavailabilityandsectorspecializations.Forexample,GermanemployersprovideemployeeswithmorethantwiceasmuchofficespaceasinLondonandTokyo.Therefore,theswitchtolowerdensitywillbemoreproblematicforsomemarketsthanforothers.Ultimately,thehigherdensitymarketswillneedmorespacetoaccommodatethesamestaffandthereforehaveastrongerdriverbalancingoutthedeclineindemandonthebackofincreasedworkingfromhome.
Changing density and design
Mos
tLe
ast
US -13%
EMEA -8%
AsiaPacific-9.5%
The future of global office demand | 17
Technology cannot fully replicate in-person interaction Evenbeforethepandemic,wehadseentheneedformoreenhancedofficedesign,withworkersindicatingthatspacesdedicatedtohealthandcollaborative/communityusesweremostimportanttothem.6Thistrendislikelytoaccelerate.Thefocusoftheofficewillbetosupportemployeeinteraction:providingface-to-facecontact,groupmeetingsandcollaborativespace–alltaskswhichtechnologycannotreplicate.Thenumberofdesksperfloormightdecreaseascollaborationspacesbecomemorevital.
Anecdotalevidencefromoccupiersindicatesadesiretoredesignspace,butmostarenotplanningtooffloadsignificantamountsofspaceintheshortterm.Forthoselookingtodownsizetheirfootprint,theymayreinvestpotentialsavingsintonewtypesofspaceandamenitiesfortheiremployees.
Workplace design legislation unlikely to impact post-COVID-19 requirements Mosthastily-producedworkplacedesignguidanceproducedsincethepandemicrelatestothereductionofofficedensityinlightofsocialdistancing,alongwithhygiene,ventilationandairfiltrationtoprovidehealthyworkingenvironments.Asyet,measuresimplementedonofficeusageandde-densificationaretemporaryand
intheformofguidance,asopposedtobeingentrenchedinmandatorylegislation.Althoughitisstillearly,itappearsthattheremaybelimitedimpactonthepost-COVID-19legalrequirementsoftheoffice,withcorporatesthemselvesaccountableforthesafetyoftheiremployees.Healthandwell-beingwillremaininthespotlightandanyguidelinesputinplacearoundfuturecontaminationmitigationareexpectedtoresultinmorerelaxeddensity.
Overall implications for future office demandShort term: A shift to considerably lower-density office occupancy will expand demand for space in some cases, but most companies will realign through increased working from home, split teams and light-touch redesign. Other options include the use of satellite and flexible offices.
Long term: Following a vaccine, effective treatment or significant change in local guidelines, we expect that the dedicated desks and extreme de-densification to ease from initial re-entry levels. However, we do not anticipate density to tighten back to pre-COVID-19 levels either. Relaxing seating densities will enlarge demand for office space in some markets. While offices are likely to need fewer full-day occupancy desks per employee, a greater focus on interaction will require new collaborative spaces, which will also offset some of this demand decline.
6JLL’s2018occupierresearch,WorkplacePoweredbyHumanExperience,JLL,2017
Source:JLL,June2020*U.S.dataisacalculationbasedonoccupiedstockandofficeemployment
Density: office space per worker across global cities
Tokyo
Hong Kong
Singapore
London
Dublin
Sydney
Madrid
Shanghai
Nashville
Amsterdam
Paris
Chicago
Austin
New York
Germany's Big 5
San Francisco
Americas EMEA Asia-Pacific
Low
er d
ensi
tyH
ighe
r den
sity
The future of global office demand | 18
Technology
New technologies support remote workingCorporatetechnologyhasbeentested,andinmanycasesrapidlyimproved,followingthemasstestofhomeworkingthatensuredongoingproductivityandefficiency.OnlinetechnologiessuchasMicrosoftTeamsandZoomhaveseenunprecedentedgrowthinusers.JLLsurveyresultsindicatethatjust23%employeesdidnotfeelsufficientlytech-readyforthechangetohomeworking,andanecdotalevidenceindicatesthatmanycorporateshavesuccessfullymaintainedproductivitylevelsthankstoonlinecollaborationtools,videoconferencingandcloud-baseddrives.7
Company efficiency and productivity
Source:BusinessInsider,April20208
Microsoft Teams daily active users (millions), July 2019-April 2020
Increasedadoptionoftechnologieswillenablecompaniestoimplementmorecost-effectiveandnimblerealestatestrategies,suchasamoredistributedworkforce.Thesameonlineproductivitytoolsthatallowemployeestoworkremotelycanalsobeleveragedtomovejobsoutofmoreexpensivemarketsaslongashigh-speedinternetisavailable.Jobsmaybemovedtolower-cost,talent-heavymarketsdomesticallyandwemayseeariseinoffshoring.
Acceleration of proptech adoptionTheCOVID-19pandemichasledtoanaccelerationintheadoptionofproptechinsomemarkets,withbuildingownersandoccupiersseekingtechnologyapplicationstoensurethehealthandsafetyoftheirworkforceandbuildings.Forexample,digitalofficespacemanagement,optimizingthelimitedcapacityavailable,andaccesstoofficebuildingsviatouch-freefacialrecognitiontechnology.Concernsarounddataprivacyinsomecountries,wherethelegislativeenvironmentarounddataprivacyaswellasculturalattitudesmightberelevant,arelikelytoresultinamorecautiousuptakeevenasproptechbecomesmorewidespread.COVID-19isalsoexpectedtoleadtomoremonitoringof‘buildinghealth’–accesstometricsonlight,temperature,buildingventilation,airfiltration,cleaning,etc.
7JLLHumanPerformanceSurvey,May20208https://www.businessinsider.com/microsoft-teams-hits-75-million-daily-active-users-2020-4
1320
44
75
July November March April
The future of global office demand | 19
How smart buildings are shaping office demandSmartofficebuildingsarebecomingincreasinglycommoninmanycitiesglobally.Smartofficebuildingsuseautomatedprocessestocontrolbuildingsoperations,fromairconditioningthroughtosecurity.Sensors,actuatorsandmicrochipsallgatherdatatohelpownersandoccupiersmonitorandimproveassetreliabilityandperformance.Keyoutcomesarethereducedenvironmentalimpactofthebuildingaswellasimprovedspaceutilizationandoptimization.
Improved business processes and efficienciesIntermsofofficedesign,smartbuildingscanhelpoptimizeofficelayouts.Collaborativeversusnon-collaborativeareascanbeoptimized,ascanthenumberandsizeofmeetingrooms;sotoothebestlocationofdifferentbusinessfunctions.IntegrationofIoTinanoccupier’ssystemsandbuildingoperationscansubstantiallyimproveprocessessuchasclimateandlightingoptimization,anddeskandmeeting-roombookingsystems.
Thisshifttowardafullyintegrated,tech-enabledandconnectednetworkisprogressivelyallowingfor‘bigdata’analysis.Theinitialbenefitsofbuildings’technologyweretheabilitytomonitorenergyandwaterusage,butthenumberofusecasesisgrowingsignificantly.Inlightofthepandemic,usessuchasbeingabletoknowwhereintheofficeiscurrentlybestfor‘quiet’workandwhentoavoidpeaklifttrafficwillbecomeincreasinglyrelevant.
Overall implications for future office demandShort term: Technology on its own is unlikely to have a significant impact on the overall volume of leasing demand. The adoption of new technologies will both facilitate remote working and also ensure workers’ well-being and efficiency on their return to office buildings.
Long term: A meaningful shift in occupier demand is expected in relation to building infrastructure. We believe demand will gravitate toward smart office buildings and space over time. Buildings with more advanced technology are better suited to support companies’ environmental, sustainability, health and wellness initiatives, and they offer the employees who work in them a better overall experience. Therefore, reduced demand for lower-quality assets over the longer term seems likely.
The future of global office demand | 19
The future of global office demand | 20
Commuting patterns
Safety and well-being concerns surround commutingWithmostofficeemployeesworkingfromhome,avoidingthetime,expenseandtheenvironmentalimpactofdailycommuteshasbeenthemainbenefitofthecoronaviruspandemic.At49%ofglobalrespondents,“lessornocommute”isthehighestreportedimpactemployeeshaveenjoyedwhenitcomestoworkingfromhome.9
Ascompaniesevaluatestrategiesforreopeningtheirworkplaces,alargerissuetranspires:howwillemployeessafelycommutetotheirworkplace?Theaddedhealthriskoftravelingincrowdedtrainsandbusesisamongthegreatestimpedimentsforbusinessesreturningtonormal
operations.Asaresult,companiesmayoffermoreflexibleworkinghourstoavoidbusycommutingtimes.ArecentU.S.JLLsurveyindicatedthatcommutingviapublictransitistheleadingconcernamongofficeemployeesfortheirre-entrytothepost-COVID-19workplace.10Manyconcernshavebeenraisedbythosewhorelyonpublictransittogettoworkonissuesrangingfromcleaningandsanitationtointerpersonalinteractionandriderdensity.Duetotheseconcerns,29%ofrespondentsthatpreviouslytookpublictransitnowindicatetheywouldprefertotakeanotherformoftransportation.Thiscouldhavesignificantimplicationsforreturningtotheoffice–atleastintheshortterm.
New challenges with transit
Source:Censusdata,variousnationalstatisticsoffices,JLL*Tokyocyclingdataincludesmotorcycles
Commuting methods across across global cities
9JLLHumanPerformanceSurvey,May202010JLLU.S.workplaceexperiencesurvey,May2020
0 25 50 75 100
NashvilleAustin
ChicagoSan Francisco
DublinMadrid
AmsterdamNew York
SydneyMumbai
SingaporeLondon
Paris Tokyo*
Hong Kong
0 25 50 75 100 0 25 50 75 100
Public transport Walking and cycling DrivingDependency on public transport
Dependency on personal transport
Americas EMEA Asia-Pacific
% commuters
The future of global office demand | 21
Manycitygovernmentshaveencouragedachangeincommutingbehaviorinrecentyears,withaparticularfocusonmakingcitiesmoreaccessibletocyclistsandpedestrians.London,forexample,isactivelypromotingcyclingasatransportmethodandhasinvestedconsiderablyinasupportiveinfrastructure,triplingthecyclenetworkbetween2016and2020to162km.COVID-19willsignificantlyacceleratethistrendwithmanycitiesalreadyrollingoutnewcyclelanesandwiderpavementstoaccommodatetheincreasingdemandforcommutingalternatives.
The path forward Eachglobalregionhasitsownrecoverytimelinedependingonprevailingpublichealthconditionsandothervariables.Inallcasesthough,masstransitwillbeessentialtore-entryandeconomicrevitalization.Transitserviceswillneedahealthymixofshort-termsolutionsandlonger-termstrategiestoeffectivelyreopentheireconomies,restorevaluesofurbanrealestateandensurelastingsuccess.
Future office demand implicationsShort term: In an environment of social distancing, aversion to public transit could have a negative impact on commercial real estate in submarkets that rely heavily on mass transportation – at least over the short term – until a vaccine or therapeutic is discovered to mitigate health risks. In particular, this could impair gateway-city performance over the near term.
Long term: Although dense, urban, transit-served markets will probably face near-term pressures (exacerbated in the U.S. by recent civil unrest), this situation is likely to evolve and eventually experience a return to normality. A cycle of pushback on suburban office buildings that necessitate commutes by car remains out-of-sync with the living preferences of many young, urban-dwelling, creative-class employees, as well as the global sustainability agenda. Additionally, internal collaboration and innovation – plus external interaction with clients and prospects – often requires face-to-face settings, which naturally gravitate toward centrally-located and highly-amenitized urban centers. These factors will underpin long-term demand and the value of urban, transit-served markets over the long term, reinforcing their historical position as preeminent destinations for office investment.
The future of global office demand | 21
The future of global office demand | 22
Spatial patterns of office demand: Ongoing urbanization
Inherent attractions of cities will prevailSomecommentatorsarespeculatingthaturbanizationwillbeinterruptedorevengointoreverse.Afterall,COVID-19strikesattheheartofwhatcitiesareallabout–togetherness,connectivity,sharedservicesandsharedspaces.Yethistoriceventshaveshownthatcitiesareremarkablyresilientandcanbouncebackfromdisruptionstrongerthanever,withnewpurposeandenergy.Theinherentattractionsofcitiesintermsofeconomicopportunities,socialconnectionsandquality-of-lifeofferarelikelytoprevailoverthelongerterm,providingnewsourcesofdemandforcommercialofficespaceacrosstheurbanecosystem.
Theforcesthatwerealreadytransformingourcitieswillgatherpace:
Digitization and automation: Fast-trackeddigitizationwillstimulateinnovationintheuseoftechnology,withincreasingdemandforaccurateandjust-in-timedata,especiallyrelatingtohealth,mobility,spaceusageandenergyefficiency.Officebuildingswillbecomesmarterandurbantechwillcomeofage.
The Responsible City: Thegreaterawarenessofthefragilityofoursocietyandecosystemwillencouragecitiestodoubledownonmeasurestocreatemoresustainableandinclusivecities.Thestrategiesofpioneeringcitiesareprioritizingclimateresilience,thecirculareconomyandanintoleranceofinequality.Officeworkplacesandpolicieswillneedtoechothesethemes.
Globalization: Thepandemichashighlightedthebrittlenessofglobalsupplychains.Whileglobalconnectivityandscalearestillcritical,local/proximateresources,productionandsupplychainswillbeincreasinglyimportantfromacityresilienceandproductivityperspective.Newopportunitieswillemergeforsomecitiestobenefitfromre-localizationofproduction,particularlyinthekeyareasofhealthcareandtechnology.
Cities will survive and thrive
City Futures
The Responsible City
EconomicsPolitics
InnovationEnvironment
Resilience
Globa
lizat
ion
Digitization & Automation
Source:JLL,June2020
The future of global office demand | 23
Source:JLL,TheBusinessofCities,June2020
The hyperconnected city region
Distributed urbanization and distributed workplaces
A sustainable and resilient urban modelUrbanizationwillremainastrongandcompellingforce,butitsdynamicswillchangewithimportantimplicationsforofficespacerequirements.Thespatiallogicofourcitiesandtheirsurroundswillevolveinresponsetodigitization,newlivingandworkplacepreferences,anddemandforamoresustainableandresilienturbanmodel.
TheCOVID-19pandemicwillacceleratethetrendof‘distributedurbanization’,withthefast-trackevolutionofdigitally-enabled,hyperconnectednetworksofcitiesthatrevolvearoundmajorcitiessuchasNewYork,London,Paris,TokyoandShanghai.Thesepolycentriccityregions
havetheadvantageofprovidingbothregionalscaleandlocalproximity.Distributedurbanizationalsooffersamoresustainablemodelbasedonreducedcommuting,flexibleworkingandmicro-mobility.
Inrecognitionofthepositiveimpactoncarbonfootprints,productivityandqualityoflife,somegovernmentsareexplicitlybuildingdistributedurbanizationandhyperconnectivityintotheirregionaldevelopmentstrategies.Chinaisleadinginthisregardwithambitiousplanstocreatefourmega-regionsofhyperconnectedcities.
Evolving spatial logic of cities
4th
Tier City
SecondaryCBD
Suburban Hub
Suburban Hub
Suburban Hub
2nd
Tier City
2nd
Tier City
2nd
Tier City
3rd
Tier City
3rd
Tier City
Innovation Hotspot
CBD
SecondaryCBD
SecondaryCBD
The future of global office demand | 24
Theriseofthehyperconnectedcityregionwillgraduallyshiftthespatialpatternofofficedemand.Wethinkthiswillpushtowardadiverseofficemarketecosystemcomprisingthreemajorelements.
Increasing demand in livable, well-connected suburbs and small citiesShort term: Concernsoverpublictransitandongoingsocialdistancingpointtosomedisplacementofoffice-basedactivitiestolocally-accessiblesuburbsandsecondandthird-tiercities.
Long term: Qualityoflife,amenitiesandconnectivitytothemainurbancorewillbekeyconsiderationsforofficeoccupiers.Thesuccessfulsuburbanandsmall-citylocationswillappealtofamiliesandamid-lifedemographicthatvaluehigh-qualityresidentialandeducationinfrastructure.Citiesandsuburbsthatcanembracesustainablemassmicro-mobilitywithgoodtransittothemainurbancoresshouldsustainlong-termsuccess.Bycontrast,wecouldquicklyseepushbackinthosesuburbanlocationsandsmallercitiesthatrelyoncommutingbyprivatetransport.
A reimagined and increasingly multi-use urban core Short term:High-densityurbancoresthatrelyheavilyonmasstransitarelikelytofacepressureassafetyconcernsweighonofficeworkersandemployers.
Long term: Urbancoreswillcontinuetoattractpeopleandcorporatespulledinbyamenities,opportunitiesandlifestyle.However,theyneedtobereimagined,reflectingtheirchangingroleintheurbanecosystemthatispivotingtowardcollaboration,creativeenergyandin-personsocialandbusinessinteraction.Itisprobablethatmorepeoplewillvisiturbancores,butlessfrequentlyandwithfewerdailycommutes.
Urbancoreswillseemoremixed-usedevelopmentthatappealstourbanlivingandworking,whileofficespacedesignwillreflectthechangingfunctionofurbancores.Spacewillhavetobeagileandflexible,withadaptivereusethatenableshybriduses.Thiswillalsorequirearethinkbycitygovernmentsovertheirplanning/zoningregimes.
New clusters of innovation-based activitiesLong term: Innovationwillbecrucialtocityresilienceandsuccess.PriortoCOVID-19wehadseentheemergenceofanewinnovationgeography,withhighconcentrationsofinnovation-orientedactivitiesinhotspotssuchasLondon’sShoreditch,Barcelona’s22@,Boston’sKendallSquareandTokyo’sShibuya.Theeconomiesofscaleofhyperconnectedcityregionswillfacilitatethefurtherclusteringofinnovation-basedactivitiesintonewhotspotsthatofferacompellingcocktailofthefour‘A’s–affordability,amenity,accessibilityandanchorinstitutions.
Companiesworkingintheinnovationandknowledgeeconomywillcontinuetobeattractedtotheselocationstoboostproductivityandencouragecollaborationwhileattractingandretainingtalent.
Moving toward a diverse office market ecosystem
Office demand in the hyperconnected city region
The future of global office demand | 25
Final Thoughts
Essential but ever changingAperiodofuncertaintyoftenfollowsunforeseenextremeeventswherepredictionsaboundofhowlifeandworkwillchangeintheaftermath.Thinkofthepredictionsfollowing9/11–thatnoonewouldeverwanttoliveorworkatthetopofahigh-risebuildingeveragain,andthatourcitiesofthefuturewouldlookvastlydifferent.Movingforwardalmosttwodecades,ourcitieshavenotfundamentallychanged,norhasthedesirabilityofofficesorresidentialatthetopofskyscrapers.Andoftenthisrealestatecomeswithapricetagtomatchtheviews.
TheCOVID-19pandemichasbeenanotherunforeseenextremeshocktoourworldwithfar-reachingconsequencesovertheshortandlongterm.Therewillbeaninevitablecorrectionintheshorttermastheeconomicimpactofthepandemicflowsthroughtocorporateactivity.However,overthelongertermtheofficewillremainafundamentalpartofourcorporatecultureandwillplayanessentialroleinourworkandproductivity.
Thatisnottosayourofficesandworkingliveswillgounchanged.Workingfromhomeisnowaprovensuccessandithashighlightedtomanyemployersandemployeesthattherearebenefitstobothpartiestoincorporatingthisflexibility.
Officespacestillhasapivotalroletoplayinfacilitatingessentialface-to-faceactivitiesthatarenoteasilyreplicatedonline.Onboardingnewstaff,trainingandmentoringareallessentialforcareerprogressionandmaintainingaproductiveworkforce.Additionally,theofficeprovidesaspaceforpeopletocometogetherandcollaborate,innovateandgenerallypushboundariestoprovidefreshimpetusforbusinessgrowth.Andnotforgetting,forsometheofficeisaplaceofconcentration,keepingworklifefirmlyawayfromhomelifeandprovidingacleardelineationbetweenthetwo.
Theofficeitselfmaychangehowitlooksandfeels.Theofficeofthe1990s,withindividualcubiclesandworkspaceswithlimitedcommunalfacilities,isnotrecognizablefromthespaceswehavetoday.Afocusonwell-beingandsomede-densification,alongwithimprovementstodesigntoencouragetheinteractionthatisdifficulttofacilitateathome,areallelementsthatmaychange.Officespacewillcontinuetoevolvebutitisfarfromover.
An ongoing evolution of the office
The future of global office demand | 25
COPYRIGHT©JONESLANGLASALLEIP,INC.2020Thisreporthasbeenpreparedsolelyforinformationpurposesanddoesnotnecessarilypurporttobeacompleteanalysisofthetopicsdiscussed,whichareinherentlyunpredictable.Ithasbeenbasedonsourceswebelievetobereliable,butwehavenotindependentlyverifiedthosesourcesandwedonotguaranteethattheinformationinthereportisaccurateorcomplete.Anyviewsexpressedinthereportreflectourjudgmentatthisdateandaresubjecttochangewithoutnotice.Statementsthatareforward-lookinginvolveknownandunknownrisksanduncertaintiesthatmaycausefuturerealitiestobemateriallydifferentfromthoseimpliedbysuchforward-lookingstatements.Advicewegivetoclientsinparticularsituationsmaydifferfromtheviewsexpressedinthisreport.Noinvestmentorotherbusinessdecisionsshouldbemadebasedsolelyontheviewsexpressedinthisreport
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