“The evolution in how we work is ultimately changing our social and our built environment,” writes Waypoint founder Diane Vrkic in this EXCLUSIVE commentary.
In 2017, North American offices average 151 square feet per worker, down from 225 square feet in 2010, according to real estate data provider CoreNet Global. Why the shift? Companies, which have historically been constrained by space limitations, are moving toward proactively reducing their footprint, while capitalizing on the benefits of shared office space such as increased flexibility for employees and more collaborative work environments.
The impact of shared workspaces goes beyond the corporate work environment. Landlords are working to meet the demand for space as a service to tenants rather than providing a space for tenants to service. From the rise of coworking, to the growth of smart building technology, the evolution in how we work is ultimately changing our social and our built environment.
The ongoing success of WeWork, the global coworking company who pioneered the coworking concept, is an indication of the growth of this industry. The company continues to thrive with 140 locations in 44 cities across 15 countries. The company is valued at close to $20 billion dollars and growing in its appeal beyond freelancers and small businesses to corporate America.
Why are shared office spaces thriving—even in corporate America? According to PricewaterhouseCoopers, real estate costs make up 8% to 9% of revenue in the professional services industry—a fee that PwC is aiming to get down to 2% as it plans to convert all of its US offices to coworking spaces. Shared spaces provide options for companies that either lack the budget for renting an office or want to rid themselves of real estate, furniture or services that were previously thought to be non-negotiable. And they are ideal for hosting meetings, and for on-demand space for satellite employees, mobile workers, and freelancers.
A real-world example of shared space done right is health insurer Aetna, which has leveraged remote employees for more than 20 years. More than 31% of the company’s employees telework and as a result, the company has reduced its office space by more than two million square feet, resulting in an approximate annual savings of $78 million.
Breather, another of the shared workspace pioneers, allow members to quickly and easily secure uniquely designed meeting spaces scattered throughout major cities. The spaces can be rented by the hour or by the day and provide a respite for workers outside of their home or office. Truly a space as a service concept.
IoT and Smart Buildings
Shared work environments are made possible due to advancements in technology such as the Internet of Things (IoT). Commonly known as smart or intelligent buildings, the rise of IoT-enabled space is impacting the commercial real estate industry due to its potential to allow owners to improve margins through cost savings and operational efficiency. How? Enhanced building performance will lower operating costs, facilitate predictive maintenance, and increase security.
A few key technologies are at the forefront of the smart buildings evolution and they focus on keeping workers connected, safe and productive. For example, the Kisi cloud-based platform embraces mobile technology, allowing members to access a facility via their smartphone 24/7, while also restricting access to various membership levels that are limited in the time of day they can use the building.
Smart technology can also enable commercial real estate companies to create competitive differentiation and improve top-line growth through service innovation to tenants. This can include leveraging sensor data to offer tenants more customized design and experience by capturing and analyzing end-user behaviors. Interactions and movements can be tracked via footpath technologies, enabling office property owners to provide insights that help design customized and comfortable workspaces.
Smart technology solutions are rapidly advancing the commercial real estate industry, yet beyond the evolving technology and growing number of shared working environments, there is great value to be had in the collaboration, innovation, and camaraderie that occurs within a social environment and landlords are starting to pay attention. By offering more collaborative spaces in buildings, landlords are responding to the rise in the coworking space trend by designing spec suites with a more coworking, shared space feel and even going as far as to offer shorter lease terms, also a characteristic of coworking lease terms.
Whether coworking in a shared space, or working in a smaller, open office concept, productivity and motivation both rise from a general sense of well-being among the workforce. A happier, more efficient workforce allows businesses to be more profitable. Profitable businesses pay rents and rents keep commercial real estate buildings alive and thriving. When commercial real estate thrives, the greater community thrives. Marrying smart technology platforms within commercial office space will continue to build stronger real estate that will increasingly improve efficiency and drive real value for the future.
By: Diane Vrkic (GlobeSt)
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