October 4, 2024
There are a multitude of forces that influence real estate requirements, such as how we work, where we work, and what we value most from our working environment. However, this shifting landscape can make planning future real estate requirements a complex challenge.
To help the industry develop a more robust approach to future planning, JLL's Future of Real Estate Report, part of their larger Future Vision program, explores future scenarios and maps out how best to assess and plan for these.
The result of 12 months’ of research by 45 diverse experts, JLL’s report aims to understand how broad future planning can impact the real estate decisions of today. Whilst the scenario lens is theoretical; they are grounded in current trends and emerging realities that are already beginning to influence the real estate sector.
In the latest Desana Podcast, Greg Miley was joined by Flore Pradere, part of the JLL Future Vision research team, where they explored three of these scenarios for our listeners. We’ve pulled out the key points from their discussion below.
A scenario that will undoubtedly continue to play out is the growth in employees working remotely accelerating the trend toward decentralized organizations. As Flore explains:
“You look for talent where they are. They can live wherever they want. They’re all connected. They’re supercharged with AI. You also have AI agents that are part of the ecosystem. And you have what we call a ‘liquid workforce’.”
Crucially, the growth in decentralized organizations is now being facilitated by advancements in technology, particularly communication and collaboration tools like virtual reality (VR) and, of course, AI. However, AI can be a double-edged sword. As Flore notes:
"We shouldn't look at AI as a way to replace people...it's really a way to empower people, to supercharge them."
AI can be powerful for task automation, allowing employees to focus on more complex and creative work. However, this requires investment in training and development to ensure employees can work alongside AI. A recent Gartner study highlighted that
"Training is crucial so 'nobody is left behind.' Organizations will need to provide continuous learning opportunities to help employees adapt to new technologies and work processes."
Similarly, while VR can support remote collaboration, Flore believes that ultimately "the future will be a mix", with face-to-face interactions still playing a key role in building "social capital." Virtual reality can create immersive environments that facilitate collaboration and communication, but it will never replace the necessary human connection from in-person interactions. Organizations need to find a balance between virtual and physical workspaces to foster collaboration and innovation.
Another more practical adjustment this "liquid workforce" requires is a rethinking of approaches to leadership, goals, and project management, as traditional hierarchical structures are unlikely to be effective. Instead, more flexible and adaptive management styles will be required to ensure.
Unsurprisingly, the rise of remote work and decentralized organizations is reshaping the demand for traditional office space. The flexible office space market is the fastest-growing segment in the US, increasing 23% annually since 2010, reflecting the need for organizations to accommodate a "liquid workforce" spread across different locations.
Although the demand for traditional office spaces is decreasing, this shift presents an opportunity for the growth of flexible and adaptable workspaces, such as coworking spaces. JLL predicts that by 2030, 30% of office space will be flexible in some form, as landlords seek partnerships to offer flexible space solutions.
These coworking spaces are designed to support collaboration, creativity, and productivity, offering a range of amenities and services tailored to the needs of modern workers. Open layouts, shared workspaces, and dedicated areas for meetings and events foster a sense of community and facilitate networking opportunities. Additionally, these spaces often incorporate features such as high-speed internet, printing services, and on-site cafes or restaurants, providing a comprehensive work environment.
The demand from citizens and employees for organizations to prioritize social impact, rather than solely pursuing profits, is growing. As Flore explains:
"People have a growing aspiration to contribute to the fabric of the city, to every decision that is being made...social impact is becoming a new metric of success."
This shift reflects a broader trend towards corporate social responsibility and sustainability, with employees and consumers increasingly looking for companies that align with their values and contribute positively to society.
The voice of the younger workforce will be pivotal in driving this change, pushing to "reinvent the way we do, the way we look at real estate, the way we use it", says Flore. Younger employees are more likely to prioritize social and environmental issues, and as they move up the ladder their influence will drive changes in how companies operate and use real estate.
This drive for a more socially and environmentally minded workspace also requires rethinking the office as "open to the city" rather than a "fortress" just for employees. The office of the future will need to be more integrated with the surrounding community, offering spaces that are accessible and beneficial to the public.
This could include public parks, community centers, and cultural spaces that enhance the quality of life for residents. Purpose, culture and workplace design are becoming increasingly intertwined, with companies seeking to create spaces that reflect their values and contribute positively to society.
The focus will be on creating environments that support a healthy work-life balance, promote mental and physical well-being, and foster a sense of belonging and purpose. This may involve incorporating features such as water features, natural lighting, and biophilic design elements that connect people with nature. The goal is to design buildings and spaces that are not only functional but also inspiring and inclusive, enhancing the overall quality of life for both employees and the broader community.
The future of real estate is intrinsically tied to the pressing issue of resource scarcity. We’ve already crossed six out of nine planetary boundaries - a clear indicator that resource depletion is no longer a distant concern, but an immediate reality we must confront. To navigate this resource-constrained landscape, the real estate sector must embrace the principles of frugal innovation and circularity.
Frugal innovation involves creating more value with fewer resources, leveraging low-tech solutions like blinds, plants, clay architecture and rooftop gardens to enhance sustainability. Simultaneously, the circular economy will drive a shift towards recyclable and reusable materials, with an increasing number of companies committing to using only circular furniture and workspaces by 2030.
Furthermore, the integration of renewable energy sources, such as solar panels and wind turbines, into building designs will become paramount. These technologies, coupled with energy-efficient lighting, heating, and cooling systems, will reduce the carbon footprint of buildings and promote self-sufficiency, ultimately contributing to a more sustainable real estate landscape.
By digging into these scenarios, what's clear is the importance of shifting our focus from designing purely functional workspaces to designing environments that enhance well-being, productivity, and a sense of purpose.
The office will also need to be a space that cultivates a sense of belonging and inclusivity. Employees want to feel part of a community and contribute to something larger than themselves - a shift we’ve seen echoed in the job market, with candidates being drawn to B-Corps and roles with purpose. By creating inclusive and inspiring environments, organizations can foster a sense of purpose and engagement among their workforce.
Ultimately, if we pull on the thread of these scenarios, the value of real estate will be measured not just by its functional efficiency, but by its ability to support the holistic needs of both employees and the surrounding communities.
As the real estate landscape evolves, organizations must embrace innovation and challenge long-held assumptions about how and where we work. Advancements in artificial intelligence and generative AI are showing promise in enhancing numerous aspects of the industry, from property valuation to construction planning, and cutting-edge sustainable practices are becoming non-negotiables. Investing in training and development programs will also be crucial to ensure employees have the skills necessary to work alongside emerging technologies.
Navigating this future of real estate requires a more holistic strategy, akin to the agile approach to building real estate portfolios. Overall, organizations should strive to create spaces that enhance well-being, productivity, and community engagement, while minimizing their ecological footprint. By adopting a forward-thinking and adaptable mindset, companies can position themselves for success in this rapidly evolving landscape.
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