By David Smith
The current economic expansion, now the second longest in post-war history, continues to roll onward at a steady pace. This sustained growth is creating fierce competition for high-quality labor in most industries. Savvy commercial real estate executives are working alongside senior leadership in human resources and members of the C-suite to develop real estate strategies that attract and retain talent in the modern workplace. It is imperative for corporations to stay ahead of the changing commercial real estate trends.
Demographic developments impact who is in the space and how it is being used. Millennials are now the largest generation in the workforce, and they are driving the agendas of how companies operate, what workplaces look like, and what technology is expected. They are not just businesses’ young workers either. Millennials born in the early 1980’s are increasingly the leaders of their organizations.
Coworking has both ridden and accelerated the wave of changing office layouts that are marked by quality build outs, generous amenities, and less space per worker. This new product type offers an alternative for large organizations, but also has impacted how corporate occupiers think about the layout, quality, and flexibility of their own office space.
Technology improvements make it easier for people to work from anywhere at any time. However, employers and workers want the communal benefits in relationships, trust building, culture development, and collaboration that come from working face-to-face. The office is no longer where one needs to be, so occupiers are focused on creating attractive, functional, and flexible work spaces in which one wants to be. The technology in the office space, as well as the amenities in and around the building, are key parts of today’s employee experience.
Cushman & Wakefield’s newest occupier report, Space Matters, dives deep into four areas of importance to today’s CRE executive. It analyzes the national trends behind office density, amenities, parking, and concessions. Additionally, it provides market-by-market comparisons of vital benchmarks for 40 of the country’s largest and fastest growing cities.
- Office density: Occupiers have been allocating less square footage per employee, but that trend is starting to slow down as businesses grapple with the right balance of personal, private, communal, and break space.
- Amenities: Common amenities—such as fitness centers and cost-effective food options—still remain very important. However, there is large opportunity for growth in how technology amenities are leveraged by occupiers and landlords.
- Parking: In many urban sub-markets parking supply is a challenge. Prices have been increasing, and occupiers are looking at creative options to meet the challenge. Also looming in the future is what impact autonomous vehicles may have on parking demand.
- Concessions: Free rent and tenant improvement allowances increased over the past year, but gains were driven by gateway markets in 2017. This trend will spread and some secondary markets will soften as absorption slows down and/or new supply comes online.
To read the whole report and learn more about these critical occupier trends, click here.
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