The corporate appetite for flexible space continues to grow as around two-thirds of occupiers rank employee engagement (68 percent) and talent attraction and development (65 percent) as two of the three most important drivers of corporate real estate (CRE) strategy. According to the 2019 EMEA Occupier Survey by CBRE over a third of companies see labour and skills shortages as a key strategic challenge, double last year’s result. In line with last year’s survey, technology disruption (36 percent) economic uncertainty (43 percent) and cost escalation (31 percent) all feature highly as key challenges for occupiers.
In last year’s survey cost-reduction was the single most important driver of CRE strategy and employee engagement was fourth but this year, cost reduction has dropped to fourth, employee engagement is second and talent attraction & development is third. In this context, optimising human capital is becoming the overriding aim of occupiers’ property decisions.
Richard Holberton, EMEA Head of Occupier Research, at CBRE said: “In an environment where occupiers identify labour and skills shortages as a key strategic challenge, decision-making across a range of issues is increasingly dominated by the need to optimize human capital.”
Appealing to staff
The survey claims there are four ways in which which firms are seeking to use real estate as a way of influencing and enhancing their appeal to skilled labour, these include:
Procurement and fit-out strategy: While traditional procurement and fit-out approaches are still favoured when taking large leases in a new building, the survey found that occupiers are increasingly influenced by internal building characteristics. Nearly 60 percent of occupiers would be willing to pay a premium of at least 10 percent over typical prime rents for a curated high amenity offer under a service agreement, compared with 46 percent who would pay a similar premium for a fully-tech enabled smart building.
There are four ways in which which firms are seeking to use real estate as a way of enhancing their appeal
Flexible space strategy: Corporate appetite for flexible space continues to grow, with the proportion of companies expecting to make significant use of flexible space over the next three years twenty percent higher than those who currently do so. The use of flexible space as a means of attracting and retaining talent is up ten percent from last year. While a rising number of companies are also using flexible space as part of a wider attempt to experiment with different workplace and occupancy models.
User Experience strategy: Formal User Experience (UX) programmes aimed at curating the full range of workforce needs across workplace, amenity and service are still not being widely used. Only around a third of companies have a formal UX programme, or plan to introduce one. However, a third of companies have plans to hire a UX lead and two-thirds would be willing to pay a premium for a building in which the landlord had provided an enhanced UX offer.