Real Estate Companies Are Wrong About The Future Of Work
Within hours of companies shutting their physical doors and setting off our collective work-from-home experiment in 2020, the intellectual discussion began over how things would look after the crisis. No firms have been even close to accurately predicting it.
Some thought the shutdowns would be a blip on the radar of our work culture. Others declared the death of the conventional office. As in most things in life, the most intelligent stance seemed to be the middle ground of what came to be known as the “hub-and-spoke” model. This version of the so-called “new normal” would have businesses increase the diversity in their real estate space but reduce overall footprint. Instead of tens of thousands or even hundreds of thousands of Class-A spaces in a Central Business District (CBD), these companies would downsize and then lease both suburban and coworking spaces to accommodate disparate needs among its talent.
Nearly two years later, most commercial real estate firms still fall into predicting either the proliferation of the hub-and-spoke or taking the overly optimistic “downtowns will be full again within a couple years.”
Both wrong.
Like many things in life (cut sugar, lose weight springs to mind), the answer is that there will be many answers – no magic, aha moments or “Field of Dreams” solutions.
So, what’s the play then? The TL;DR is businesses have almost no control. In the era of The Great Resignation (a gross mischaracterization of what’s happening, but we’ll leave that for another post), it’s not up to businesses. It’s up to the talent. And instead of calling them talent, let’s move to a more accurate definition: people.
People have individual idiosyncrasies, desires and characteristics. Few generalities can be made. Predicting how one industry will move forward is woefully shortsighted, as the state, city and even neighborhood the people (employees in this construct) live in makes a difference. Their individuality makes all the difference. There is no one size fits all, or even most. The true answer doesn’t yet exist, and the predictions are at best an educated guess.
“The longer we have to live with ‘return-to-office’ starts and stops, the higher the chance that flexible/hybrid work practices will be entrenched,” Head of Commercial Real Estate Economics at Moody's Analytics Victor Calanog told us. “(Smaller) office tenants are signing much shorter leases (one year or less) as a proportion of the total, prioritizing flexibility over long-term commitments – because what the ‘long term’ looks like remains murky.”
L.A.-based consultancy Korn Ferry recently published a piece in which it makes a number of predictions about the future of work. It’s well-prepared and has a lot of useful nuggets in it. At one crucial point, it poses a bold question that almost gets to the heart of it: “2022 is the year of the employee,” Korn Ferry states. “They know what they want, but can you give it to them?”
There are two pieces to unpack and push back on here. First, it’s not the year of the employee. It’s the continuation of an evolution likely to permanently shift the power in favor of the employee. Next year will be another year of the employee. And the one after that.
Secondly, do they really know what they want? Who is they? Are they all the same? Does Lisa in accounting miss the office so much that she can be swayed by a sanitizer station and her boss being so magnanimous as to allow her to work from home twice a week? Does John in marketing like working in his 400-square-foot micro apartment in New York’s Financial District or would he actually welcome more space so he stretch his legs and have a place to sit that isn’t made of memory foam.
The content goes on to list out several trends and tactics, including suggesting “delivering consumer-grade employee experiences at work” will help with changing demands. This is a classic cart-before-the-horse problem. That statement suggests work is merely a physical space, or that access to decent coffee and more comfortable chairs may solve the problem. That’s a decade-old story, when commercial real estate companies waxed poetic about open office and the collaboration it claimed to increase being the forever future. In their defense, these predictions were made without a pandemic top of mind.
As the Roman Emperor and Stoic philosopher Marcus Aurelius said, “Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present.”
This isn’t easy. Commercial real estate firms and consultancies are expected to advise clients on what the future of work will look like. It’s understandable to toss out all these predictions. It’s even understandable to state them as something akin to fact. After all, these are for-profit businesses.
But there is a better way. Instead of doing that, how about authenticity and transparency? Next time you advise a client on how work will look when this is over, if it’s ever “over,” how about saying you have some ideas on how things might go, but the only thing you can offer is agility. Look them square in the eye and with empathy, say, “I don’t know what’s going to happen next. What I do know is that I’ll be here to help you navigate it, whatever it looks like.”
That’s value.
Elliot Golan, Vice President, Real Estate is responsible for managing the overall quality of account staff work within the Real Estate Practice and serves as a strategic advisor and senior counsel to clients.
Category: Corporate
