Insight

How real estate managers must rethink office spaces for an evolving workforce

Office

COVID-19, along with rising ESG concerns, has spurred a revolution of the workplace as we know it- to get employees back to the office, office spaces must reinvent themselves.

The writing on the wall is clear – the world of work will never be the same again. And there are plenty of signs that hybrid working is here to stay.

Data from Google shows that workplace activity in London, New York, and San Francisco is running at half of the pre-pandemic average. A recent survey by Eurofound showed that the majority of EU workers have a preference to work from home occasionally, with the most popular preference being a hybrid working model.

Against the backdrop of changing workplace habits, corporate real estate has realised the importance of ESG and long-term sustainability practices. Significantly, this is not just in response to legislation but is rapidly becoming an expectation of employees, clients and investors alike.

Impact of ESG and COVID-19 on office spaces

Given that the built environment has a significant impact on the natural environment, real estate is an integral part of companies’ ESG strategies. Here, companies should focus on:

  • Ventilation: Offices must incorporate green and airy spaces, maintain air-conditioning units regularly, and use air purifiers to ensure clean and breathable air, all initiatives that are especially crucial in a post-pandemic world.
  • Energy efficiency: Heating, cooling, and electrifying offices is a highly energy- intensive activity. Some office parks have installed large-scale solar panels or wind turbines to reduce reliance on traditional, carbon-based energy sources. Others have done the same on a smaller scale by installing LED lighting.
  • Plastic usage and recycling: Offices are also engaging in waste recycling programmes towards reducing the company's environmental impact. Initiatives such as cutting down the prevalence of single-use plastic and ensuring that multi-purpose plastic is used instead can go a long way.
  • Green spaces: Not only do more green spaces mean less energy consumption, but they also imply that employees have more fresh air to breathe and exercise in as they engage in rest or recreation, besides enjoying more pleasing views at work.

How global real estate is adapting to change

With leading global financial centres taking sustainability seriously, building owners are following suit. In New York, for example, building owners are being mandated by law to create more green spaces, reduce energy consumption, and transition to using other forms of renewable energy. New York City’s Climate Mobilization Act seeks to reduce greenhouse gas emissions from New York City buildings by 40% by 2030 and 80% by 2050, using 2005 emissions as a baseline.

And, when it comes to remote working, tech majors in San Francisco are definitely set for a major upheaval. In August 2020, Pinterest pulled out of a deal to move into nearly 500,000 square feet of office space in San Francisco, while Twitter is subleasing 100,000 square feet of its San Francisco office. Of course, while large-scale, flagship tech campuses might be a thing of the past, it is likely that there will continue to be  investment by companies in smaller regional hubs  as more remote workers are dispersed throughout the US. 

What IQ-EQ is doing to woo a new generation of workers

At IQ-EQ, we are seeing hybrid working and optimised office spaces take root across the group.

With hotdesking and social distancing measures, IQ-EQ is making conscious efforts to free up office areas and optimise working spaces for employees. This has meant that we’ve been able to overcome many of the constraints of traditionally smaller office centres, providing our employees with bigger break rooms and more space for staff to exercise or relax during office hours.

Moreover, our corporate headquarters at Luxembourg has moved to a hybrid work model as well. It has also embraced a plastic-free model to ensure zero plastic around the office. With a view to reduce their carbon footprint, our staff is also working towards a paperless office – so there is one recycling bin per floor and printers are being phased out too.

Beyond offices: Student accommodation adjusts to Gen Z’s needs

As one of the leading service providers for real estate companies, one major trend we’ve seen in the last year is the impact of the pandemic on student housing. While international students may have felt this the most, the inability of universities to extend on-campus housing due to health and safety concerns has also affected local students, who may previously have chosen to reside on campus.

In particular, with the pandemic forcing students to adjust to a new lifestyle that confines them to their apartment, we can expect to see a new focus on upgraded apartment amenities.  We’re likely to see enhancements such as air purification systems, package lockers, food delivery lockers, and keyless entry to assuage health concerns. Similarly, a rise in green amenities is likely as climate concerns coincide with a focus on health. Indeed, with the COVID outbreak, Gen Z’s already climate-conscious students have even more reason to prioritise a lifestyle that feels healthy for themselves and is good for the environment.

How to make real estate a hot asset class again

In recent years, employees, particularly from Gen Z, have actively sought out companies that share their values on sustainability. This makes it critical that employers understand what an evolving workforce expects of them, both in the face of COVID-19 health and safety norms, as well as with an eye on ESG.

This evolution of workforce habits has only been accelerated in a COVID context, with surveys showing that while most office workers actually want to go back to an office — this would not be for more than two or three days per week. That suggests that providing an attractive workspace for the most talented people will require less space than it did in the past, since it is unlikely that all employees will be in on the same days.  

In summary, companies must adapt to accommodate these changes if they want to keep employees in the office. Re-designing office spaces for a smaller workforce, improving office amenities, and implementing ESG values will all be critical for ensuring the future of the office- for both current, and future, generations.