A major new survey by commercial property consultancy CBRE reveals the changing priorities of office space occupiers across EMEA and confirms trends in the market across Scotland, with users’ experience and needs increasingly being the prime concern.
In the 2019 EMEA Occupier Survey, published yesterday by the global real estate advisor, around two-thirds of occupiers rank employee engagement (68%) and attracting and developing staff (65%) as two of the three most important drivers of corporate real estate (CRE) strategy. Highlighting this heightened focus on employees, and the fact that ‘human capital’ is becoming an overriding factor of occupiers’ property decisions, cost-reduction has dropped from being the single most important driver last year to fourth ranking.
Underpinning the shift in priorities is the fact that labour and skills shortages are seen as a key strategic challenge by a third of companies – double last year’s figure – with technology disruption (36%), economic uncertainty (43%), and cost escalation (31%) noted as other main issues. To enhance their appeal to skilled staff, companies are seeking to use four strategy levers relating to their office environments:
- Procurement and fit-out: While traditional procurement and fit-out approaches are still favoured for new building large leases, occupiers are increasingly influenced by internal building characteristics. Nearly 60% would be willing to pay at least 10% over typical prime rents for a curated high amenity offer under a service agreement, compared with 46% who would pay a similar premium for a fully-tech enabled smart building.
- 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 20% higher than those who currently do so. The use of flexible space as a means of attracting and retaining talent is 10% up from last year. Increasingly companies are also using flexible space as part of a wider attempt to experiment with different workplace / occupancy models.
- User Experience strategy : Only a third of companies have, or plan to introduce, a formal User Experience (UX) programme curating the full range of employee needs, in the workplace, amenity and service are still not being widely used. However two-thirds of companies would be willing to pay a premium for a building in which the landlord had provided an enhanced UX offer.
- Technology strategy : 70% of companies intend to raise their level of real estate technology investment in the next few years towards a more people-focussed direction. The methods of acquiring the skills needed to deliver these aims, such as data scientists, are becoming more sophisticated with corporates pursuing a variety of approaches, including outsourcing to specialists.
CBRE Scotland confirms that evidence of the main findings of the EMEA Occupier Survey is being seen across the Scottish office property market, where the evolving trend for highly flexible, more efficient, more enjoyable environments geared to workforce needs is apparent.
Edinburgh-based Angela Lowe, CBRE Senior Director in Advisory & Transaction Services, comments: “This report verifies what we are seeing on the ground in terms of flex space, fit out and the user experience. Increasingly our clients are looking at flexible space options, not just to minimise capital expenditure and increase lease flexibility, but to offer an environment that their staff enjoy. Demand for this type of space is outstripping supply.
“When committing to longer term space, occupiers are seeking efficient buildings with ‘non corporate’ common areas, which they can then put their stamp on through creative fits outs which help promote the culture and collaboration. Smart buildings are here but this is definitely a growth area. What we have seen has been focused on energy and occupancy management. We expect more promotion of technologies that can enhance the user experience as well as providing a more efficient, transparent and sustainable office environment.”
Derren McRae, CBRE Managing Director – Aberdeen, Advisory & Transaction, adds: “We have seen a surge in the growth of serviced office offerings in Aberdeen in recent years with new entrants such as Citibase, Orega, Centrum and Spaces opening centres in key locations. The benefit for a landlord is that a number of occupiers with larger requirements are then attracted to buildings with a serviced office offering, especially given the project led nature of the energy sector.
“We also anticipate a greater occupier focus on ready to occupy space where initial capital expenditure costs are reduced and lease flexibility is available. Pro-active landlords are working with their agents and design teams on innovative solutions to create ‘plug & play’ space for occupiers looking to take new offices with a shorter lead in time.”