Cost Continues to Drive Office Decisions, But a People-Focused Shift is Emerging
Nearly a third of companies recently surveyed by Cushman & Wakefield have shifted their commercial real estate reporting structure to HR, signaling a recognition that the entire industry is a people-focused element of organizations. However, most still rely on traditional real estate financial metrics, missing an opportunity to measure how CRE impacts employee experience, engagement, workflow and productivity.
These findings are gleaned from the bi-annual What Occupiers Want survey conducted by Cushman & Wakefield and CoreNet Global. The report encourages organizations to develop cross-functional metrics that link real estate investment to corporate financial goals that demonstrate the return on investment of CRE decisions and to strengthen collaboration across finance, HR and IT under a shared performance framework.
Most CRE teams continue to report into financial departments, and real estate decisions are largely driven by pressures to reduce and control spending, the report said. Teams in the industry are also becoming more data-driven, which emphasizes metrics like cost, efficiency and utilization above other performance measures. Meanwhile, political and economic instability, shifting workplace behaviors and evolving perceptions of the office’s purpose are clouding decision-making, according to Cushman & Wakefield.
Talent sourcing and retention are increasingly factoring into CRE decisions, which has elevated geographic flexibility to a top priority for occupiers looking to leverage real estate portfolios to tap into diverse and distributed talent pools. Tech talent demand remains high in the Americas, with the finance and banking sectors particularly active in seeking tech talent, said the report.
Two-thirds of occupiers reduced their real estate footprint over the past two years, but most are now shifting from reactive downsizing in the wake of the pandemic to proactive portfolio management, the survey found. Notably, one in eight occupiers indicated they plan to expand their footprint, and the average lease has grown by 13% in the past two years.
Occupancy levels continue to stabilize thanks to a combination of footprint rationalization and stricter return-to-office mandates. At between 51% and 60%, occupancy remains below pre-pandemic utilization rates, but usage is steadily rising, said the report.
As occupiers work to bring employees back to the office, they expect landlords to provide amenities, services and community-focused events. Only about 60% of employees believe their office fosters collaboration, relationships and company culture, with nearly half of occupiers said they are willing to pay a premium for better amenities and services.
“By working together, employers and landlords can create unique, value-driven work environments,” Cushman & Wakefield said. “The office is being redefined—not just as a place to work, but as a service that needs to justify its value. Landlords who embrace this opportunity will set themselves apart as leaders and enhance the long-term value of their assets.”
Source: GlobeSt/ALM