What is the purpose of an office? Is it space that we value? Or is it productivity in that space? These are the questions that Yardi asks in its latest thought leadership paper, The Big Pivot.
“It took a global pandemic for people to truly question what they wanted from space,” says Yardi’s regional director Bernie Devine.
Millions of people have spent the last 18 months re-evaluating their priorities, and the great work-from-home experiment has proved once and for all that we don’t need an office for office work.
Microsoft’s 2021 Work Trend Index, for example, confirms that 73 percent of people want flexibility to be a permanent arrangement.
But Yardi’s latest white paper, The Big Pivot, provides a compelling counter-argument. A massive 60 percent of Generation Z employees say networking is more daunting and teams are more siloed. Even after a year of working from home, 42 percent of employees say they still lack essential office supplies at home, and one in 10 don’t have an adequate internet connection.
“We might not need an office for office work — but we certainly need it for collaboration, ideation, onboarding, mentoring and socialising,” Devine says.
Devine has spent more than three decades working at the intersection of technology and real estate, helping clients grow their operations, enhance efficiencies and gain insights with the power of data.
He says most companies are now looking at a hybrid business model, and that is forcing landlords to rethink their role as suppliers of space. In the past, a landlord could be, “at best, pleasantly passive”. Lease a space, collect the rent, maintain the reception, operate the lifts and keep the building ticking over. In this model, rental yields and capital values are the obvious priorities.
But Devine predicts a future where rents, leases and asset value are all tied to tenants’ business growth. “These are two very different models. One sells leased space. The other sells space as a service, and ultimately productivity.”
Yardi’s white paper provides insights from Paul Edwards, general manager of strategy and customer with Mirvac, as well as a fascinating case study of Mirvac’s “next generation” workplace at Olderfleet in Melbourne.
Mirvac has partnered with Work Club to provide flexible space, private suites, an exclusive club lounge, a concept retail store, a cafe and a basement bar set over 4,000 square metres (43,056 square feet). Work Club also provides hotel-style concierge services for the entire building and runs a programme of curated experiences.
“We know workers want a frictionless experience when they head to the office,” Devine notes. “People want services that make their lives easier, whether that’s same-day dry-cleaning or a concierge that can sort out theatre tickets or access to a state-of-the-art gym. And they want space that feels like a community, not just a row of desks.”
But how do you specify all that in a lease? Devine says property leaders can take their cues from other industries.
“If you sign a contract with a software company, you expect a certain level of service. Same with real estate. In that way, a building is just another device.”