Do you own an office building?
Or provide services to someone who does?
If so, you’ll know that technology is RADICALLY changing the way we use the office.
But how well do you understand what’s driving these shifts?
Or the specific ways buildings must change if they’re to remain relevant?
If you’re a struggling to keep up with this stuff, here are the four things you need to know…
Thing #1: Technology is transforming the type of work done in offices.
Thing #2: Technology is changing how that work is done.
Thing #3: The result is that a different kind of employee is coming to dominate office work.
Thing #4: This employee needs a new kind of building.
What’s going on?
In a nutshell, the internet is allowing a TON of the stuff traditionally done by office workers to be outsourced – to computers.
Vast numbers of office jobs are likely to be KILLED OFF.
But which ones face the chop?
To find out, Carl Benedikt Frey and Michael Osborne at Oxford University have analysed 702 different job types.
They’ve concluded that 47% of workers in the United States are in ‘at risk’ jobs – many of them office-based.
The thing that makes these jobs vulnerable is that they involve work that is routine and predictable.
In other words, the kind of work computers eat for breakfast.
So which jobs are on the hit list?
Surprisingly, it includes many kinds of lawyer.
Meanwhile, tons of less prestigious roles – like receptionists, tele-marketers and insurance sales people – are also likely to go.
But while loads of jobs will vanish, there’s one type of work computers can’t gobble (not yet, anyway).
It’s the kind that involves solving non-routine problems.
In other words, problems that are different every time.
These are things only humans can understand and solve.
Rise of the creative class
The people who solve these unique problems are often known as the ‘creative class’.
Think engineers, computer programmers and medical researchers.
And hundreds of other kinds of worker.
The thing they have in common is that they survive on their wits.
All. Day. Long.
And as you’d expect, they need a working environment that maximises their ability to think.
After all, that’s what they’re employed to do.
The creative class don’t just work differently to the people being replaced by machines.
They often live differently, too.
As you’ll see, that’s having a major impact on the office.
For example, certain geographic areas are growing in popularity.
And others are dying.
So what does automation – and the emerging dominance of the creative class – mean for your building?
Here are 21 things…
1. Less accommodation needed
Automation MAY create as many new jobs as it destroys.
But if it doesn’t, there will be FEWER office workers.
And as you can guess, that means a drop in the amount of office floor space being rented.
In that scenario, the pain WILL NOT be shared equally by all office buildings.
My hunch is that buildings designed to house people doing routine ‘back-of-house’ work will see demand fall.
For example, those located in office parks.
And bog-standard office blocks – especially ones in suburbs and smaller towns and cities.
In contrast, some buildings will thrive – particularly those that appeal to the creative class.
2. More staff per square meter
The last decade has seen tenants squeeze more staff into less space.
According to the British Council for Offices, the average office worker now uses about 11 square metres.
That’s 35% less than in 1997.
How has this been achieved?
By combining several techniques:
Firstly, staff are increasingly encouraged to work off-site.
That could be at home…
…or in a café.
That one change SLASHES the amount of office space needed.
Secondly, many tenants have stopped allocating permanent desks to each worker.
That’s because such desks are typically used only about 50% of the time thanks to holidays, sickness, attendance at meetings, etc.
Taking the place of the permanent desk is the hot desk that anyone can use.
This combination of off-site working and hot desking has boosted typical utilisation of each desk from about 50% to circa 80%.
In turn, that’s having a profound effect on office demand.
For a start, tenants are shrinking the amount of space they rent.
In some cases, large organisations are even able to take people from multiple buildings and pack them into one.
In those situations, they’re typically retreating from the less aspirational locations – and housing everyone in the places that appeal to senior management and the knowledge workers.
In other words, they’re moving into the downtowns of our bigger cities.
3. More robust infrastructure
Thanks to increased intensity of use, desirable buildings’ infrastructure is under growing pressure.
For example, more people inside a building means the air-conditioning needs to work harder.
And with more computers, there is higher demand for electricity.
Meanwhile, there is more demand for things like toilets, showers and lifts.
What does this onslaught mean for you as a landlord (or as someone advising a landlord)?
It means you may need to invest in more – and better – infrastructure.
And more frequent repair and maintenance work.
4. Better proximity to food, fashion and fun
Outside of the office, it’s no secret that today’s younger workers aspire to spend their recreational time hanging out in cool retail areas.
And, they want their office to be located near the action.
That way, they can indulge during their lunch break and after work.
And have meetings and entertain clients in aspirational settings outside of the office.
But tenants and their staff don’t just want hip shops, cool cafes and happening restaurants.
They also want to be moments away from practical things like gyms and supermarkets.
If your office building has these things on its doorstep, you stand a fighting chance of staying relevant.
But what if your building is miles from anywhere?
The trick is to bring top-notch retail to you – not easy unless you operate a building or campus with vast numbers of staff who can support a thriving retail scene.
5. More relevant on-site retail
If your building includes retail space, it’s ESSENTIAL that your retail tenants appeal to the creative class.
Perhaps the most obvious (and important) thing to include in the mix is an outstanding coffee shop.
And in case you hadn’t noticed, creative workers are more excited by independent ‘third wave’ coffee shops than by the usual chains.
Unusual fashion can build interest, too.
6. Access to better public transport
If you were born before – say – 1980, you’ve probably had a life-long love affair with your car.
That love has been born from the freedom it’s given you.
And the way you’ve used your car to make a statement about yourself.
For example, if you wanted to be seen as a thrusting business success, you’d drive something smart – like a BMW, Mercedes or Porsche.
Or if you wanted to show off your intellectual credentials, you might opt for a VW, Volvo or Subaru.
The one thing you DIDN’T aspire to was public transport.
After all, that was only for POOR people.
And school kids.
Well guess what?
Things have changed.
It turns out that younger people are less interested in cars and driving.
And WAY more interested in public transport.
Especially those creative professionals living in cities with high-quality public transport networks.
This cultural shift explains why the number of passengers on London’s Tube increased 30% between 2007 and 2015.
And why the number of passengers using the city’s buses increased 72% between 2000 and 2015.
Changing attitudes also explain why private car journeys in London, as a percentage of all journeys, shrank from 46% in 1993 to 33% in 2013.
Crucially, a big chunk – perhaps the majority – of these people are professionals and other office workers.
There are a whole lot of reasons why, when given a choice between driving and using a high-quality public transport system, many people prefer the latter.
Obviously public transport saves you money.
And often time.
But perhaps more importantly, many folk no longer want to fritter their lives away trapped behind the wheel in bumper-to-bumper traffic.
To them, it ain’t living the dream.
Especially when you could be doing REWARDING stuff.
Like hanging out on social media…
…Or getting a head start on your work.
In other words, amongst younger creative professionals, it’s less and less common to see driving oneself as an aspirational task.
Instead, the professional classes increasingly see driving as grunt work best left to the poor.
Like Uber drivers. And supermarket delivery people.
Why does any of this matter if you own, market or manage office buildings?
Because in response to employee demand, tenants are increasingly attracted to properties that are well served by public transport.
In contrast, organisations that locate in buildings that are hard to reach on public transport will struggle to attract and retain top talent.
That’s why tech firms in northern California must now provide luxurious free buses to transport their staff from their homes in San Francisco to the firms’ campuses in the sleepy suburbs of Silicon Valley.
What does this public transport trend mean for you?
If your property is not well served by public transport, it’s likely to become less appealing relative to those that are.
And be forced to accept lower quality tenants – and lower rents.
7. More demand for central locations
A perfect storm of automation, more efficient use of office space and a desire to locate in the downtown of our biggest cities is hurting office landlords who’s buildings are in less demanded places.
You can see that happening in the well-connected London suburb of Croydon.
Packed with corporate office towers, Croydon is about 20 minutes from central London by train (and trains run every few minutes).
And it’s circa 15 minutes from Gatwick, the second busiest airport in the UK.
Nevertheless, Croydon has seen the amount of office space being rented drop by about 25% since the mid 2000s as tenants’ retreat to central London.
If somewhere like Croydon is struggling, less central places are likely to be awash in un-rented inventory.
8. More serviced offices/co-working spaces
Creatively-led businesses are often working in situations where it’s hard to be certain about future office needs.
In particular, when the nature of your work is constantly changing, estimating future head-count is tricky.
That lack of clarity is a key factor driving the serviced office/co-working boom.
After all, serviced offices and co-working spaces allow tenants to shrink or expand at a moment’s notice.
But there are other benefits, too.
For example, in a serviced environment, a tenant doesn’t need to undertake the mundane tasks that are needed to operate an office space.
Like trying to fix a broken internet connection.
Or sorting out the blocked toilets.
In a serviced office, those time sucks become someone else’s problem.
For a small businesses, that benefit is HUGE.
After all, when you only have a handful of staff, you don’t want them tied up fixing non-core problems that are interrupting the smooth operation of your organisation.
Serviced offices and co-working spaces also allow smaller tenants to operate from smarter buildings in better locations than they could if they took out a lease on their own premises.
That’s because much of the infrastructure can be shared between tenants – especially things that have a low level of utilisation in a traditional office.
For example, take meeting rooms.
Not only does sharing them save everyone money.
It may also be possible to install state of the art meeting room facilities that might be too expensive for one tenant.
Like video conferencing systems.
And high quality fixtures and fittings.
9. Better bike facilities
Besides the growth in public transport usage, the other big transport trend amongst commuters is the rise of cycling.
For example, in London, the number of daily bike journeys grew 79% between 2001 and 2011.
In New York City, there was an 80% growth in daily cycling between 2010 & 2015.
And it’s especially popular with fitness-obsessed creative professionals.
To attract them and their employers as tenants, your building needs to provide onsite bike storage.
And it needs to be of a high standard.
Lets face it, your tenant’s senior management team will probably be amongst the people riding into the office.
How are they going to get excited about your building if your bike storage facilities are a crappy afterthought?
In other words, you’ll fail to impress if your bike storage facilities consist of a few bike racks dumped someplace out in the rain.
Or if you make people lug their bikes up and down stairs.
Or into lifts.
Ideally, your bike storage should be inside the building – in the basement or ground floor.
And it should allow the commuter to ride straight in without having to traipse through reception areas.
Or cycle through a sea of garbage dumpsters – hardly an inspiring way to start one’s day.
What if there is no room for quality onsite bike storage?
Here are two ideas:
Lobby your local council to install on-street bike storage that is both covered and secured.
Or arrange with the nearest multi-story car park to provide dedicated bike storage to your tenants.
10. More inspiring architecture
You don’t need me to point out that beautiful design matters to people in a way that was unimaginable just a few years ago.
Witness the rise of Apple, IKEA and Dyson.
Ditto the emergence of high-end architecture as a key feature of buildings targeting the most lucrative tenants.
Why are high value tenants OBSESSED with well-designed buildings?
For a start, there’s status.
You see, for the creative, working in a beautiful building is a key indicator of success.
Meanwhile, superb design also has a practical benefit in that it should boost productivity (more on this later).
What’s more, quality architecture helps businesses to market themselves – especially when they have customers and prospects visiting their offices.
After all, clients like a nice office.
But it’s not just corporations that want to be in beautiful buildings.
Creatively-driven small and medium businesses are hungry for the same thing.
Hence the rise of WeWork.
While the idea of serviced offices is nothing new, WeWork’s success is largely down to their insight that creatively-led businesses don’t just want office space – they want COOL office space.
Where does all this leave buildings of poor – or dull – design?
On struggle street.
Unable to attract top-notch tenants, they’ll be left to fight over the scraps.
This doesn’t mean you building is toast just because it wasn’t designed by a starchitect.
After all, different kinds of tenant have different ideas as to what’s ‘cool’.
Your tasks are to (1) figure out what kind of creatively-led organisation your building should be targeting, (2) find out what kind of architecture that type of organisation wants and finally (3) develop your building appropriately.
11. More natural light
This is a sub-section of great architecture.
But it’s so important, it deserves its own entry.
As you’ll know from your own experience, when you’re starved of natural light, your energy and inspiration levels take a BEATING.
For creative workers, that’s a disaster.
After all, their VERY survival is dependent on bringing their A-Game to the office.
Each and every day.
What does this mean for you as a supplier of office space?
You need to FLOOD that space with natural light.
That doesn’t mean you need to bathe EVERY square foot in golden sunshine.
But you should at least find ways to let light pour into those touchstone areas that set the mood for everyone’s day.
For example, your property’s entrance and reception.
12. Fewer internal walls
Have you stepped into the offices of a large forward-thinking high-end business recently?
If so, you may have spotted a variety of working environments within their demise.
That’s because the old model of chaining a worker to one desk all day long is dying.
Smart organisations have woken up to the fact that a creative worker performs different kinds of tasks across the day.
For example, silent private offices have been shown to be best for doing deep work.
Meanwhile, open-plan breakout areas work best for lively informal meetings and discussions.
And the traditional meeting room remains ideal as the place for formal presentations.
Or sensitive conversations.
To incorporate these different areas – and be able to re-configure them quickly – tenants need a space that offers maximum flexibility.
In other words, they want big open spaces.
That’s why un-let office space that is split up by internal walls and partitions is going to be harder to market.
After all, who wants to be shoe-horned into someone else’s pre-defined layout?
The lesson for you is this:
If your empty office space has internal divisions, it may be worth removing them in order to rent the space faster – and at a higher rent.
That applies to small buildings.
And large ones.
13. Bigger floorplates
Just as smart businesses HATE the idea of being forced into someone else’s floor plan, they also dislike having to split their staff across multiple floors.
Because, amongst other things, multiple floors risk creating a silo mentality as different departments are physically separated from each other.
In other words, people become detached from colleagues on different floors.
What’s more, being spread across multiple floors can require duplication on each floor of things like meeting rooms, kitchens, printing rooms, etc.
Avoiding these problems is no doubt one of the reasons Facebook’s new HQ has 2800 staff on one giant floor.
Unfortunately, in the centres of cities like London, much of the building stock is made up of small old buildings with tiny floorplates.
350 – 450 square feet is not uncommon.
How should the owners of these buildings respond?
Where similar buildings adjoin one another – and its not practical to demolish them – one option is to buy a row of them.
And then tear down the internal party walls to create larger floorplates.
In doing so, the external façades can be kept so that, from the street, they still look like separate buildings – a factor that retains their charm (note: creative workers LOVE charm).
14. Better internet infrastructure
In case you hadn’t noticed, tenants now run large chunks of their operations using cloud-based systems.
Obviously email has been cloud-based for years.
As have many office-based telephone systems.
But today, a ton of other mission-critical systems typically live in the cloud, too.
For example, sales and marketing departments now often run their all-important Customer Relationship Management (CRM) systems using online platforms like the Salesforce suite.
And project management is done with tools like Basecamp.
Meanwhile, video-conferencing with prospects, customers and colleagues is an everyday activity.
As you can guess, these systems require VAST amounts of data to be moved between a tenant’s office and the cloud.
And that data must move FAST.
If it doesn’t?
Your tenants will face constant pain as their mission-critical systems keep crashing.
What does this mean for you?
If your building is to remain relevant, it MUST to be wired for lightning fast broadband.
Of course, that’s now a given in any Class A property.
But in lower quality and smaller properties, many landlords have fallen horribly behind the times.
What should you do if your property doesn’t offer top-notch connectivity?
Ideally, you should run a fibre optic cable from each office space down to the street.
Where it hits the street, it should plug DIRECTLY into your area’s fibre optic network.
Depending on which area of the world you’re in, this set-up usually goes by one of three names:
Fibre to the Premises (FTTP), Fibre to the Building (FTTB) or Fibre to the Home (FTTH).
And it will TURBO-CHARGE your building’s internet speeds.
In fact, your tenants will enjoy speeds that are 10-20 times faster than the next best option.
If FTTP/FTTB/FTTH isn’t available in your area yet, what’s the next-best option?
It may be what you have now – a system in which old-fashioned copper wires connect your building to a nearby street cabinet owned by your telco.
Inside the cabinet, the copper wire from your building connects to a fibre optic cable.
In turn, that fibre optic cable runs from the cabinet to your telco’s local exchange building where it plugs directly into the big fat pipes of the global internet.
This combination of copper wire and fibre optic cable is called Fibre to the Cabinet (FTTC).
I know that upgrading from FTTC to FTTP/FTTB/FTTH sounds fiddly.
But if your tenants aren’t screaming for it today, they will be tomorrow.
15. Higher quality showers
Earlier, I discussed how cycling has become popular amongst creative workers.
But it turns out that bike riding is just one manifestation of these hard-charging people’s obsession with physical exercise.
You see, they’re into a whole lot of other stuff as well:
Like hitting the gym.
Much of this is happening before work – and at lunchtime.
Which means it has profound implications for your building.
Because to stay relevant, you need to provide showers for sweat-drenched staff.
And those showers need to be nice.
After all, your tenant’s CEO doesn’t want to come back from an inspiring lunchtime run only to be forced to shower alongside stinking toilets.
Ditto the CFO who commutes in on her bike.
That means you need to have a shower room that’s separate from the toilets.
And, if space permits, you need enough showers to meet peaks in demand.
Especially first thing in the morning when people are cycling or jogging into work.
And at lunchtime when they’re returning from their workouts.
16. Improved thermal insulation
This is a biggie – especially if your building was constructed before high quality insulation became standard.
Why is it so important?
Because, as you know from your own experience, when your office is freezing (or boiling), your productivity nosedives.
Speaking of my own experience, when I get cold, my ability to think creatively grinds to a halt.
Not good for a knowledge worker.
Even worse for their employer.
Of course, poor insulation can be partially overcome by heating and air conditioning.
But that’s expensive.
And even on full-blast, HVAC systems often fail to deliver the desired temperature to all areas of the building.
If your building doesn’t have quality insulation, get it installed.
And deal with other things that cause the temperature to see-saw – like insufficient seals around windows, inefficient window glazing and cold bridges.
With that work done, your now outstanding thermal efficiency rating should form a cornerstone of your marketing effort.
And allow you to attract and retain higher paying tenants.
17. Less outside noise
Does the quality of your thinking improve in noisy environments?
Neither does mine.
For tenants who rely on their staff’s ability to think creatively, it’s a productivity zapper.
What can you do if external noise is a problem in your building?
Invest in sound reduction technologies.
For example, secondary glazing on your windows.
18. Less inside noise
Noise created by other tenants WITHIN your building is as bad as noise from outside.
While Category A and B buildings are likely to have this issue under control, it can be a major headache in old buildings.
Install sound insulation between each demise.
19. Nicer lighting
I’ve already talked about the importance of flooding your building with natural light.
But some areas – probably most – still need artificial light during the day.
And, of course, everywhere needs it at night.
But creative workers don’t just want any old light – they want light that will help them thrive.
And while the tenant is ultimately responsible for specifying their lighting, the landlord still has to fit lighting into vacant office spaces.
And into the common parts of a building.
To appeal to quality tenants, you need to replace the crappy strip lighting of the past with lighting that’s a pleasure to work in.
20. Higher quality finishes
Creative workers have no interest in being dumped into office space that is finished with dull, low quality materials.
Let’s face it, would you want to spend the best years of your life in here?
To be effective, the workers who avoid the AI wipe-out will need to be in environments that stimulate the mind.
That’s why WeWork offices are finished to a high standard.
21. Better receptions
Creative workers are often expected to spend a great deal of time at work.
What’s more, their hours often vary wildly from one day to the next as they race to hit a never-ending stream of deadlines.
That’s why businesses like Google provide food, laundry and other services onsite.
If you have a staffed reception desk, you should use it to make your tenants lives easier – and happier.
By thinking like a hospitality organisation rather than as a mere provider of floor space.
For example, staff your reception desk with individuals who have GREAT people skills.
Like knowing how to smile and say hi.
Another opportunity to impress your tenants is to encourage the use of reception as a collection point for people’s online shopping.
And while you’re at it, create a facility for storing foods that need refrigeration or freezing.
Given the problems creative workers often have getting home in time to receive deliveries, you’ll be doing them a MASSIVE favour.
And for that they’ll LOVE you.
While you’re fixing up your reception area, don’t forget to install free wifi.
There’s nothing more annoying for tenants and their visitors than waiting in reception – but not being able to access emails, presentations, etc because there’s no wifi and little cellular signal.
Also, stuff your reception with power points so that visitors can keep their phones and laptops charged.