The economy may not be as robust as we would like at the moment, but developers still see opportunities in real estate in 2020 and beyond. Commercial real estate is expected to be favorable, according to the latest PwC report, Emerging Trends in Real Estate 2020. Hot markets like Austin, Texas, Raleigh/Durham, North Carolina, and Orlando, Florida are seeing plenty of action in office real estate.
Office real estate assets may be a mixed bag for some portfolios, but investors can keep the following tips in mind when developing commercial office space in 2020—and over the next several years.
Open offices may have become the standard in recent years, but the main drive right now for office space is having the flexibility to accommodate various work styles and functions. It all comes down to the power of choice.
While office workers need space for quiet, focused activity and collaboration, a variety of spaces are needed, from the traditional desk to lounge seating and enclosed focus rooms. A U.S. Workplace 2019 Survey found that people preferred office spaces that are “mostly open plan, with on-demand private spaces when needed.” Offices that give workers the opportunity to easily balance collaborating with others and working in their preferred space for focused work will continue to be highly sought after.
Additionally, coworking varies with larger enterprises, when compared with startups and entrepreneurs. Larger enterprises tend to use coworking spaces for overflow or fluctuating office needs, as noted in the report. This has prompted some enterprises to assign a portion of their real estate portfolio as “flex space” to fill in whenever needed.
Tech companies have changed the game for office environments and workers are looking for more amenities that extend beyond ping-pong tables. In fact, rather than ways to play while at work, people are looking for ways to do their job better.
Popular amenities that address the blurred lines between work life and home life will continue to be popular. These amenities can include on-site dry cleaning, dinner pick-up, concierge, fitness centers, doggy daycare, mother’s rooms, nap pods, and meditation rooms, all of which appeal to workers of all ages. The demand for workforce housing continues to be a real need.
Because of technological advances in robotics and artificial intelligence (AI), the workforce is expected to shrink at organizations, which means that real estate will likely have to shrink as well. Some exciting technology to look forward to include predicting work patterns such as a voice-activated sensor that announces a meeting is over to notify the next user or automatic reservations that schedule around your calendar. Responsive environments will be the wave of the future as technology develops further.
One idea to keep in mind is that sustainability is no longer something unique, but expected for office real estate. This push for sustainability in commercial office spaces is coming from both investors and tenants. As we see the conversation shifting to more concerns about global warming and climate change, expect to see environmental sustainability as well as social sustainability play an important part of the decision making process.
As workplace trends continue to change, offering flexibility and options to cater to modern workplace habits will be invaluable for your investments.
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