LOS ANGELES—Although making the right hires remains a key consideration for corporate real estate executives, the levels of uncertainty posed by today's economic environment mean that finding talent isn't their only priority. That uncertainty looms larger in a new survey of Americas real estate executives; 52% cite it as a top-three concern, up from 36% a year ago, says CBRE Group Inc.

Accordingly, 87% of the 176 corporate occupiers surveyed said they're responding by disposing of surplus space and/or implementing more efficient workplace designs to get their portfolios ready for the future. Just 26% of those surveyed said they expected to expand their portfolios over the next two years, compared to 38% who said this a year ago.

It's not only economic uncertainty driving this decision-making, although the more gradual pace of the recovery in this cycle certainly has been a factor. There's also the changing definition of what constitutes employee workspace, coupled with a top-of-mind concern about employee satisfaction.

“Workplace strategy has been the focal point of the discussion for the past decade,” Julie Whelan, Americas head of occupier research, CBRE, tells GlobeSt.com. “But what workplace strategy means now is very different from 10 years ago.”

Early on, she says, “it was very much open office layout, offices on the interior, giving cubes access to light and nice views and putting in one size of cube with low walls, then calling it a day. Now it's a very different structure, with activity-based working certainly rising up the curve in terms of occupiers wanting to understand what that's all about, and the basic premise is that it's not just about offices and work stations and conference rooms.

“It's about studying your people, which is different from industry to industry, but it's also different from function to function within the same industry,” Whelan continues. “So it's really understanding who's sitting in your building, what they need to be successful and productive, and what they need in order to come to the office, because frankly, so many people don't need the office now. They have a laptop, an Internet connection and a mobile phone and they can work from anywhere. So workplace strategy is still about using less space, but now it's also about reinvesting the money that you're saving into a better user experience.”

Whelan says occupiers often ask CBRE professionals what it takes to make employees return to the office—i.e. the space the occupier has leased for employees to work in. “Let's take what Yahoo did; they basically told their people they had to come back in,” she says. “We're saying that that's absolutely not what we're suggesting here; we all need to understand that the office, defined as the place where you work, is forever changed. You have more places than just home and the workplace to work from. You have all of these different pillars of workspace—it could be your headquarters office, it could be a home office, it could be Starbucks, it could be the airport lounge, it could be a co-working space. So the question to ask as a real estate executive is, 'What is the structure I'm providing my people so they can optimally do what they need to do in as efficient a manner as possible?' ”

Not surprisingly, decisions about how much space to occupy are usually taken around lease expirations; that hasn't changed. “What is changing is that they're trying to make sure they're not as locked-in in the future, so they don't just have these lease expirations every 10 years, because businesses are ebbing and flowing at a much faster rate than that. The key words are agility and flexibility right now,” and CBRE hears them “over and over again,” Whelan says.

When CBRE works with occupiers on determining their real estate needs, “the main thing that we're trying to tell our clients is to understand where your industry is, where the market is and where the cycle is,” says Whelan. “Those three things have to come together to make good strategic decisions.”

Instant Insights /

The Changing Definition of 'Workplace Strategy'

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