Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE

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Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
Real
Estate
Strategy
Reset
8 CORE TRUTHS
GUIDING THE
FUTURE OF WORK
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
Throughout these remarkably
disruptive times, we’ve been
listening to and learning from
some of the most influential
corporate real estate executives
as our industry focuses on
finding the path forward.
Insights gained from corporate
real estate leaders across the world
throughout 2020 have underscored a
confluence of approaches in four core
areas—Talent, Location, Occupancy and
Design & Experience—that will be at the
forefront of our priorities and strategic
outcomes for 2021 and beyond.

Despite significant uncertainty,
corporate real estate leaders must
now embrace the unknown and
confront the new realities of business.

The following report outlines the
eight core truths that CBRE experts
believe are guiding companies today,
as well as the key considerations
corporate real estate leaders must
examine when evaluating long- and
short-term business decisions that
will determine the future of work.
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
TRUTH
        As employees return to the office, the                       Decentralized office strategies are           TRUTH
        desire for flexibility and choice will drive              emerging as a tool to support existing
01      new behaviors in how and when they                            employees and attract new ones.
                                                                                                                  03
        engage with spaces of all kinds.

TRUTH
        Workplace policy must be fundamentally                 In the US, migration to lower-cost, high-           TRUTH
        reset in light of a more distributed                quality-of-life markets has been a hallmark
02      workforce and hybrid workstyles.                    of the past decade and likely will continue.
                                                                                                                  04

                                   Talent                            Location

                                         THE FUTURE
                                          OF WORK
                                                                    Design &
                              Occupancy                            Experience

TRUTH
        Companies that embrace                                     The reimagined workplace will be an             TRUTH
        planning amid uncertainty can                            essential part of ensuring the wellness,
05      gain advantages in the current                                productivity and engagement of a
                                                                                                                  07
        real estate market.                                                        distributed workforce.

TRUTH
        Flexible solutions allow companies to                   Digital technologies will create smarter,          TRUTH
        more easily adjust their space usage,                        more efficient buildings and better
06      and occupier sentiment toward using                    employee experience, including creating
                                                                                                                  08
        flexible office space is growing.                                safer and healthier workplaces.

                                                 Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work     3
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
Talent
    Employees now expect more autonomy.
     Employers who build trust and offer
      choice will gain a competitive edge
               in the race for talent.

                   RELATED CBRE SERVICES

        Workplace, Occupancy    Labor Analytics
        Management & Design
4
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   5
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
TRUTH          As employees return to the office, the desire for flexibility
      01              and choice will drive new behaviors in how and when
                      they engage with spaces of all kinds.

                      STRATEGY CONSIDERATION

                      How often will workers engage with
                      the physical office and what will they
                      use it for?

    Despite so much focus on
                                            67% of employees desire a balance of office
    remote work during the
    pandemic, future real estate
                                            and remote as their preferred workstyle.
    strategies likely will not favor
                                            When the COVID crisis is over,
    fully remote or fully at the
                                            where would you prefer to work?
    office. Rather, strategies will
    support employee choice over
                                                  FULLY AT THE OFFICE   6%
    the experiences and actions that
    allow them to integrate life and
    work.                                       MOSTLY AT THE OFFICE
                                                     (3+ DAYS/WEEK)
                                                                        10%
    According to our research, only
    28% of employees desire a fully
                                                   EQUAL MIX OF BOTH
                                                                                     29%
    remote arrangement. Most                 (2-3 DAYS/WEEK OF EACH)

    employees want to work in a
    more balanced way between                        MOSTLY REMOTE
                                                     (3+ DAYS/WEEK)                 28%
    home and the office, and most
    employers anticipate supporting
    this shift. While this will result in              FULLY REMOTE                 28%
    lower utilization of the office on
    a regular basis, it will not mean
    an end to the office. Rather, it                                                               Note: 8% undecided.
    represents a fresh start that                                        Source: CBRE Workforce Sentiment Survey, 2020.

    will allow company decision-
    makers to reimagine the role
    and functionality of the physical

6      CBRE Research | © 2021 CBRE, Inc.
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
offices. Fluidity in workstyles is
                                     73% of companies anticipate supporting
not new; rather, the pandemic
has put a spotlight on a practice
                                     balanced workstyles in the future.
that has been building slowly                                     Source: CBRE Occupier Sentiment Survey, 2020

over the past decade.

With this accelerated change,        The Hybrid Workforce Network
most occupiers are moving
toward models that support a
more balanced workstyle. Each
company’s approach will differ         SATELLITE                   HOME                       PROJECT
                                        OFFICE                                                 OFFICE
based on its strategic priorities      NETWORK
and beliefs about which work
arrangements will enhance its
competitive position and enable
it to recruit, engage and retain
                                                              HEADQUARTERS
key talent.                                                   AS A NETWORK
                                                                                            MEETING
                                       GYM/CAFE                                            ON-DEMAND

                                                                  FLEXIBLE
                                                                   SPACE

                                                                                  Source: CBRE Research, 2020

                                      Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work      7
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
TRUTH           Workplace policy must be fundamentally reset in
    02              light of a more distributed workforce and hybrid
                    workstyles.

                    STRATEGY CONSIDERATION

                    What are the policies and guidelines
                    needed to suit employee choice and
                    maintain a culture of accountability,
                    productivity, diversity and wellness?

          The Physical Office is Still a Requirement for Most

                 Primarily                            Distributed                                   Primarily
                Office-Based                          Workforce                                      Remote
                 Workforce                                                                          Workforce
                                              Full-Time Office vs. Full-Time Remote
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
Overall, most companies expect     a requirement, companies                  on innovation and customer
that their workforce will still    must develop formal remote                engagement report special
be largely office-based. While     work policies and standards               challenges. For employees,
many are taking a conservative     in collaboration with their               feelings of isolation or lack of
approach toward full-time          human resources, technology,              connection with team members
remote work, some are assessing    finance and legal departments.            and visibility to leadership are
if upward of 75% of their          Defining parameters for                   real concerns. As portions of
employees could work this way.     different scenarios, such as              the workforce return to the
New models are emerging such       moving jurisdictions, will enable         office while another portion
as the “virtual first” workforce   companies to manage risks and             migrate to a more remote model,
that primarily depends on          complexities accordingly.                 leaders must be in tune with
remote environments but expect                                               the potential for unintended
                                   Additionally, although remote
that teams will come together on                                             consequences once employees
                                   working is favored by some, there
a regular basis to connect and                                               are no longer under a restricted
                                   also are commonly reported
collaborate.                                                                 workstyle amid the pandemic.
                                   areas of discontent among
Full-time remote is a very         business leaders and employees.
different arrangement              Companies that depend heavily
than allowing choice with
responsibility. Those companies
that are planning on even a
portion of full-time remote
workers are beginning to                         Evolving workplace polices must
weigh the realities of such an
                                            balance a myriad of factors, including
arrangement. This could be
one area that fluctuates post-
                                                health and safety considerations,
pandemic as approximately only                strategic business priorities, digital
28% of employees desire to work              enablement, local employment laws,
on a full-time remote basis.                  tax implications and the role of the
                                              physical workplace. Effective cross-
The financial obligations,
compliance, employee
                                               functional collaboration has never
engagement and liability                                       been more critical.
considerations of remote work
                                                                                            KAREN ELLZEY
programs must be weighed,                                      Executive Managing Director of Client Strategy,
including the unintended                           Transformation and Analytics & Global Workplace Solutions
consequences of imposing                                                      Crisis Management Lead, CBRE

full-time remote work on
employees who may not
welcome it. Whether this type
of work becomes a choice or

                                            Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   9
Real Estate Strategy Reset - 8 CORE TRUTHS GUIDING THE FUTURE OF WORK - CBRE
Location
                Emerging migration patterns, new dynamics
                   around public transportation, population
                    density, and telecom infrastructure have
                 begun to impact location selection criteria.

                                    RELATED CBRE SERVICES

     Integrated Transaction                         Workplace, Occupancy    Location
                              Labor Analytics
            Solutions                               Management & Design    Incentives
10
Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   11
TRUTH
                   Decentralized office strategies are emerging as a tool
     03            to support existing employees and attract new ones.

                   STRATEGY CONSIDERATION

                   Would providing a more decentralized
                   office strategy satisfy my employee base
                   that is highly mobile and/or encumbered
                   by commute times?

      Same Market, New Network

      Would you consider working at a company provided location closer to your home?

                                                      BY COMMUTE TIME

                                                         0-15 minutes

                                                        15-30 minutes

                                                        30-45 minutes
                                    33%
                     29%
                                              24%       45-60 minutes
        14%
                                                          60+ minutes

        Always    Frequently     Sometimes    Never                     Always   Frequently      Sometimes       Never
                   (1-2x/wk)      (1-2x/mo)

                                                                            Source: CBRE Workforce Sentiment Survey, 2020

12   CBRE Research | © 2021 CBRE, Inc.
Sentiment toward high-density         are near an increasingly dis-             bat challenges such as commute
urban cores remains favorable         persed workforce is of moderate           times and feelings of isolation of-
in the long term, but employee        but rising interest to occupiers,         ten associated with remote work.
choice over when and where they       especially those with portfolios
                                                                                Flexible office providers are cap-
work will continue in the wake of     in the U.S., Europe, India and
                                                                                italizing on this emerging trend
COVID.                                Australia.
                                                                                by more easily providing cost-ef-
Office-based employees will           CBRE’s Workforce Sentiment                fective, on-demand space. While
choose the urban-core location        Survey of 10,000 global employ-           hub-and-spoke portfolio solu-
part of the time to interact with     ees across 32 companies found             tions are unlikely to be a domi-
colleagues in an environment          that 43% would either always or           nant strategy , they most likely
that provides them the ameni-         frequently prefer working at a            will be pursued by occupiers in
ties, technology and space that       company-provided location clos-           those areas that offer the perfect
are critical to their productivity,   er to their home. This sentiment          confluence of market attributes,
enjoyment and connections with        is largely driven by employees            talent location and availabili-
others. But they will draw on a       who have 45+ minute, one-way              ty, mobility profile, real estate
network of locations the rest of      commute times. By offering a              availability and sustained mass
the time to conduct their work.       network of locations closer to            transportation barriers.
Establishing satellite offices that   home, employers can help com-

                                                    A smart hub-and-spoke strategy is
                                                     about accessing and retaining top
                                                  talent. Satellite hubs near dispersed
                                                        employment pools can serve as
                                                   magnets, drawing workers in while
                                               still allowing a fluid virtual workplace.
                                                                                                      MARK SEELEY
                                                                                             Executive Vice President
                                                                                              Labor Analytics, CBRE

                                               Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work    13
TRUTH          In the US, migration to lower-cost, high-quality-of-life
       04              markets has been a hallmark of the past decade and
                       likely will continue.

                       STRATEGY CONSIDERATION

                       Where does talent exist to satisfy goals
                       of diversity and evolving skillsets
                       while maintaining an advantage over
                       competition?

                     40%                    of companies are proactively reviewing their location
                                            footprint and considering alternative strategies.
                                                                        Source: CBRE Occupier Sentiment Survey, 2020

     It’s no secret that the ability           opportunities to be a
                                                                                            If a company can
     to attract highly skilled talent          preferred employer and
                                                                                            create a business
     drives competitive advantage for          therefore limit competition
     companies. Established markets            for talent from others. The
                                                                                           strategy based on
     that are epicenters of highly             current environment allows               meeting talent where
     skilled and diverse talent remain         many employers to challenge                     they are, it can
     central to business strategy.             years of legacy strategy to                 both reduce labor
     Over the past decade, however,
                                               take advantage of a less-                   costs and increase
     lower-cost secondary markets
                                               centralized workforce.                           its competitive
     have begun to play an essential                                                    advantage relative to
     role in many companies’                                                            other major markets.
     business and talent strategies.
                                                                                                            KRISTIN SEXTON
     These secondary markets                                                                         Senior Managing Director
                                                                                                         Labor Analytics, CBRE
     offer more buying power for
     companies, while providing

14      CBRE Research | © 2021 CBRE, Inc.
US Migration Trends
2010-2019
                                                     Domestic Migration                         Natural Increase                                          International Migration
       100
        80
        60
        40
        20
         0
       -20
       -40
       -60

                                                                                                                                                                                                                             York
                                                                                                                                     Francisco
                                                                                                                                                 Boston
                                                                                   Oakland
                                   Denver
                         Phoenix

                                                                                                                                                                                                                                              Chicago
                                                                                                                                                                                                          Los Angeles
                                                                                                               Washington, DC
             Charlotte

                                                               Seattle

                                                                                             Fort Lauderdale

                                                                                                                                                                   Baltimore
                                                                                                                                                                               San Jose
                                                                                                                                                           Miami
                                                                         Houston
                                                     Atlanta

                                                                                                                                                                                          Philadelphia*

                                                                                                                                                                                                                                    Detroit
                                            Dallas

                                                                                                                                 SanFrancisco

                                                                                                                                                                                                                         NewYork
                                                                                                                                                                                                                        New
                                                                                                                                San

                                                               *Includes Philadelphia proper, Bucks/Montgomery Counties and Camden, NJ metro divisions.
                                                                                                                           Source: US Census, CBRE-EA.

Early data is indicating a possible                                 diverse talent, they will be                                                                               test markets and create potential
acceleration of migration trends,                                   less dependent on an existing                                                                              release valves (especially for
with markets such as Phoenix,                                       physical footprint. This                                                                                   hard-to-find skill sets in the
Dallas and Charlotte increasing                                     new dynamic may create                                                                                     technology sector). Labor-driven
their inflow over the past quarter.                                 opportunities to broaden                                                                                   location strategy will become
Los Angeles, San Francisco and                                      location strategies not only                                                                               increasingly important as long
New York were the top export                                        into secondary markets, but                                                                                as diversity and inclusion, high-
markets for these inbound                                           also tertiary markets with small                                                                           demand skill sets and cost
metros, likely due to their                                         pockets of skilled labor.                                                                                  optimization remain a focus
higher costs and higher density.                                                                                                                                               for companies.
                                                                    A small but influential number
While domestic migration is
                                                                    of companies report that they are
not a new trend, time will tell if
                                                                    experiment¬ing with a “virtual-
worker mobility is permanently
                                                                    first” work¬force, allowing them
accelerated in the COVID-19 era.
                                                                    to start hiring small numbers in
As companies think about
attracting, retaining and
supporting highly skilled,

                                                                                         Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work                                                                                          15
Occupancy
                         Companies are focusing on “no-regrets”
                           decisions that maximize flexibility for
                               requirements that are uncertain.

                                                  RELATED CBRE SERVICES

     Agile Real Estate   Integrated Transaction       Workplace, Occupancy       Automated        Host   Hana
                                Solutions             Management & Design    Building Solutions
16
Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   17
TRUTH
                       Companies that embrace planning amid
       05              uncertainty can gain advantages in the
                       current real estate market.

                       STRATEGY CONSIDERATION

                       How can companies mitigate risk around long-
                       term commitments and continue to develop
                       progressive real estate strategies?

         60%                                                            70%
         Aggressively pursuing efforts to reduce space                  Paused expansion in the face of uncertain
         given currently low levels of occupancy                        space requirements
                                                                             Source: CBRE Occupier Sentiment Survey, 2020.

     As companies weather the               the time needed to successfully          All these things have present
     recessionary impacts of 2020 and       execute these strategies, varies.        and future cost and balance
     further grapple with extended                                                   sheet implications that must
                                            Focusing on portfolio strategy
     remote work requirements driven                                                 factor into accounting analysis,
                                            to ensure that the real estate
     by the pandemic, the need to                                                    ownership structures and capital
                                            footprint can shift as trends
     plan amid uncertainty has never                                                 priorities as decisions unfold.
                                            unfold is critical.
     been more critical.                                                             Identifying the appropriate steps
                                            Changing market fundamentals             in the near, mid and long term
     Creating an updated portfolio
                                            may trigger transaction activity;        helps to create opportunities
     strategy to align with corporate
                                            evolving space utilization may           that can provide iterative
     goals can be a daunting task,
                                            trigger optimization efforts,            changes that make a big impact
     since real estate is traditionally a
                                            and accelerated demographic              on a traditionally long-term
     long-term committed asset. The
                                            trends may trigger new location          committed real estate portfolio.
     degree of difficulty, as well as
                                            and space considerations.

18      CBRE Research | © 2021 CBRE, Inc.
Updating Real Estate Strategy
                            • Create business case for leadership
                            • Build consensus among stakeholders
                            • Identify implementation decision dates

      Revisiting                          Repositioning                       Realizing
  Occupancy Models                       Future Footprint                 Expense Reductions

• Remote Work                        • Revisiting Future Plans          • Financial Analysis
  How flexible models will impact      Identify specific portfolio        Cash & GAAP
  the real estate plan and how it      scenarios
                                                                        • Balance Sheet & Income
  can be implemented
                                     • Value Creation                     Statement Strategy
• In the Office                        Through monetization or            Timing and structure
  Planning required investments        repurposing of real estate         for assets
  in cleaning, technology,             assets
                                                                        • Capital Investments
  workstations, and conference
                                     • Location Strategy                  Prioritizing when to continue
  room
                                       Repositioning the location and     investments and when to pause
                                       type of space within or across
                                       markets

                                                                           Source: CBRE Consulting, 2020.

                                                   Although efficiency remains top of
                                                   mind, taking a step back to really
                                                       challenge the status quo given
                                                      anticipated workforce behavior
                                                 changes is critical to future strategy.
                                                                                                 MIKE NELSON
                                                                                        Senior Managing Director
                                                                                                Consulting, CBRE

                                            Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   19
TRUTH           Flexible solutions allow companies to more easily adjust
        06              their space usage, and occupier sentiment toward using
                        flexible office space is growing.

                        STRATEGY CONSIDERATION

                        What requirements in your portfolio
                        would be better suited for more flexible
                        office space options?

     56%
     Anticipate using more
                                            37%
                                            Expect flexible office space
                                                                                          82%
                                                                                          Will favor buildings
     flexible office space in               to play a significant role                    in the future that offer
     their future real estate               in their future real estate                   flexible office space and
     strategy.                              strategy.                                     shared meeting options.

                                                                           Source: CBRE Occupier Sentiment Survey, 2020.

20      CBRE Research | © 2021 CBRE, Inc.
Many occupiers are increasingly       flex access within the building
using flexible office space as        or the nearby area. Should
part of a programmatic strategy       headcount grow or the need for
that allows them to maximize          additional overflow and meeting
their long-term commitments           space arise, flex space can
while also minimizing their risk      accommodate it.
of having too much or too little
                                      When flex is not viewed as a
space as headcount fluctuates.
                                      standalone solution, but rather
Implementing more flexible            as a piece of a holistic portfolio
approaches allows companies to        strategy, it is not uncommon to
remain nimble in the face of the      realize savings of between 25%
current economic situation and        and 30%.
the profound shift in workforce
behavior—both of which are
still in flux. This strategy, when
delivered under the appropriate
structure, offers occupiers the                              Flexibility will be the key to
opportunity to ensure their                            corporate resilience. Companies
headcount requirement, improve                         that adopt an agile approach to
their financial performance and                          their real estate strategies will
reduce capital expenses.                              be better equipped to navigate a
Given today’s uncertainty around                    rapidly changing landscape around
headcount and utilization                               the work or office environment.
projections, it is smart to develop
                                                                                             MANISH KASHYAP
solutions under the assumption
                                                                                 Global Head of A&T - Agile, CBRE
that the future is unknown and
flexibility is required. Instead
of asking whether demand
projection is uncertain enough
to warrant flexibility, companies
should change their perspectives
to ask whether their headcount
projection is solid enough to
make a long-term commitment.

Making a long-term commitment
based on more real-team space
needs can be supplemented with

                                               Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   21
Flex Offices: A Market in Constant Evolution

        JUST IN TIME                                                                                                  DEDICATED

     On Demand              Coworking                  Suites                  Enterprise                       LL Spec Suites 2.0
     Emerging space         Membership shared          Licensing Agreement     Licensing Agreement              Lease for a dedicated
                            communal space no          dedicated closed        Dedicated private                private floor(s) fit-out per
     Open access desk       dedicated desks            space with dedicated    floor(s) fit-out per client      LL specifications from 24
     pass or conference                                desks within a shared   specifications from              months and up
     rooms, event           Some offer global access   environment from        12 months and up
     booking                month-to-month             3 months and up

                                                                                              Source: CBRE Agile Practice Group, Q3 2020.

     Just as cloud computing and ride             estate strategy can provide a               new practices, such as mapping
     sharing have transformed legacy              productive, efficient and flexible          proximity and availability of
     industries, flexible office space            real estate portfolio that allows           flex locations as an extension
     is transforming commercial real              occupiers to match commitment               of their existing portfolios. As
     estate.                                      terms with the level of business            new headcount requirements,
                                                  uncertainty.                                utilization patterns and location
     Each type of flexible space
                                                                                              strategies emerge, companies
     option aspires to offer the right            With this increasing array of
                                                                                              can use flexible space options
     space at the right time, with                truly flexible alternatives, there
                                                                                              to quickly provide business
     little waste. With utilization               has never been a safer time to
                                                                                              solutions. This is a fallback
     rates becoming a more common                 be wrong about future space
                                                                                              strategy that has not been
     measure, occupiers are becoming              usage. Occupiers now have
                                                                                              available in previous cycles.
     more aware of how much space                 the luxury of adopting a wait-
     goes unused and the associated               and-see approach, rather than
     cost of that underutilization.               making long-term decisions
     Underutilized space (no matter               that will create long-term cost
     how inexpensive) is not a good               challenges. Those with truly agile
     use of funds. An agile real                  portfolio strategies will adopt

22       CBRE Research | © 2021 CBRE, Inc.
Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   23
Design and
                    Experience
     New design standards and technologies focused
     on health, productivity and communication will
     bind the workforce together across a physical and
                   virtual real estate footprint.

                            RELATED CBRE SERVICES

          Workplace, Occupancy                  Automated Building
                                     Host
         Management and Design                      Solutions
24
Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   25
TRUTH         The reimagined workplace will be an essential part
     07            of ensuring the safety, wellness, productivity and
                   engagement of a distributed workforce.

                   STRATEGY CONSIDERATION

                   How does a company best assess its needs
                   and then utilize its space to maximize the
                   productivity of individuals, collaboration
                   needs of teams and effectiveness of events
                   and meetings?

                   For the physical office to remain a competitive advantage, companies must manage change
                   and drive unprecedented levels of innovation tailored to serve the needs of a more flexible
                   workforce while supporting unified goals.

                   This means aligning design and experience to flexible workforce needs.

26   CBRE Research | © 2021 CBRE, Inc.
Activity-Based Work

   Neighborhoods of open                                                                    Cafe spaces that double as
 workstations for focused work                                                                 collaboration areas

   Open collaboration zones                                                                 Variety of settings to match
   with integrated technology                                                                 your variable schedule

                           50%                                     25%                       10%     15%
                           ME                                      WE                        SUPPORT AMENITY

                                                                                              Source: CBRE Design, 2020.

Activity-based work (ABW)            were already addressing pre-              employees to be effective and
environments will be the new         COVID. ABW design excels at               connected while in the office and
baseline for companies, as           supporting a workforce that               allows employers to be efficient
most employers adapt to meet         uses the office to engage in both         with their space strategy.
employees’ desire for a more         individual and collaborative
                                                                               An additional benefit of ABW
balanced workstyle and greater       activities, but not every day.
                                                                               is the sharing of ideas and
flexibility.
                                     ABW is best implemented as                information as employees
Companies previously adhering        free address (no dedicated                move between spaces based
to traditional space models likely   seats), where employees instead           on their activities versus strict
will find themselves continuing      report to a shared zone or                confinement to designated areas
to pay for underutilized space—      neighborhood. This “best of               or floors based on department or
a negative trend that occupiers      both worlds” approach allows              specialty.

                                              Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work        27
Team-Based Work

                                                                                                     Reconfigurable workstations
                                                                                                        for teams of all sizes
      War room settings to make
      your teamwork productive

                                                                   Large cafe space for team              Informal spaces to
       Variety of break-out areas                              socialization and casual collisions     collaborate comfortably
           within team space

                             40%                         40%                                    8%                12%
                             ME                          WE                                     SUPPORT           AMENITY

                                                                                                      Source: CBRE Design, 2020.

                                          Occupiers increasingly report             engage in the office when they
                                          that remote and home-based                primarily need to collaborate
                                          work arrangements are taking              with their team on a specific
                                          a toll on team-based work, such           task or project. They report to
                                          as creative ideation, innovation          a “campsite” shared with their
                                          pipeline development,                     project team, with additional
                                          impromptu conversations and               collaborative and social venues
                                          social connections—all of which           nearby.
                                          are best achieved in person. A
                                          team-based workplace design
                                          concept allows employees to

28    CBRE Research | © 2021 CBRE, Inc.
Event-Based Work

   Large cafe space for                                                            Semi-private break-out space
    townhall meetings                                                              for individuals or small teams

   Flexible space for events,                                Phone niches provide        High tech telepresence
 training and team break-out                             alternate work zones during      room merges phyical
                                                                    events                     and digital

                           15%                     55%                           10%             20%
                           ME                      WE                            SUPPORT         AMENITY

                                                                                        Source: CBRE Design, 2020.

Changing occupier expectations                  To compete with the ubiquitous
are driving a unique, hospitality-
                                                 connectivity available in a 5G
inspired aspect to employee
                                              world, the office must be the best
experience. An event-based
workplace design allows
                                              venue to connect with colleagues,
employees to conduct most of                    experience brand and mission,
their individual work at home                               and get work done.
and come to the office primarily
                                                                                    LENNY BEAUDOIN
for scheduled meetings and                                                  Executive Managing Director
events. They spend most of                                          Workplace, Design, Occupancy, CBRE
their office time in meeting and
social spaces. The innovations
in workplace design will help
companies meet the needs of an
even more mobile workforce.

                                     Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work           29
TRUTH         Digital technologies will create smarter, more efficient
      08            buildings and a more connected employee experience
                    including creating safer and healthier workplaces.

                    STRATEGY CONSIDERATION

                    How do companies upgrade and implement
                    property technology, or “proptech,” to drive
                    connectivity, innovation, environmental
                    sustainability and efficiency in commercial
                    real estate buildings?

            Video                                                                       HVAC

     Audio Visual                                                                       Lighting

                                                                                        Internet
 Fire/Life Safety
                                                                                        & WiFi

                                                                                        Access
      Occupancy
                                                                                        Control

         Parking                                                                        Metering

                                                             Source: CBRE Smart Buildings and IoT, 2020.

30    CBRE Research | © 2021 CBRE, Inc.
Measuring, monitoring and              technologies can be used to
visualizing critical health and        address energy efficiency and
safety information is an essential     meet sustainable building goals.
element of reestablishing the
                                       While these services can
workplace as a destination.
                                       be provided through new
Building technologies enable           technologies, they can also be
transparent environmental              delivered through strategic reuse
monitoring, operational                of existing building systems.
adjustments and rapid
communications to building
occupants. In addition,

   Examples:

   •   Basic occupancy sensors reframed for strategic staff seating assignments.

   •   Janitorial service targeting (and confirmations), and/or warnings on excess foot traffic

   •   Reframing of HVAC sensors intended for periodic system balancing to identify higher-risk stale air
       zones, targeted system optimizations and/or secondary circulation or disinfection measures.

   •   Motion-based lighting and AV systems as a base source for assigning janitorial teams to execute
       higher SLA scopes across lower footprints.

                                       Tech is enabling a true link              artfully integrated. Building a
                                       between supply and demand,                technology roadmap is a key
                                       matching verified needs to                consideration for occupiers as
                                       available resources.                      they determine what is most
                                                                                 important to them (e.g., building
                                       The strategies are endless,
                                                                                 systems, sustainability, occupier
                                       but one thing is clear: The
                                                                                 experience).
                                       building’s technology and
                                       management teams must be

                                                Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   31
Anticipating the Future
     of the Smart Practices

     In Process                                      In Demand
     Today                                           Tomorrow

     60%                                             68%
     reviewing building systems                      indoor air quality

     55%                                             63%
     requiring reservations for                      connected technologies/
     office use                                      building apps

     43%                                             50%
     installing touchless                            touchless technology
     technologies
     Source: CBRE Occupier Sentiment Survey, 2020.

                                                                                 In the wake of COVID-19,
                                                                               building technology stands
                                                                                alone for the unique sense
                                                                                 of continual transparency,
                                                                            optimization and commitment
                                                                              that building occupants now
                                                                          require from their management.
                                                                                                       MATT TONER
                                                                                                Managing Director of
                                                                                          Smart Buildings & IoT, CBRE

32       CBRE Research | © 2021 CBRE, Inc.
Our goal is to allow
                                                                            employees to make
                                                                     decisions with productivity
                                                                    in mind, pairing them with
                                                                      recommendations based
                                                                   on their desired work style,
                                                                    who they are meeting with
                                                                        and the services in the
                                                                                     workplace.
                                                                                        BRENNAN McREYNOLDS
                                                                                  Senior Vice President, Host, CBRE

Additionally, employees are         prominence as an essential part            important intersection of the
adopting a more mobile              of the employee experience.                physical and digital worlds and
workstyle, and our workplaces in                                               must develop strategies that
                                    Artificial intelligence-driven
turn are expected to more easily                                               effectively merge them to shape
                                    recommendations are expected
adapt to the needs of sometimes                                                the future of how people interact
                                    to help employees make
transient occupants. Technology                                                with the workplace.
                                    informed decisions of when
applications are at the forefront
                                    to go into the office based on
of delivering intuitive solutions
                                    meeting schedules and other
to employees to streamline their
                                    colleagues’ work patterns. This
daily interactions within their
                                    will foster collaboration between
community, workplace and even
                                    a more fluid workforce that will
with each other. From scheduling
                                    be essential for companies in the
health screenings and space
                                    future.
reservations, to enabling a
touchless experience, these apps    Office occupiers are sitting
are growing in sophistication and   squarely at the increasingly

                                              Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work   33
CONCLUSION

                                      Corporate real estate leaders
                                       have a critical role to play as
                                   stewards of the future of work.
                                        Leaders will systematically
                                  consider transformative models
                                    and facilitate cross-functional
                                    strategies to enable successful
                                               business outcomes.

34   CBRE Research | © 2021 CBRE, Inc.
As companies navigate 2021 and beyond, commercial real
estate’s critical contributions to strategic business outcomes
will be more evident and essential than ever before.

Now is the time for corporate real estate leaders to seize
the unique opportunity afforded by the global pandemic to
fundamentally rethink and reset both their own and their
teams’ roles in supporting enterprise recovery and resiliency.

Multidisciplinary teams will be critical to keeping
interconnected real estate decisions front of mind as
companies mitigate risk and develop the future of their long-
term footprint, talent strategy and employee experience.

This strategic evolution will require shifting from traditional
approaches to embracing new, more transformational
commercial real estate models and methods, including
reimagining the scope, connectedness and use of the
workplace.
REPORT AUTHORS

     Julie Whelan                                Lenny Beaudoin                               Brennan McReynolds
     Vice President                              Executive Managing Director                  Senior Vice President
     Global Head of Occupier Research            Workplace, Design, Occupancy                 Host

     Julie Whelan is an authority on             Lenny Beaudoin oversees the                  Brennan is passionate about how
     workplace trends driven by the              integration of CBRE’s Global                 technology can enhance and inform
     evolution of demographics and               Workplace, Occupancy, and Design             workplace experience. He is the Global
     technology in our society. As CBRE’s        practices to provide our clients             Product & Technology lead for Host,
     Head of Occupier Thought Leadership,        competitive advantage through                a proprietary service offering for
     she regularly speaks at industry            actionable workplace strategies,             corporate occupiers and institutional
     events and is frequently quoted in          informed occupancy planning, great           property investors designed to meet
     the media about the office and data         design, and superior delivery of the         the rapidly growing demand for
     center real estate markets. Julie is        future work environment.                     enhanced employee experience in the
     well-versed on the evolution of flexible                                                 workplace.
     office space in the real estate industry.   +1 212 984 8139
     As a “xennial” (caught between the          lenny.beaudoin@cbre.com                      +1 301 202 0976
     Gen X and millennial generations),                                                       brennan.mcreynolds@cbre.com
     she understands firsthand why this
     evolution of the workplace is so critical
     to the future success of our workforce.     Christelle Bron                              Mike L. Nelson
                                                 Americas Agile Practice Leader               Senior Managing Director
     +1 508 789 7085                                                                          Advisory & Transaction Services
     julie.whelan@cbre.com                        As leader of CBRE’s Americas Agile
     @juliewhelancbre                            Real Estate Practice, Christelle Bron        Mike Nelson has overall responsibility
                                                 and her team advise clients on agile         for managing CBRE’s Portfolio
                                                 real estate strategies – from coworking      Optimization Group on a national
                                                 and flexible space to optimized              basis. He assists both private and
     Karen Ellzey
                                                 portfolios – throughout the Americas.        public sector clients in developing
     Executive Managing Director
                                                 Ms. Bron has more than 20 years of           portfolio optimization plans,
     and Global Lead, Client Strategy
                                                 real estate consulting experience            headquarters strategies, and
     and Transformation
                                                 and previously led CBRE’s Integrated         feasibility analyses with special
                                                 Transaction Solutions team for the           expertise in capital structure
     Karen Ellzey is the Executive
                                                 Eastern U.S.                                 optimization, leasing/ownership
     Managing Director of Client Strategy
                                                                                              strategies, financing strategies and
     and Transformation. The team
                                                 +1 212 984 8000                              accounting and tax implications of
     delivers next-generation solutions
                                                 christelle.bron@cbre.com                     real estate transactions.
     and business analytics to occupiers
     of commercial real estate, as well as
                                                                                              +1 213 613 3333
     thought leadership through programs
                                                                                              m.nelson@cbre.com
     such as the CBRE Institute and other
     strategic initiatives.                      Travis Deese
                                                 Associate Director
     +1 617 8696154                              Occupier Research
     karen.ellzey@cbre.com
                                                 As the U.S. Associate Director of
                                                 Occupier Research, Travis Deese
                                                 identifies and analyzes workplace and
                                                 market trends impacting occupiers,
                                                 primarily in the office sector and the
                                                 ever-evolving flexible office industry, to
                                                 properly advise CBRE’s clients on real
                                                 estate decisions. With over a decade of
                                                 experience in commercial real estate,
                                                 Travis has worked on the local, regional
                                                 and national scales serving as the
                                                 primary thought leader for the metro
                                                 Atlanta, Southeast and U.S. markets.

                                                 +1 404 441 4239
                                                 travis.deese@cbre.com

36      CBRE Research | © 2021 CBRE, Inc.
Mark Seeley                              Kristin Sexton                             Matt Toner
Executive Vice President                 Senior Managing Director                   Managing Director
Labor Analytics                          Labor Analytics                            Smart Buildings and IoT

Mark Seeley, Executive Vice President    Senior Managing Director for CBRE          Matt Toner is CBRE’s Managing
for CBRE’s Labor Analytics, and leads    Labor Analytics, Kristin has extensive     Director of Smart Buildings and
the team’s consulting practice. Mark     experience in developing sophisticated     IoT. He is responsible for developing
has practiced corporate location and     strategies for clients including: M&A      and delivering a new generation of
labor analysis consulting since 1998,    portfolio optimization, site selection,    client solutions; combining rising
and is one of the nation’s foremost      workforce longevity & sensitivity          capabilities in industry technology,
experts on labor market conditions       assessments and cost-benefit analysis      occupant experience and building
domestically and globally. He            for portfolio decision support. In         operations. Matt’s personal focus
specializes in workforce optimization,   addition to portfolio evaluations,         areas include strategic solutioning,
location strategy, site selection and    Kristin has led the development of         future visioning, global partner
on-site labor assessments.               analytical models for use in labor         development, and operational
                                         market assessments and site selection.     investment.
+1 602 735 5230
mark.seeley@cbre.com                     +1 602 735 5247                            +1 302 373 0903
                                         kristin.sexton@cbre.com                    matthew.toner@cbre.com

RESEARC H LEADERSHIP

Richard Barkham, Ph.D.                   Spencer Levy                               Henry Chin, Ph.D.
Global Head of Research                  Chairman Americas Research &               Head of Research, APAC
+1 617 912 5215                          Senior Economic Advisor                    +852 2820 8160
richard.barkham@cbre.com                 +1 617 912 5236                            henry.chin@cbre.com
@RichardJBarkham                         spencer.levy@cbre.com
                                         @SpencerGLevy

G LO B A L L E A D E R S H I P

Karen Ellzey                             Whitley Collins                            Guy Holden
Executive Managing Director              Global President of A&T – Occupier         Managing Director, A&T – EMEA
and Global Lead, Client Strategy         +1 310 363 4842                            +44 207 182 3089
and Transformation;                      whitley.collins@cbre.com                   guy.holden@cbre.com
COVID-19 Response and Reopening Lead,
CBRE | Global Workplace Solutions        Brandon Forde                              Manish Kashyap
+1 617 8696154                           President, Client Solutions                Global Head of A&T – Agile
karen.ellzey@cbre.com                    +1 404 504 7884                            +65 6326 1220
                                         brandon.forde@cbre.com                     mansih.kashyap@cbre.com

                                                   Real Estate Strategy Reset | 8 Core Truths Guiding the Future of Work    37
Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not
verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information
is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of
CBRE. All COVID-19 related materials have been developed with information from the World Health Organization, Center for Disease Control & Prevention, and strategic
suppliers providing services in affected regions. They may not be suitable for application to all facilities or situations. Ultimately, occupiers and landlords must make their
own strategic decisions for their individual stakeholders and workplaces. CBRE’s guidance is intended to initiate those discussions and expedite the process. We make no
representations or warranties regarding the accuracy or completeness of this material. CBRE disclaims all liability arising from use of these materials by others.
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