The Future of the Office Survey - CBRE Research SEPTEMBER 2020

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The Future of the Office Survey - CBRE Research SEPTEMBER 2020
CBRE Research
The Future of
the Office Survey
Survey Highlights

SEPTEMBER 2020
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
BREAKDOWN OF RESPONDENTS

             77
         RESPONDENTS
                                    75%
                                    GLOBAL
                                                                   23%
                                                                   TECH, MEDIA & TELECOM

       Survey closed September 21
                                                                   21%
                                    Regions with major presence:   BANKING & FINANCE
             50%                    100% United States
       are Fortune 500 Firms        89% Continental Europe         12%
                                    80% India                      INDUSTRIAL & MANUFACTURING

          50%+                      64% Eastern Asia
        trending companies          64% UK                         8%
                                                                   BUSINESS & PROFESSIONAL SERVICES

CBRE                                              2                          THE FUTURE OF THE OFFICE SURVEY
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
CURRENT STATE
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
THE BUSINESS OUTLOOK IS RELATIVELY POSITIVE

What do you expect the state of the business environment to be in the next six months?

                                                  48%                          48%
                                                         43%
 Most respondents
 believe the business
 environment will be                                                   28%
 about the same, if not                                                                  24%

 better, in the next six
 months.                                                                                          9%

                                                     Better           About the Same        Worse

                                                                      Jun-20   Sep-20

CBRE                                                     4                               THE FUTURE OF THE OFFICE SURVEY
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
OFFICE RE-ENTRY PLANS PROMISING

Currently, when will all employees have access to the physical office?

                                                                TODAY    BY MID 2021             BEYOND / UNSURE
                                                   Global        21%         46%                      34%

 On average globally,
 67% of respondents                           United States      18%       46%                         35%

 expect all employees
 to have access to the
                                            United Kingdom      13%        56%                           31%
 physical office by
 mid-2021 – led by
 Eastern Asia.                           Continental Europe       25%         42%                       33%

                                               Eastern Asia       25%               56%                       19%

CBRE                                                        5                             THE FUTURE OF THE OFFICE SURVEY
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
THE PATH OF THE VIRUS IS THE BIGGEST UNKNOWN

What is preventing your organization from offering more employees access to the physical office?

                                                        Current state of community transmission                                   86%

                                                  Corporate concern about employee health risk                                  83%
 Sustained
 COVID-related                                                    Employee reluctance to return                         70%
 issues continue
 to hamper                 Consideration for employees to plan around child-care, relocation etc.                58%
 employee access
 to the office.                                        Risk associated with public transportation          49%

                                                 Evaluating prolonged remote working strategy        40%

                                                                  Maximum capacity restrictions     36%

CBRE                                                                      6                          THE FUTURE OF THE OFFICE SURVEY
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
SECOND WAVE INFECTION AND LOCAL SURGES

Daily new cases in 7-day moving averages

                     14,000                                                                                                                                   100,000
                                                                                                            India (rhs)
                                                                                                                                                              90,000
                     12,000                                                                                                         France
                                                                                                                                                              80,000
                                                                                                                                    Spain
                     10,000
   Number of Cases

                                                                                                                                                              70,000

                                                                                                                                                              60,000
                      8,000
                                                                                                                                                              50,000
                      6,000                                                                                                       U.S. excl. NY (rhs)
                                                                                                                                                              40,000
                                                                                           Brazil (rhs)                           U.K.
                      4,000                                                                                                                                   30,000

                                                                                                                                                              20,000
                      2,000
                                                                                                                                                              10,000
                                                                                                                          Japan               China
                         0                                                                                                                                    0
                              0   25          50            75            100            125         150         175          200           225         250

                                                                     Days Since Daily Increase Exceeds 100

Source: CBRE Research, European Centre for Disease Prevention, COVID Tracking Project, Macrobond, 28 Sep 2020.
Note: Number reported as a 7-day moving average.

CBRE                                                                                 7                                                   THE FUTURE OF THE OFFICE SURVEY
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
HEALTH AND SAFETY MEASURES REMAIN TOP PRIORITY

What measures are being taken to ensure health & safety of employees when they return to the physical office?

                                Offering hand sanitizer / antibacterial wipes near every surface                                           98.7%
                                                        Requiring use of masks / face coverings                                         94.8%
 Generally, the                                                         Restricting guest access                                        93.5%
 steps being                                                         Health-screening protocols                                         93.5%
 taken to ensure           Resetting space for reduced max capacity (signage, visual reminders)                                       92.2%
 employee                                               Offering personal protective equipment                                     87.0%
 health & safety                                       Modifying food and beverage programs                                     81.8%
 upon return
                             Shift-based re-entry (e.g., A&B team approach or staggered shifts)                        59.7%
 remain
                                          Conducting comprehensive review of building systems                          59.7%
 unchanged
                                     Reconfiguring furniture layouts and seating arrangements                        55.8%
 from June 2020
                                                                    Reservation-based re-entry                       54.5%
 survey.
                                                                 Installing touchless technology             42.9%
                               Employee COVID-19 testing program (e.g., diagnostic, antibody)        22.1%
                                                                                                                                Increase of 5%+
                                                          Offering alternatives to public transit   19.5%                       since June

CBRE                                                                        8                                   THE FUTURE OF THE OFFICE SURVEY
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
WORKFORCE &
WORKPLACE STRATEGY
The Future of the Office Survey - CBRE Research SEPTEMBER 2020
A BALANCE OF OFFICE AND REMOTE WAYS OF WORKING PREFERRED BY MOST

       67% of employees desire a balance of office            73% of companies anticipate supporting
         and remote as their preferred workstyle.               balanced workstyles in the future.
            WORKFORCE SENTIMENT SURVEY, 2020                    CBRE OCCUPIER SENTIMENT SURVEY, 2020
                CBRE survey of 10,000 client employees

             When the COVID crisis is over,
            where would you prefer to work?

                                                                   Note: 61% of companies had this sentiment in Jun-20

CBRE                                                     10                                   THE FUTURE OF THE OFFICE SURVEY
THE PHYSICAL OFFICE IS STILL A REQUIREMENT FOR MOST

Compared with pre-COVID, what is the future of full-time remote work in your company?

                                         Primarily                                                    Primarily
                                                                   “Distributed”
                                       “Office-Based”                                                 “Remote”
                                                                    Workforce
                                         Workforce                                                    Workforce
 81% of organizations
 anticipate most of                                              FT Office vs. FT Remote
 their workforce to
 utilize the office as
 their destination of
ASSESSING THE CONSEQUENCES OF REMOTE WORK

Remote work policies must comply with local employment law and take unintended consequences into account.

Issues to consider relative to remote work policies:
• An employer’s ability to require home working
• An employee’s right to insist on home working
• Required processes to implement home working
• Arrangements for home working (health and safety
  obligations, expense reimbursement, tax allowances,
  etc.)
• Key issues to address in employment contracts and
  policies
• Considerations for employers when communicating
  and monitoring the performance of employees

Source: Global Guide to Remote Working, DLA Piper

CBRE                                                    12                              THE FUTURE OF THE OFFICE SURVEY
SUPPORTING THE NEW NORMAL WILL ACCELERATE WORKPLACE TRANSFORMATION

Pre-COVID, how were the majority of                                        What is the future of seating assignments in
your workplaces designed?                                                  your real estate portfolio?

Majority traditional with dedicated seats                                       Mostly Assigned Environment
                                                    57%                                                            10%
 (offices / cubicles / conference rooms)

                                                                      Partial Free Address (75% unassigned)
                                                                                                                           35%

 CBRE                                                     13                                         THE FUTURE OF THE OFFICE SURVEY
UNDERSTANDING THE ROLE OF THE OFFICE

In a future steady-state environment will the importance of your physical office change?

                                       WHY?                                                                               WHY?
                                       Community &                                                                        Reduced
 Dependence on the                     Social Interaction
                                                                                                              49%
                                                                                                                          dependence on
 office as a place for                 (100%)                                                                             the office (98%)

 individual work is                    Collaboration,                                                   41%               Investment
                                       Innovation,                                                                        required to support
 evolving…                             Productivity (100%)                                                                remote work (76%)
                                       Reflection of Brand                                                                More distributed
 …but dependence on                    & Culture (100%)                                                                   workforce (63%)
                                                                                    22%
 the office for groups                 Engage & Attract                                    18%
 to come together in                   Talent (87.5%)                    16%
                                                                                                                           13%
 pursuit of a common                                               10%                                                           10%
                                               6%
 goal has never been                                 5%

 more important.
                                                Increase      Increase Slightly    No Change         Decrease Slightly     Decrease
                                              Significantly                                                               Significantly
                                                                                  Jun-20    Sep-20

CBRE                                                          14                                              THE FUTURE OF THE OFFICE SURVEY
MEASURING THE VALUE OF THE OFFICE

Do you have a metric that you track to measure the impact of your workplace?

 Measuring the impact of
 the workplace not only                                 No, we do not measure workplace impact                               48.1%
 from a cost and efficiency
 perspective ⎼ but also               Yes, we measure workplace impact on employee engagement                        36.4%
 from an employee and
 productivity perspective ⎼               Yes, we measure workplace impact on cost management                      32.5%
 will be important to
 strategically position the                     Yes, we measure workplace impact on productivity          19.5%
 C-Suite discussion in the
 future.

CBRE                                                       15                                      THE FUTURE OF THE OFFICE SURVEY
WORKPLACE FLEXIBILITY

  Assigned Seating                                                                                      Unassigned Seating

   Dedicated Seats          Targeted Mobility             Hotdesking           Activity-Based Work           Work from Home
      Work primarily        Hybrid dedicated and       Majority of seats are    Shared Departmental             Individuals work
   from the office with     shared seats driven by       unassigned and         ‘neighborhoods’ with        primarily from the home
   minimal out of office   work style and functional   reserved in advance       more variety in work       and occasionally come
         mobility                    needs                or upon arrival          setting choices                to the office

CBRE                                                           16                                         THE FUTURE OF THE OFFICE SURVEY
THE EVOLVING WORKPLACE

Activity-Based Work      Team-Based Work      Event-Based Work

  50% ME                   36% ME               25% ME

  25% WE                   36% WE               50% WE

  10% SUPPORT              10% SUPPORT          10% SUPPORT

  10% AMENITY              18% AMENITY          15% AMENITY

CBRE                                     17                   THE FUTURE OF THE OFFICE SURVEY
FOUR LIKELY BETS

More Enclosed and Modular Offices                       Hotelification of the Office Experience

Increased Investment in Collaborative Technology        Sustained Reliance on Remote Work

  CBRE                                             18                                   THE FUTURE OF THE OFFICE SURVEY
PORTFOLIO STRATEGY
PORTFOLIO OPTIMIZATION GROWING AS AN AREA OF FOCUS

Due to COVID, how are the following portfolio strategy decisions impacted?

                                                                                        Pursuing aggressively    Business as usual    Paused    Canceled

                              Contraction / consolidation / exit plans                      60%     +21%                             33% +13%        7%

 Organizations are
 more resolved to                                     Renegotiations              32%   +2%                           58% +6%                    10%
 pursue actions that will
 help them optimize                                         Renewals 4%                       56%                                     37%            3%
 their portfolios while
 remaining agile to                                  Relocation Plans    9%              36%                                  52%                    3%
 adjust course in the
 future as employees
                                          Non-COVID-related Capex        3%              48%                                    45%                  4%
 gradually return to
 more normal ways of
 working.                                            Expansion Plans     3% 13%                                 74% +10%                         10%

                                                            Site Visits 1% 15%                             63%                                 21%

CBRE                                                               20                                                  THE FUTURE OF THE OFFICE SURVEY
SCENARIO PLANNING FOR THE FUTURE

What future portfolio strategies are under consideration?

                                       Analyze remote work portfolio scenarios                                                      63%
                                                                                                                                       68%

                                                      Consolidation strategies                                       45%
                                                                                                                                  61%
 Planning for uncertainty
                                                                                                             33%
 and flexibility is at the                    More use of flexible office space                                               56%
 forefront of future
                                                     Review geographical mix                             30%
 portfolio planning                                                                                                41%
 activities.                                                                                           25%
                                                          Hub & Spoke Model                                  34%

                                                 Financial "Amnesty" programs           10%

                                      Dispersion from high-density urban cores         8%
                                                                                  3%

                                                                                  Jun-20      Sep-20

CBRE                                                         21                                                THE FUTURE OF THE OFFICE SURVEY
COVID HAS ACCELERATED DOMINANT PRE-COVID TRENDS

How do you expect your corporation’s real estate portfolio to change over the next 3-5 years?

                                                 Modest decrease                                                44%

 Real estate efficiency
                                              Significant decrease                                             43%
 has been a focus among
 occupiers over the last
                                                      No Change                9%
 decade and clearly
 remains one in the
                                                 Modest increase          4%
 future.
                                              Significant increase   0%

CBRE                                                       22                               THE FUTURE OF THE OFFICE SURVEY
FLEX OFFERS UNPRECEDENTED ALTERNATIVES TO UNCERTAINTY
What role do you believe flexible office space (coworking, serviced office, suites etc.) will play in
your long-term real estate strategy?

                                                                                                         Evolving Occupier Uses for Flex…
                                                           50% 49%
                                                                                                         1. Network of locations for
                                                                                                            mobile workforce
 Flexible office space is                      37%                                                       2. Enter new markets
 proving to be resilient                                                                                 3. Short-term space solution
 as occupiers consider it                23%
                                                                                                         4. Reduce capital expenditures
                                                                                                         5. Test alternate occupancy
 to create new strategies                                                                                   models
 that require a more                                                         13%          13%
                                                                                     8%
 iterative approach.                                                                            6%
                                                                                                         …and Demands of Flex

                                                                                                         1.   Health & safety
                                       Significant Role   Minimal Role        No Role     Unsure         2.   Privacy & security
                                                                   Jun-20   Sep-20                       3.   Cost
                                                                                                         4.   Reputation of provider
                                                                                                         5.   Scale of network

CBRE                                                          23                                     THE FUTURE OF THE OFFICE SURVEY
CORPORATE OCCUPIER DESIRES ARE CHANGING

What will be the most in-demand building attributes in the future?

                                               Flexible office space options                                                  82.0%

                                                    Shared meeting space                                                74.0%

                                                          Indoor air quality                                       68.0%
 Occupier desires when              Connected technologies / Building apps                                      62.0%
 selecting buildings may
 pose operational                              Sustainable building design                              52.0%

 challenges for landlords                           Touchless technologies                             51.0%
 to deliver in the short-
                                            Onsite café food and beverage                            48.0%
 term.
                                               Public transportation access                33.0%

                                                        Outdoor amenities               27.0%

                                                           Fitness facilities     22.0%

                                                        Concierge services      18.0%

CBRE                                                           24                                  THE FUTURE OF THE OFFICE SURVEY
PORTFOLIO OPTIMIZATION ISSUES

  Lease Accounting            Risk                  Geographical Mix             Planning vs.
      Changes               Exposure                 of the Portfolio          Implementation

• Right of use        • Targeting smaller,        • Work from anywhere       • Continued
  impairments           suburban locations          considerations in          uncertainty about
                                                    play                       the future
• Alignment with C-   • Less costly and
  Suite, Business       disruptive to             • Considering skilled      • Exit leases, excess
  Units and Finance     temporarily close           talent in less costly,     space on the
                        several small               smaller markets            sublease market
                        locations                                              and/or try to buy
                                                                               out of leases

CBRE                                         25                              THE FUTURE OF THE OFFICE SURVEY
KEY FINDINGS

Occupiers aspire to provide office access. 67% globally anticipate all employees to have access to the office by mid-
2021 – this sentiment is very dependent on virus transmission and health considerations as the re-entry date nears.

Occupiers and employees expect an office option. 81% of respondents expect at least half of their workforce to be
“office-based” in the future – 73% support these “office-based” employees in balancing their time between the office, home
and “third places.”

Transformation towards collaborative design will accelerate. As the role of the office evolves to favor teamwork
over individual work, design will likely follow suit – 70% are planning to operate in a significantly “free address”
environment to support a more mobile workforce.

Focus on optimization has intensified. 60% are aggressively pursuing consolidation strategies and 70% have
expansion plans on hold as optimizing existing portfolios is a focus in light of uncertainty. Urban core remains important
while hub and spoke strategies vary by market and sector.

Flexible solutions are attracting greater interest. 56% are considering more use of flexible office space as it offers
unprecedented alternatives to plan for uncertainty – 82% indicate it is a desired attribute as they select buildings to lease in
the future.

CBRE                                                          26                                      THE FUTURE OF THE OFFICE SURVEY
C O N TA C T S

            KAREN ELLZEY                                    JULIE WHELAN
            Executive Managing Director, Client Strategy,   Vice President, Head of Global
            Transformation & Analytics, Global / Americas   Occupier Thought Leadership, CBRE
            COVID-19 Crisis Management Lead for GWS, CBRE
                                                            508.789.7085
            617.869.6154                                    julie.whelan@cbre.com
            karen.ellzey@cbre.com

            LENNY BEAUDOIN                                  MIKE NELSON
            Executive Managing                              Senior Managing Director, Advisory &
            Director, Workplace,                            Transaction Services, Portfolio
            Occupancy, Design, CBRE                         Optimization, CBRE
            212.984.8139                                    213.613.3214
            lenny.beaudoin@cbre.com                         mike.nelson@cbre.com
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