For office space design in 2016, “sense of purpose” is the new catchphrase that office-using businesses are using to attract and retain workers, including the much sought-after Millennials, according to recent research reports.
Leading up to the recession, many companies were already looking to shave off extra square footage from their real estate and the downturn forced further downsizing and space efficiency, resulting in smaller desk areas per worker than in decades past. However, the years following the recession have also seen the rise of the Millennial employee, versed in technology and able to work from anywhere. Eschewing the stodgy ideal of a corner office, these new employees prefer flexibility and demand a larger stake in the firm’s purpose.
As the U.S. economy slowly improves, there’s a shift away from cost-cutting to a greater focus on people, says Bernice Boucher, managing director of workplace strategy for the Americas with commercial real estate services firm JLL. “It’s your people who can have a positive impact on revenue, they’re the ones who come up with new ideas for business processes, speed-to-market or how to increase market share,” she says. “While investing in technology is important, and it’s clear that every business is becoming a technology business, innovation comes from people, not an algorithm.”
JLL recently released a study entitled “Fully Engaged,” which claims that disengagement, i.e. an employee who has no sense of purpose in the workplace, causes up to $500 billion in lost revenue in the U.S. each year. Conversely, firms that embrace employee engagement and spread brand awareness throughout the organization—such as those mentioned in the “Best Company to Work For” lists—can be about 500 percent more profitable, according to the report.
Older managers find it difficult to understand that the new generation of workers desires a sense of purpose more than financial or “office real estate” recognition, Boucher says.
“Millennials are pickier about who they work for and why, they want to really believe in what a company stands for,” she notes. “They saw their parents work extremely hard at jobs they didn’t enjoy, and then get laid off even after all that loyalty, and they don’t want to follow that. They’re much more willing to walk away from jobs and companies where they don’t feel a connection.”
First attempts at making offices more adaptable to technology and new worker demands, such as massive cubicle farms, were really more attempts at cost-cutting than modernization, she adds. The “Best Company” firms have embraced the flexibility desired by Millennials by offering many different workstations and multi-sized conference rooms that allow for both social work environments and solitary areas for head-down study. While many thought telecommuting would have more of an impact, Boucher says that didn’t really happen as much as expected, as Millennials desire more physical connection to their career.
“The ‘open-plan’ was just a crime against productivity. Companies are experimenting with ways to provide space dedicated to collaboration or concentration, while still allowing employees more flexibility and control of where they work,” she says.
One of the newest methods of office flexibility involves co-working, according to a recent report from real estate services firm CBRE. Co-working is a hybrid of a tech-type business incubator and the “rent an office” spaces offered by companies such as Regus Group Cos. Instead of having to sign a multi-year lease for a set amount of space, a company looking to open a satellite office can sign up for co-working space on a per-seat basis, with the workstations and access to shared receptionist, conference room and other typical office facilities included.
CBRE found that 40 percent of respondents to its occupier survey said they use or are considering using shared space for expansion, including co-working space, says Julie Whelen, CBRE’s head of office research for the Americas. The co-working trend can present opportunities to firms venturing into new markets, especially as office rents in most large cities has increased to pre-recession levels.
“The co-working trend isn’t just a flash in the pan, as employees have learned that telecommuting is too isolating, they want to be around people, to feel like they’re part of something, a bigger purpose,” Whelen says. “Our research shows that co-working has grown to about 2.2 million square feet in New York City and doubled in size in Washington, D.C.”
The deconstruction of single-tenant space to focus on more current employee needs is a common trend, she says. The trend assists not only established firms looking to establish satellite offices, but also start-up companies that desire both flexibility and a professional front for clients. Co-working space provides a cheaper, adaptable alternative to the long-term lease, she says.
Regardless of how it’s done, there’s no doubt that the workplace will likely look much different in the next decade, as Millennials move to fill the void left by retiring baby boomers. Until then, however, there are still other generations of workers, all with different career goals, that have to learn to work in the new modern spaces. Real estate services firm Avison Young weighed in on the issue recently with the white paper “Five Generations: Is the Need for New Workplace Structures Myth or Reality?”
According to the firm, there are more similarities than differences between the five generations currently in the workforce. It’s a myth that a company should just focus on the needs of the Millennials; instead, office brokers should help clients create a “we” culture, that embraces many types of work stations and promotes the attainment of common goals. Flexibility, training and eco-friendly environments are among the new organizational initiatives to focus on, according to the report.
“Every location is unique, yet when we do our workstyles surveys, we find the results are very similar as we look across the globe,” said Trex Morris, a global real estate leader for Ernst & Young. “People feel like they do not have to come into the office to be seen, but they come into the office for a purpose, which is all about how we want to support our clients.”