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GLO
BA
L OCCUPIERSURVEY REPORT2017
CBRE RESEARCH
ACHIEVING A HEALTHY BALANCE: SPACE EFFICIENCY & WORKPLACE EXPERIENCE
Source: CBRE Global Occupier Survey, 2017.
BUSINESS SENTIMENT: CAUTIOUS OPTIMISM PORTFOLIO SENTIMENT: SPACE AGILITY WORKPLACE SENTIMENT: USER EXPERIENCE
ECONOMIC UNCERTAINTY CITED AS PRIMARY CHALLENGE BY 59% OF GLOBAL RESPONDENTS
RESPONDENTS CITED DIFFERENT WORKFORCE DESIRES BY REGION...AND ARE RESPONDING ACCORDINGLY
52%AMERICAS+16 percentage points from 2016
68%ASIA PACIFICon par with 2016
40%CITE SPACE AGILITY AS A GROWING PORTFOLIO STRATEGY+5 percentage points from 2016
64%EMEA+6 percentage points from 2016 30%
CURRENTLY45%BY 2020
vs.
Respondent sentiment toward use of shared space, especially coworking, is increasing
58%CITE SPACE EFFICIENCY AS KEY TO COST MANAGEMENT-21 percentage points from 2016
AM
ERIC
AS
CRE
RES
PON
SE
64%Amenities
86%are reinventing or adapting their workplace standards with the goal of employee satisfaction
CRE
RES
PON
SE
EMEA 72%
prefer WELL- certified buildings
68%Seek comfort through indoor environmental quality
CRE
RES
PON
SE
ASI
A P
AC
IFIC 53%
plan to implement activity-based working
52%Connectivity & Collaboration
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
Organizations are proceeding with cautious optimism against a background of continuing economic uncertainty. As a result, the flexibility to quickly and efficiently expand or contract space usage in response to changing economic and business conditions is top of mind for corporate real estate executives participating in CBRE’s 2017 Global Occupier Survey. Employee experience in the workplace is an additional area of focus to attract and retain talent, as a generational shift in the labor market is underway.
We met with CBRE executives across the globe to get their take on the global survey results...
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
LATE CYCLE CONCERNS
Survey results showed a heightened sense of uncertainty about the global economy. This area of concern is likely stemming from the late stage of the current economic cycle and potential economic policy changes due to Brexit and the U.S. election. In the U.S., there is much speculation about the tax, regulation and trade policies of the Trump administration. In EMEA, nearly half of occupier respondents view Brexit as a material issue due to its potential impact on trade, operations and labor.
The APAC region also has cause for concern. “Last year, the uncertainty in the APAC region was largely surrounding the China slowdown and the consequent volatility in the financial market,” says Ada Choi, CBRE’s Senior Research
Director for the region. “But the source of uncertainty is now shifting more to policies, in particular whether protectionism will rise in the U.S. and consequently affect Asia Pacific’s outsourcing and export demand.”
Despite the late-stage feel of the current economic cycle and a general concern about the global political climate, many occupiers are still executing strategic real estate initiatives. “Many of our corporate occupier clients remain pretty stable, and they’re comfortable investing and making decisions now compared with just a few years ago,” says William Concannon, CEO of CBRE’s Global Workplace Solutions.
F IGURE 1: ECONOMIC UNCERTAINTY IS A GLOBAL.. .AND GROWING SENTIMENT* % of respondents that cited economic uncertainty as a top three challenge
*All figures in this report are sourced from the Global Occupier Survey, 2017.
AM
ERIC
AS
EMEA
ASI
A P
AC
IFIC
2017 / 52% 2016 / 36%
2017 / 64% 2016 / 58%
2017 / 68% 2016 / 68%
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
“Many of our corporate occupier clients remain pretty stable, and they’re comfortable
investing and making decisions now compared with just a few years ago.”
– William Concannon, CEO of CBRE’s Global Workplace Solutions
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
FUTURE-PROOFING THEIR PORTFOLIOS
Occupiers across the globe are implementing space efficiency strategies including efficient workplace design and disposal of surplus space to manage costs. Although the majority of respondents are pursuing a space efficiency strategy, this is not as widespread among occupiers as it was last year. Perhaps this is evidence that some occupiers have successfully completed their space efficiency programs and are now looking for cost savings elsewhere.
“Sophisticated occupiers are seeking ways to create flexibility with the goal of ‘de-risking’ their portfolios because the future is hard to predict,” says Brandon Forde, Executive Managing Director of CBRE Advisory & Transaction Services. Although collaboration and talent attraction are still primarily driving workplace strategy, there has been a clear uptick in the pursuit of occupier ‘agility’ or the ability to move quickly and easily regarding space decisions. In these instances, executives are pushing to decrease their risk and align CRE to the business by driving:
1) Agility in workplace design Activity-based workspace design, floorplate and furniture selections
2) Agility in workplace offerings Delivering a network of desking options ranging from dedicated within a traditional “core” office, to co-working based satellite options, to on-demand app-based options
3) Agility in leasing structures Negotiating for shorter lease terms with added flexibility in expansion and contraction options in later years
In each option, occupier executives are pursuing the greater flexibility that today’s economy demands. The shadow space left after the last recession is not a problem that corporate occupiers want to experience again. Phil Rowland, CEO of Global Workplace Solutions in Asia Pacific for CBRE, says that the goal
is to “create the flexibility that will future-proof these portfolios, especially in this market (APAC), and address changing needs around the experience of both employees and customers.”
FIGURE 2: SPACE EFFICIENCY STRATEGIES STILL KEY TO COST MANAGEMENT BUT LESS PRONOUNCED THAN LAST YEAR
% of respondents that cited space efficiency strategies as a top three cost-reduction initiative
GLO
BA
LLY
2017 / 58%2016 / 79%
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
Future-proofing a dynamic portfolio amidst the uncertainties industries are facing today is a challenging task that requires strong alignment between the goals of real estate and the enterprise strategy. Karen Ellzey, Executive Managing Director of CBRE’s Research & Consulting Practice, calls it a “heads-up, rather than heads-down” approach. “The goal of creating value for the enterprise is a timeless discussion we have with our clients,” she says. “Corporate real estate leaders have most often transitioned from being an order-taker to an order shaper; a true advisor to the C-suite.”
This demands an understanding beyond the bricks and mortar. “Successful real estate leaders have to understand the business of the business and address the imperatives of their various business units,” says Concannon. “What keeps corporate real estate ahead of the curve—what keeps them proactive rather than reactive—is always having a Plan B in their back pocket.”
Phil Rowland agrees. The influencers are “those who can grasp those big drivers of change and the potential impacts on their portfolios,” he says.
Informed and smart real estate decisions are extremely important during periods of economic uncertainty. “We are advising our clients to be cycle-aware,” says Julie Whelan, Head of Occupier Research in the Americas for CBRE. “Smart real estate decisions can be made by any industry, in any property market and at any point in the cycle with strategies and solutions ranging from opportunistic to reactive and from agile to committed.”
FIGURE 3: BUSINESS AGILITY IS INCREASINGLY IMPORTANT IN WORKPLACE STRATEGY
% of respondents that cited business agility as a top three driver of workplace strategy
GLO
BA
LLY
2017 / 40%2016 / 35%
“Sophisticated occupiers are seeking ways to create flexibility with the goal of
‘de-risking’ their portfolios because the future is hard to predict.“
– Brandon Forde, Executive Managing Director of CBRE Advisory & Transaction Services
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
AN EXAMPLE OF WORKPLACE AGILITY: FLEXIBLE OFFICE SPACE
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
The shared workplace is an alternative lease arrangement through a third party that provides corporations with inherent flexibility, and occupier interest in these arrangements is growing. Occupiers anticipate increased use across all shared-workplace categories by 2020. The largest anticipated increases are in business incubators and innovation centers. Coworking spaces and serviced offices are still the most widely used, with anticipated use of coworking space overtaking the traditional serviced office by 2020. Across the globe, the most prevalent reasons cited for using shared space are reducing costs—often capital expenditures—and increasing flexibility.
Landlords are also striving to tap into this emerging revenue stream. It will become a virtual must as an increasing number of occupiers look for ways to breathe new flexibility into their spaces—which means their lease terms. “Traditional landlords are slower to respond, but some of the more innovative ones are hearing it and listening, especially landlords with mostly financial services tenants,” says Paul Hubbard Brown, Executive Director of Advisory & Transaction Services for CBRE’s Asia Pacific region.
FIGURE 4: WHAT TYPE OF SHARED WORKPLACE DO YOU USE TODAY? BY 2020? % of respondents with intentions to use a shared workplace globally today vs. 2020
TODAY 2020
Overall Shared Workplace
Serviced/Furnished offices
Innovation Center
Coworking space
Business incubator or accelerator
30%
44%
25%
36%
14%
45%
51%
42%
54%
32%
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
FIGURE 5: WHAT IS DRIVING YOUR DECISION TO IMPLEMENT A SHARED-WORKPLACE STRATEGY? % of respondents globally that cited reason for using a shared workplace
45%Reduce costs
41%Increase flexibility in leasing terms
15%Promote
networking or collaboration
42%Need a short term
space solution
21%Attract and retain talent
25%Acquire satellite/
remote office spaces
13%Promote
innovation
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
INNOVATION SPOTLIGHT
MIKE GEDYE, MANAGING DIRECTOR OF ADVISORY & TRANSACTION MANAGEMENT FOR CBRE
“A large oil-and-gas company we work with recognizes that their industry is in a major period of transition and they need to accelerate their development of alternative fuels. Historically, they would have packed those people into the corporate headquarters and said figure out the solution.” Rather, the client put 60 people in shared space offsite, taking them out of the corporate environment in order to help them “develop solutions in an environment that is more conducive to creativity.” The client is not alone, nor is such a solution unique to the energy industry. “This is one of many cases of clients using flexible spaces to road test new ideas before they bring back all or parts of the team to the mainstream,” says Gedye. Consumer-products clients are doing much the same, “creating new types of spaces to attract new types of talent to develop new types of products.”
AMERICAS
65% anticipate presence
in coworking space by 2020
vs.
48% today
EMEA
44% anticipate presence
in coworking space by 2020
vs.
25%today
ASIA PACIFIC
41% anticipate presence
in business incubator space by 2020
vs.
15% today
FIGURE 6: WHAT TYPE OF SHARED WORKPLACE IS L IKELY TO SEE THE GREATEST GROWTH BY REGION?
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.© 2017 CBRE, INC.
A TRANSFORMATIONAL WORKPLACE EXPERIENCE
“We’ve reached a point where an exclusive focus on cost management can be counterproductive because it may adversely impact the quality of the workplace,” says Richard Holberton, CBRE’s Head of Occupier Research in EMEA. “Then the workplace becomes less attractive to the existing workforce and potential talent. There is a strong recognition in our EMEA Occupier Survey results that a high-quality workplace and a well-executed workplace strategy provide a broad strategic advantage for businesses.”
This is being recognized on a global scale, even though cost savings and an upgrade in workplace strategy “are sometimes conflicting priorities,” says Cynthia Chan, a CBRE Office Specialist in the Asia Pacific region. “Cost is obviously the critical factor in location and building selection. But a solid workplace strategy and talent attraction are also high on the agenda.”
CBRE’s Workplace Performance White Paper Series states that “cost savings are often the result of driving investments out of the things people no longer need—larger offices and cubicles, inflexible policies, antiquated conferencing technology—and into the things on which they place higher value, including better services, agile work environments and policies, and user-centric technologies.”
“Workplace offerings range from foundational elements required to simply function in the office to transformational elements that make employees want to come into the office because they are getting an experience that is unmatched anywhere else” notes Georgia Collins, CBRE Senior Managing Director of Global Workplace Strategy.
Lenny Beaudoin, also a CBRE Senior Managing Director of Global Workplace Strategy, sees a transformational trend of occupiers “really thinking about the opportunity to use predictive technology in their future workplace to connect people to projects, services and spaces in an effort to help their employees use their time more effectively.”
“We’re seeing potential employees looking for differentiators and actually asking to see the work environment before they make a decision about joining a firm,” says Michelle Pattison, Senior Director of Occupier Advisory Services in EMEA for CBRE’s Advisory & Transaction Services Group. “That means companies must think about what they’re doing that will attract talent to their business and still link to their business’s underlying corporate values.”
RESPONDENTS CITED DIFFERENT WORKFORCE DESIRES BY REGION...AND ARE RESPONDING ACCORDINGLY
AM
ERIC
AS
CRE
RES
PON
SE
64%Amenities
86%are reinventing or adapting their workplace standards with the goal of employee satisfaction
CRE
RES
PON
SE
EMEA 72%
prefer WELL- certified buildings
68%Seek comfort through indoor environmental quality
CRE
RES
PON
SE
ASI
A P
AC
IFIC 53%
plan to implement activity-based working
52%Connectivity & Collaboration
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
FIGURE 7: WHICH AMENITIES ARE PROVIDED IN YOUR PORTFOLIO?
+ = above average for category in region – = below average for category in region
AMERICAS EMEA ASIA PACIFIC
Food & Beverage Work Life Integration Serivces
Health & Wellness
73% 74%
57%54%
45%
36%
50% 52%
36%
Health & Wellness AMERICAS EMEA APACFitness Center + – –Game Room – – –Rest Areas – – –Green Space – – +Wellness Facilities & Services + – +Bike Racks + + +
Work Life Integration Services AMERICAS EMEA APACChild Day Care Center – – –Dry Cleaning – – –Concierge services – – –Showers + + +
Food & Beverage AMERICAS EMEA APACOnsite Convenience Store – – –Canteen / Cafeteria + – –Coffee Bar + + +
Globally, 58% of occupiers believe amenities are important to the global workforce
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
THE HEALTH & WELLNESS AGENDA: MORE THAN BIKE RACKS
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
Occupiers are realizing that a true, formal health & wellness program means more than just providing bike racks and exercise equipment. Fewer respondents to this year’s Global Occupier Survey stated they have a formal program than last year and “I think in part that reflects an increasingly subtle and mature understanding of what is actually meant by a wellness program,” says Richard Holberton.
“There is a broadening of what is meant by a wellness program and what needs to be provided in order to meet that description,” Holberton explains. “The numbers show a significant increase in the inclusion of health and wellbeing awareness sessions, mental health awareness programs of one sort or another, onsite healthcare and relaxation/mindfulness sessions. It seems to be increasingly embedded in corporate thinking and practice.”
“The workplace is more than a place of work,” says Ada Choi. “It is also a place where you can relax and socialize. We see almost half of occupiers responding to that need with plans to increase their social and relaxation spaces.”
She adds that more expansive health and wellness programs are cropping up more in suburban campuses, while in the limited confines of core CBD locations “occupiers will rely on landlords to provide those amenities.” In Japan, she reports, one landlord is even considering providing hot springs for stressed-out tenants.
In the U.S., some 76% of respondents reported running some kind of employee wellness program. This response supports findings from CBRE’s recent Health & Wellness Survey, which found that although the majority of wellness programs are led by Human Resources, more than 90% of corporate real estate executives saw their own engagement in these initiatives increasing in the near future.
F IGURE 8: DO YOU RUN A FORMAL WELLNESS PROGRAM FOR EMPLOYEES?
NO, AND HAVE NO PLANS TO NO, BUT PLAN TO INTRODUCE YES
Americas
EMEA
Asia Pacific
15%
29%
41%
9%
15%
28%
76%
55%
30%
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
FIGURE 9: EXPECTED PORTFOLIO CHANGE OVER THREE YEARS% of respondents anticipating plan to contract or expand in each region
-40% -20% 0% 20% 40%-30% -10% 10% 30% 50%
India
South East Asia
South Africa
Central and South America
North Asia
Rest of Sub-Saharan Africa
China
Central and Eastern Europe
Pacific
North Africa
Middle East
North America
Western Europe
CONTRACT NET EXPANSIONEXPAND
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
WHAT DOES THE FUTURE HOLD?
Across all global regions, CBRE professionals are observing cautious optimism by occupiers with an unwavering commitment to the new paradigm shift toward portfolio flexibility. As always, “cost will still influence real estate decisions,” says Ada Choi, but she also expects “less relocation activity purely for cost reduction. Occupiers will use relocation strategies to meet talent needs and achieve agile working initiatives as well as reduce space per capita.” In APAC, 53% of surveyed occupiers anticipate increasing office headcount in the next three years, with this sentiment being strongest among Indian occupiers.
“Some of the things we’re seeing in this year’s survey, which includes flexible workplace strategies and the deployment of data to predict different aspects of building usage, design and management, will evolve quickly over the next year,” says Richard Holberton. Technology and innovative thinking underpin the tools that occupiers are deploying to make their space work better, from smart-building sensors to predictive analytics to personal environment control systems.
Julie Whelan agrees that technology will play a bigger role next year in the drive to optimize the workplace. “But economic uncertainty will still be a primary concern, as will labor considerations. The majority of respondents across the globe are challenged by finding the right labor and keeping the existing labor in the current environment.” As a result, global occupiers are making market and building decisions based on access to talent.
Talent needs aside, occupier sentiment is not overwhelmingly expansionary. The majority of occupiers anticipate stability in their global portfolios and although expansion sentiment still outweighs contraction sentiment, the gap is closing. This is a metric to watch as the future unfolds.
Across all global regions, CBRE
professionals are observing cautious
optimism by occupiers with an
unwavering commitment to the new
paradigm shift toward portfolio
flexibility.
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
FOR IN-DEPTH ANALYSIS OF REGIONAL SURVEY RESULTS, DOWNLOAD THE 2017 AMERICAS, EMEA, AND ASIA PACIFIC OCCUPIER SURVEYS:
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
KEY CONTACTS
GLOBAL RESEARCH
Nick Axford, Ph.D.Head of Research, Global+44 207 182 [email protected]@NickAxford1
Neil Blake, Ph.D.Global Head of Forecasting and Analytics +44 207 182 [email protected]@NeilBlake123
Richard Barkham Ph.D.Chief Economist, Global+44 207 182 [email protected]
OCCUPIER RESEARCH
Julie WhelanHead of Occupier Research, Americas+1 617 912 [email protected]
Richard HolbertonHead of Occupier Research, EMEA+44 20 7182 [email protected]
Ada ChoiSenior Director, Asia Pacific Research+852 2820 [email protected]
Cynthia ChanOffice Specialist, Asia Pacific Research+852 2820 [email protected]
CBRE INSTITUTE
Karen EllzeyExecutive Managing Director, GWS Consulting+1 617 869 [email protected]
Matt TonerManaging Director, CBRE Institute+1 302 373 [email protected]
Henry Chin, Ph.D.Head of Research, Asia Pacific+852 2820 [email protected]@HenryChinPhD
Spencer LevyHead of Research, Americas+1 617 912 [email protected]@SpencerGLevy
Jos TrompHead of Research, EMEA +31 20 589 07 53 [email protected]
To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway.
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.
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GLOBAL OCCUPIER SURVEY REPORT 2017 © 2017 CBRE, INC.
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