The End of Office Space

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As the R.E.M. song goes, “It’s the End of the World as We Know It” for traditional office space.  CoreNet Global, a global corporate real estate association, published an interesting study last week during its annual meeting in San Diego.  One of the key findings is that within the next 8 years, companies will increase their technology platforms and renovate their office space to support techy-savvy employees who prefer alternative workplace solutions like telecommuting.

That was among the key findings from a yearlong survey of corporate real estate executives conducted by CoreNet Global called “Corporate Real Estate 2020: The Future of Corporate Real Estate and the Workplace.”  The study seeks to understand how large companies will manage their vast real estate holdings in the future, because real estate ranks second only to personnel in operating costs for most organizations.

As I plowed through their summary, it became apparent that the C-level leadership is finally understanding that telecommuting is here to stay and they can lower their real estate costs if they adapt.  The level of telecommuting will differ because companies which require a high amount of collaboration will still need to provide appropriate spaces according to the report. However, many companies will be able to increase the number of employees per square foot, a trend that will shrink the office footprint of the future.

In addition, competition for top talent will drive companies to support employees more widely with telecommuting and other alternative workforce strategies. According to projections in the study, up to 50% of all workers in developed economies and 25% in developing areas will use teleworking.  This will lead to a new forecast on a company’s physical space needs while driving down costs and reducing its carbon footprint.

Another interesting aspect of the report dealt with distribution centers and the movement of goods.  The CoreNet study found that pressure from energy costs will continue to drive up costs even if new supply is developed.   They are forecasting that we’ll see re-shoring of manufacturing as heavy goods become more expensive to transport. There may be continued outsourcing of services like accounting and legal. But hard assets are going to come back on shore.  In the face of longer supply chains and the resulting higher cost of energy and transportation and hoping to move closer to their customer base, the U.S. and other developed countries such as Germany will re-emerge as manufacturing powerhouses. To narrow the supply chain cost gap, some companies will choose to expand on U.S. soil rather than overseas while others will “re-shore” operations back to the U.S. from other countries.

Very interesting stuff particularly since we are the Gateway to Latin America.  If you would like to read more, visit their website at www.corenetglobal.org

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  1. Interesting Article. Perhaps office space will change as we know it, although we doubt it’s the end of it. Internet didn’t kill books (not yet) just as teleworking will not kill the office. Maybe co-working will increase and spaces will tend to be smaller but there’s still a long way to go before offices disappear.

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