The theme for last week’s Estates Gazette Office Occupier Summit focused on whether property developers and the commercial real estate sector are having to adapt to the changing needs of occupiers. Chairing the event, Emily Wright, Estates Gazette Features Editor, set the tone by remarking that the world of business is changing at “warp factor speed” This was the perfect introduction for my topic of challenging the relevance of the central tenet of real estate; location, location, location. I wondered out loud if all the changes taking place in our lives today might have any implications for how the industry provides office buildings? Are we seeing a real change in how companies and individuals use space? What are the implications, indeed opportunities, for those that provide and invest in offices?
Location, location, location as a phrase was reputedly coined by Lord Samuel, the doyen of the British property investment industry. As chairman of Land Securities he oversaw the emergence of the commercial investment sector. All surveyors learning their trade today absorb this principle and indeed it has stood the test of time. It is applied in all sectors of the market and is understood by all. However, are we in, or approaching, a new paradigm? The property investment market relies on tenants to pay rent. Historically occupiers have been tethered to an office building usually for a considerable period of time. What if large corporate’s become more footloose than they ever have before? I posed the question that this might be in more ways than one.
As somebody who has seen both sides of the coin, I fear that London’s current buoyant market is blinding many players to our changing world. Indeed, I’m not the only one to express a note of caution. EG’s editor Damien Wild expressed similar concerns in his 23rd Oct editorial, especially the sectors propensity to be inward looking. In my speech, I proposed a different way of looking at Location, Location, Location. It is based on the premise that the office should no longer be regarded as just a place to contain the people who work there, but as a base from which they are free to explore the new 21st century world of possibilities. That is not to say that the office will die but it will be regarded differently – a decent place to do work with good day-lighting, circulation and collaborative working facilities. So rather than just looking at location in terms of the investor viewpoint; savvy property players of the future will be able to understand the office proposition from three different perspectives;-
Location in the eyes of the Provider – Investor, Developer,
- The traditional single dimension view
Location in the eyes of the Consumer – the Corporation, Organisation
- The tenant who takes the space
Location in the eyes of the Occupier – the office worker
- Not considered as all that important in the past but the game has changed.
I believe over the last 5 to 10 years we have experienced a seismic shift which for the most part has gone unnoticed. It is how we can do office work. For a growing number of people in many companies they can now work in a variety of places. Whilst this is recognised what is less appreciated is that this work can be done anytime. Although, there is a growing amount of coverage about these new ways of working, it is still a minority sport. But for how much longer? The influential writer Charles Handy made this insightful observation about office work;- Organisations, however, are just ways of connecting people and now that there are so many other ways to connect beyond face-to-face encounters we will see the physical aspect of the organisation changing rapidly. It has always struck me as odd to watch all those streams of people pouring out of railway stations in order to sit in their box-like cubicles communicating with similar folk in other boxes by email, telephone or messaging when they could do it equally well from home, or from a local work hub.
The common denominator is choice – all three players now have this in abundance and are learning how to use it. For property people, we need to better understand the changing nature of business. It has shifted from being singular and tethered to a single office building towards being multifaceted and always on. This may open up new opportunities?
I believe that we are truly at a crossroads, facing a future in which “change,” is the one, common thread. I foresee a shift in focus from delivering building-centric to people-centric solutions. To quote Frank Duffy (ex of DEGW): “we live in an increasingly virtual world and we need to justify the role of “place” I contend that the virtual world is approaching far faster than most of us realise. Whilst location, location, location remains relevant – it will have multiple and variable perspectives.