Next-generation real estate strategies to drive office space renewal

New reports from two of the world’s biggest names in professional real estate services strike a more positive note for investors and companies grappling with hybrid work in 2024, suggesting that crisis can give way to opportunity if the more adaptive workplace strategies are quickly put in place.

In a paper from Colliers entitled ‘Engage, Activate and Accelerate Performance: Next Generation Real Estate Strategies’, several of the advisory firm’s experts from the EMEA region outline ways to activate and manage transformational change.

Recommendations from Colliers include the delivery of ‘well-executed hybrid programmes that give people the space to be productive in different environments and to remain connected remotely, while providing rich experiences in the workplace’.

There should be increased momentum to upgrade legacy real estate stock to support the ESG agenda and avoid assets becoming stranded due to high carbon emissions. Transformative use of data and AI should help drive better decision-making around CRE investment, occupancy and use. And there should be more flex leases as opposed to traditional ones.

Hybrid adoption

Meanwhile, CBRE has issued a report on global workplace and occupancy insights, ‘The Workplace Evolution: The Path from Efficiency to Effectiveness’. This summarises three years of office benchmarking and client sentiment surveys by CBRE clients, showing how companies have tried to optimise their office portfolio as part of hybrid work adoption.

According to CBRE, there has been a 22 per cent decrease in average square foot per person, a 28 per cent increase in occupancy rates plus a major boost in collaboration spaces by 44 per cent globally since 2021.

Nearly half of companies (45 per cent) require employees to be in the office three or more days per week, but less than 4 per cent consistently implement their own policy so there are hardly any consequences for those who stay away.

Utilisation of office space today stands at 40 per cent – a 45 per cent decrease of pre-pandemic levels of 64 per cent. Looking ahead, around four in ten firms in the CBRE survey plan to decrease their portfolio size by more than 30 per cent in the next three years. However, the report also suggests that new performance metrics for office space allied to agile strategies to improve employee experience and optimise the portfolio marks the way forward.

Reading across both reports, there are some grounds for optimism for office real estate after a difficult period globally in which investment has stalled. Access the Colliers paper here and the CBRE report here .