Not for long. Work is quickly and permanently becoming untethered from dependence on traditional office facilities with the aid of collaboration technologies, automation and augmented reality experiences. New networks of highly hosted flexible office facilities also offer workplaces on demand that serve as outsourced real estate, helping to unlock the full potential of a workforce and making companies more competitive. With the technological innovations of the past 10 years, physical work and repetitive, predictable, skills-based work activities are now being automated and done in the cloud, with no dependency on the physical world whatsoever. Office work that once required people to work in rows of desks in departments, with close proximity to the next step in the physical workflows of documents, no longer exists. McKinsey estimates that 60% of current jobs are 30% automatable: from underwriting insurance, to drafting legal briefs, to making medical diagnoses. That has huge implications on our connection to physical space, especially the need for office space.
Over the same 10-year timeframe, new technology has given us the power to collaborate and meet in ways that don't require a physical presence and can increase the opportunity to communicate, share and manage workflows. New cloud-based workplace experiences will also compete with the traditional office. Referred to as the metaverse, these include simulated and augmented reality environments that can put workers on an emulated or imagined campus, meeting room or convention hall to interact with colleagues or customers to meet for a virtual drink or cup of coffee.
The move toward automation of office jobs, better remote collaboration tools and new augmented virtual office experiences mean the workforce will need less and differently designed physical space. There's no going back.
It's a Meta-Trend, Not a Fad
It is important to reinforce that the pandemic is not the cause for the drop in demand for office space. For the past 10 years, companies renewed leases on shorter terms and with less space, contracting an average of 30% to match falling traditional office space utilization. However, the wholesale abandonment of office space during the pandemic did accelerate adoption of new ways of working and spawned new expectations of the workforce.
We are now on an unalterable course toward the disassociation of work with a physical place. That means we will need different kinds of places to work – workplaces that serve more focused purposes when we do choose to meet in person. Work requires a continuum of settings and locations, places to learn, inspire, network, collaborate and, yes, create and focus. Essentially, the workplace is becoming a network of places, a platform of settings and locations that we can traverse and match to the activity or goal.
Think of a network of workplaces that includes headquarters, satellite offices, meeting venues, home, digital and virtual/augmented reality work settings. Workplaces are now being consumed on demand like computing services; the future is an on-demand workplace cloud for facilities services augmenting a smaller footprint of fixed real estate assets.
This workplace cloud approach frees up capital from lease liabilities and real estate asset ownership. It completely aligns business plans with workplace resources. There's no more guessing (or cost of being wrong) about future headcount or space requirements. In addition to liberating its workforce to traverse a set of workplaces, it frees companies to locate outside of expensive urban markets, with smaller space requirements, designed to support collaboration and personal connection.
As CEO of an international outsourced workplace company operating in 30 markets across the US and UK, I have been working with companies for over 10 years to add agility and flexibility to their workplace strategy. This always includes tactical needs like market rollouts, overflow and regional team support. We are now serving multinational companies across all industries as they execute on major strategic real estate initiatives to support a remote workforce, quit traditional office leases and focus on their broader initiatives like retaining top talent, lowering costs and outsourcing their real estate, not just their real estate management. These initiatives also enable a lighter, lower-cost, hub and spoke real estate footprint.
The Power of the Workplace Cloud
A workplace-cloud-driven strategy also allows companies to attract the best talent regardless of geography, including those who wish to balance family responsibilities and remain in the workforce. A mainstream policy of workplace flexibility provides more equal access, and peer equity both of which promote workforce diversity. As a Latino CEO, I am particularly attuned to the value of drawing a workforce from new networks, cultural backgrounds, and perspectives.
The workplace cloud strategy can also lower environmental impact, generating fewer and shorter commutes and less energy consumption from office buildings.
With a rich set of choices about where and how to work, employees will have agency over their workplace decisions. Knowledge worker autonomy is not simply a matter of which days in the office one chooses to work – it's about the degree to which people can influence outcomes about their own lives. It's bigger than workplace, it's about people being able to unlock their full potential and how employers invest to enable and support employee agency while benefitting all their stakeholders. Welcome to the workplace cloud and the future of work.
John Arenas has brought groundbreaking innovation to the real estate and hospitality industries. He is founder, chairman & CEO of Serendipity Labs, Inc. Founded in 2011, Serendipity Labs offers flexible workplace solutions that meet the on-demand workplace needs of remote and mobile workers, business travelers and project teams across the U.S. and the U.K.
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