Is Office Space a Cost Center or Value Driver?

Nearly half of CRE decision-makers said they believe commercial real estate is perceived as a cost center rather than a value driver. However, about two-thirds of global business leaders surveyed by JLL for its biennial Future of Work Survey said they expect their CRE budgets to increase between now and 2030 despite the challenging CRE landscape and a mixed economic environment.

Business leaders are primarily focused on three corporate goals over the next five years, all of which will require some thought about the use of physical office space to grow staff and optimize work output. Of the respondents, 57% said they are focused on growing revenue through expansion and M&A, 53% are focused on attracting and retaining talent, and 54% are focused on achieving organizational efficiency.

More than half of business leaders said they plan to grow their total footprint over the next five years, with 44% of organizations considered ‘office advocates’ who would like to see staff in the office five days a week. Of organizations, 85% have a policy of at least three days of office attendance per week, and 43% expect that number to increase by 2030.

“Hybrid work is here to stay, but the office is central to work again,” said JLL. The report found a greater acceptance of hybrid work at large organizations while office advocates tend to be smaller and mid-size companies. Office advocates are aware that they need to add value to office attendance through healthier office environments. This includes workspaces tailored to meet the needs of different people, as well as even offering higher compensation and career advancement for employees who attend the office regularly.

Globally, business leaders believe CRE can add the most value by supporting business growth (41%), enabling organizational efficiency (38%) and reducing operating costs (37%), according to the report. Nearly half of CRE decision-makers said investing for the long term is difficult due to the pace of organizational change. Identifying the right metrics and ways to demonstrate value, in addition to strengthening relationships with the C-suite, will ensure CRE is more integrated into the wider business and positioned to quickly adapt to changing priorities, the report said. Of CRE leaders, 46% say influencing and leadership will be critical skills in the future.

Technology is having an increased impact on CRE. Industry leaders said they expect 70% of their activities to be partially supported through the use of artificial intelligence by 2030. One-quarter of the CRE function could initially be completed through automation, freeing up time for more strategic work, the survey found.