There’s an Office in Your Future – Sept. 16, 2024

Last week, both Fitch Ratings and the Mortgage Bankers Association reported that delinquencies are continuing to rise for loans backed by office properties. It’s therefore reasonable for office owners and investors to continue questioning the sector’s long-term outlook. However, the release of JLL’s biennial Future of Work survey offers some encouraging findings. 

Two-thirds of global business leaders expect their commercial real estate budgets to increase between now and 2030. Strong momentum toward office-based work since JLL’s survey was last conducted in 2022 has brought forth expectations among respondents to increase use of office space, and more than half of leaders plan to grow their total footprint over the next five years.  

Today, 44% of organizations are considered “office advocates,” who would like to see staff in the office five days a week, according to JLL. That’s up from 2022, when just 34% of employees were working in the office full time.  

Although hybrid work is here to stay, the office is central to work again, JLL said. In 2024, 85% of organizations have a policy of at least three days of office attendance per week, and 43% expect the number of in-office days to increase by 2030. 

The office space question doesn’t exist in a vacuum, though. According to the survey, the results of which are being rolled out in a series of articles, business leaders are mainly focused on three corporate goals over the next five years: growing revenue through expansion and M&A (57%), attracting and retaining talent (53%) and achieving organizational efficiency (54%).  

Given the need to bring those goals into harmony, “the juxtaposition that lies between driving revenue growth through top talent and increasing efficiency requires leaders to delicately balance priorities and assess the role of offices as places that enable employees to deliver their best work,” according to JLL. 

“Since our 2022 survey, the CRE landscape has become increasingly complex and dynamic, evolving toward better office use,” said Neil Murray, Global CEO, Work Dynamics, JLL. ” We see that in these results, and in our conversations with clients.”  

He added, “Looking ahead, business and CRE leaders working to drive talent and efficiency throughout their organization must consider the unique needs of their organization, and leverage tools such as tech, AI, and upskilling, as well as strategic partnerships across the value chain to enable the CRE function to reach its full potential as a powerful agent of transformation.” 

The first in a series of articles drilling into the survey’s implications focuses on the implications of shifting work patterns and their effects on workplace expectations. It cites six factors driving a need for change: 

• A desire to increase and rebalance organizational headcount, in an attempt to recruit the right talent and skills to be future-ready; 

• A strong focus on organizational efficiency that requires smarter long-term investment decisions; 

• Competing visions of ‘how work should be done’ to achieve the best performance – often coexisting within the same organization; 

• An attempt from ‘Office advocates’ to promote equal work practices among their workforce and to design more inclusive workplaces; 

• The recognition that flexibility in workstyles is the best way to strengthen organizational performance among ‘Hybrid adopters’; 

• Finally, an opportunity for CRE teams to contribute to the Employee Value Proposition (EVP) discussion, by defining a compelling and evolutionary office model for their organization. 

“The future of work looks different across companies and regions, reflecting the unique nature of organizations and employee needs,” said Cynthia Kantor, CEO, Project & Development Services, JLL. ” It keeps shifting and requires building evolutionary office programs and spaces, able to adapt to continuous changes in the workstyles. Globally, as CRE budgets and footprints receive new investment, the corporate real estate function must effectively partner with the C-suite to demonstrate the desired value.”