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Challenges of robots, real estate and transforming spaces

Market volatility, digital disruption, political turmoil, and a rapidly changing environment are only some of the elements that businesses will have to factor into their corporate real estate strategies this year.
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After all, 2016 showed us that the world is a difficult place to forecast. Organisations will need to be agile. This principle will apply to their portfolios, but also to their ability to adapt to new geographies, operating environments and real estate.

And not only there: businesses will also need to be agile in their workplaces, attracting and retaining the right talent to secure growth.

Automation is redefining business roles and processes and, as a result, we are already starting to see a transformation in the way organisations use and measure real estate.

Automation and the organisation reorganised

Rarely out of the headlines, robotics and automation are already being adopted widely across the corporate world.

Importantly, however, this does not necessarily mean that the robots are coming for your job, or that we are about to see a wholesale replacement of humans with machines.

In fact, although 25 per cent of tasks across every job category will be automated by 2019, just nine per cent of jobs are at risk of being totally automated – according to the OECD.

Rather, the automation of repetitive, simple tasks in the business process, could help firms increase the speed, precision and cost efficiency of their operations, freeing their (human) employees to focus more narrowly on actual value creation.

Over the long term, automation has the potential to transform real estate portfolios, condensing them into a few strategic locations and urban hubs.

Enhanced productivity and lower costs would be some of the significant benefits for companies, but it is in the short-term that we can see crucial changes in the workspace. 

Workplace attitudes are already shifting, just as people are becoming more comfortable with smart technology and robotics in the home.

Automation has already transformed manufacturing processes and what we are seeing is an extension into new industries and job functions.

User experience will take primacy in the design of office environments as the war for talent grows more intense. To meet the expectations of the next generation and boost the productivity of those using the office, a greater variety of spaces will be available to work in.

Activity-based working – an approach to creating workplaces that provide users with shared access to spaces for individual and collaborative work – will become commonplace in workplace design.

High-quality services, from food and beverages to recreation spaces, gyms and space to support wellbeing, will become standard features in core locations.

Location, location, location

It is not just automation and digital disruption that have a profound effect on businesses and their demands for real estate, but location, too.

With 57 per cent of talent acquisition leaders citing competition for top talent as their main concern for 2017, the challenge for a firm is to find a location and an office that works for their business: one that helps them attract fresh talent and retain their star employees.  

A good location can help boost a company’s performance in the long term, a bad one can cost millions in lost productivity and capital. In one case we encountered, a company elected to decentralise and move its location in order to reduce its expenditures.

Although the real estate costs fell, the company ended up losing key staff and talent. The corporate identity was affected and moving location in this instance turned out not be the expected efficiency driver, but rather a strategic disaster.

On the other hand, for instance, we recently advised a global corporate that successfully consolidated its back office support functions into fewer, bigger locations.

The processing was aligned and globally integrated. This decision ended up increasing the firm’s ability to attract even more talent because of its dominant market position, whilst simultaneously yielding £150m of cost savings.

Flexible workspaces

The growth of a contingent, flexible workforce in the form of the ‘gig’ economy, and increased demand for flexible workspaces, has caused many firms to reevaluate their real estate needs and portfolios.

Flexible workspace arrangements, such as co-working, provide one potential solution to the changing workforce. Such is the growing popularity of co-working structures that the number of individuals using this kind of space is predicted to reach nearly 1.2 million by 2018.

Whether it is through the creation of an innovation hub exclusively for employees, or by a securing access to a collaboration space that is shared with external organisations or individuals, co-working can promote increased innovation and collaboration.

Of course, such arrangements are not without their challenges, particularly regarding the cyber security considerations that inevitably come with employees working in close proximity to those of different firms.

But with careful planning, such as, for instance, the creation of a clear cybersecurity policy and the provision of separate servers or private Wi-Fi networks, there is no reason why firms can’t effectively utilise co-working spaces.

Businesses face several challenges in 2017. From the rise of automation through to the changing nature of work, property is often at the forefront of meeting those challenges.

Tom Carroll is head of EMEA Corporate Research at JLL

Image: Shutterstock

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