Traditional Office Space is going the way of the Selectric. It is still there, but no one uses it.
The office of the future is mobile, ubiquitous, and on-demand. Landlords, be warned. This will radically change the commercial real estate landscape. Few office space providers are prepared for this tsunami whose first ripples are already quite visible.
The earthquake that triggered the tsunami started long ago with the adoption of the Internet and mobile technology. The first ripples have added technology to the office, telecommuting away from the office, but they have not transformed the nature of the office itself. Not yet. However, they did drive significant behavioral changes in how office workers get their work done. These changes are about to destroy ‘the office’ as we know it.
The recession is shaping a new reality that will only accelerate this metamorphosis in commercial real estate. Companies feel the urgency to slash occupancy costs and shed office space altogether. Employees and employers alike are pushing hard for ways to slash commute time, reduce carbon footprint, and increase productivity. The planning cycle has considerably shortened: anything past six months is highly uncertain and hard to commit to. Generation Y folks want to work close to where they live and close to where they play. These powerful forces are hitting us from different directions at the same time. A perfect storm is brewing.
Many office users have already learned to live without dedicated offices. Start ups and professional firms were first to successfully rely on networks of work-from-home and work-on-the-road professionals, enabling the companies to operate from a small physical office footprint. They drove the initial explosion in demand for Virtual Offices.
On the large enterprise side, pioneers such as Accenture, Cisco, or Sun Microsystems have successfully deployed touchdown spaces since the 90’s, fine tuning various hoteling and hot-desking approaches. A growing portion of their workforce now operates without a permanent office. In the process, they have learned new ways to save on occupancy cost and be more productive at the same time.
But these were timid steps, early ripples presaging more powerful waves. What will be left after the tidal wave washes away demand for traditional office space is the complete virtualization and outsourcing of huge chunks of the commercial office space.
The last thing corporations want to own, or even lease, is commercial real estate. Yet, the need for office space and meeting rooms is not going away. The office space itself is not disappearing, it is being outsourced.
The workplace needs to move with the user. It is a meeting room close to a customer site. It is a furnished private office close to home but away from the kids. It is the place where the outsourced support staff manages mail, communications, IT and the telephony infrastructure. It is the comfortable business lounge where professionals can network, or relax, while keeping an eye on the market. And it is the place where the main corporate identity is established, in a prestigious building but with no or little dedicated office footprint. More importantly, the office of the future is all of these places, at the same time.
Data connectivity has long been ubiquitous. ‘Find me, follow me’ features of most VoIP Unified Messaging systems enable seamless delivery of voice connectivity to users wherever they are. The physical infrastructure needs to follow suit. At Pacific Business Centers we call this paradigm Cloud OfficingTM.
The office of the future is not controlled or managed by corporate. It is hosted and on-demand. Paid per use and delivered under a utility model. It is not constrained by 4 walls in one building. Just like hotel rooms or extended-stay suites, the office needs to be here and there, and everywhere.
Office space will no longer need to be leased, but instead will be paid for on an hourly basis or under a subscription model. Large corporate users will buy capacity, defined plans made up of hours of office space, conference rooms, and related services over a network of locations that fit their geographical needs. Capacity can be easily increased or decreased under predetermined financial parameters. Some corporate users will ask for the network to host dedicated and secured mini-suites, but only for a small core of projected occupancy.
The office of the 50’s, with the diplomas on the wall and the golf trophy on the desk, is dead. It is being replaced by a network of locations that all share the same basic functionality: furnished, connected, with a large array of tools ranging from networked color printer and VoIP telephony to Telepresence video conferencing.
The office of the future is serviced and managed by a specialized operator. It is delivered as a service over a ubiquitous network of locations with workplaces available anywhere, anyplace, anytime. The number of large, long term, leases signed by corporate users will dwindle as they outsource their need for touchdown space to utility players.
The future is now. Landlords must retool their infrastructure and partner with a new breed of service providers that can effectively market and manage on-demand offices. The dedicated office is dead, but long live the Workplace-as-a-Service TM!
About The Author
Chief Executive Officer
Prior to starting PBC in 2003 (rebranded to Pacific Workplaces), Laurent held executive and management positions at Sun Microsystems, Litchfield Advisors, and Hewlett-Packard, with responsibilities in Corporate Real Estate, Corporate Development, Operations, and Finance. He holds an MBA from the Haas School at UC Berkeley.