For decades, baby boomers ruled the corporate world and, during this time, one of the hallmarks of a company’s success was its property – usually large, imposing buildings at prestigious addresses.
The changing of the guard last year, however, is poised to precipitate a dramatic transformation in the workplace, the world of business and, as a result, commercial real estate.
Last year, the mantle was officially passed to a new order as there are now not only more Millennials than baby boomers, but Generation Z, the first fully digital generation, has also entered the workplace and the demographic groups view the world (and business) very differently, says Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty.
“Millennials adopt new technologies much more easily and quickly than their predecessors, they are more comfortable doing business remotely and virtually, and also expect to be given the tools and freedom by employers to do so.
“And Gen Z, which has never known life without digital technology at their fingertips, will push the envelope even further.
“Research is revealing traits like the fact that 60% of this group prefer to learn through YouTube tutorials and videos, which alone presents a host of new challenges for standard HR and training methods.”
Digital technology has negated the need for a workforce to always be together in the same space. “The office is now more of a central base from which to attract, retain and inspire the best talent and it’s no longer necessary for them all to report for work at the same time every day.”
When factoring in the prevailing global economy, spiralling traffic congestion in major metros and the growing expectation of convenience, all indications are that the traditional 9-to-5 era is fading away.
“South Africa’s economic woes aside, many economists predict that we are teetering on the edge of another global recession and businesses are already looking at ways to reduce the costs of large office overheads by instituting flexitime and turning to co-working centres.”
Many freelancers and small companies already use public spaces like coffee shops to work from and even hold meetings, Geffen adds. Contrary to what many traditionalists fear – that people will not be productive when out from under management’s watchful eye – studies are proving the opposite is true.
According to research from IWG’s annual Global Workspace Survey, affording employees the chance to work from flexible workspaces has been shown to increase productivity, with 54% of employees saying that working remotely enables them to get more done.
The new guard also has very different lifestyle needs and shopping habits. They prefer walkability to driving everywhere and they also do most of their shopping online which is spurring further shifts in the commercial real estate sector, Geffen says.
Tenants will become increasingly attracted to live-work-play precincts, such as Century City, says Jack Bass, director of the group’s commercial division in Cape Town.
“Businesses looking to attract Millennial and Gen Z clients and workers need to look at situating themselves in nodes with good walkability and enticing retail, dining and recreational options, where everything is on their doorstep, and there is seldom a need to drive.
“This trend is already well established in the US, with several areas, like Irvine in California, already home to many such precincts.”
Bass says the growing move to online shopping is already having an impact on the retail sector, especially the high street concept, which has been declining in recent years, while the industrial sector has strengthened.
“Smaller industrial spaces of around 100m² are being snapped up, and are mostly used for storage and warehousing, and I think that as e-commerce continues to grow, so traditional retail will slow.”
Connectivity and digital capability are no longer optional extras when renting out commercial space, he adds. “Even meetings and training seminars are increasingly being conducted via communication technology, such as Zoom and Facebook Live, and the need to travel far and wide on aircraft and staying over for meetings is almost a thing of the past.”
However, Bass says care needs to be taken to “not completely eliminate the human touchpoint” but drive it with smarter systems.