Trends in the Office Market Part 2

Posted by Coleman Team on December 15, 2017
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Millennials – one generation is changing how we interact with our workplace

We have witnessed countless ways that major demographic shifts affect our overall society, and one particular manifestation is in trends in the office market. These trends ultimately lead to changes to design, function and efficiency of office space. Everything from the time at which we go work to the size of the boss’ private office is changing. The growth of the millennial generation is the driving force behind these changes in our culture as a whole, and the real estate industry has seen that strongly influence changes in office culture. In 2015, the Millennial generation took over as the largest workforce demographic and it is estimated that by 2025 they will make up 75% of the workforce. For a generation that has been recognized for turning many cultural norms on their head, some good and some bad, this is undoubtedly going to continue to change how, when, where, and why we go to work every day.

The Generation that doesn’t ‘Switch Off’

The millennial generation is known for being the iPhone generation – where constant connectivity is an expectation rather than a luxury. This also means constant access to their workplace responsibilities creating a generation of workers that never ‘switches off’. Offices now must provide the technology and connectivity to enable these workers to maximize productivity, especially due to the dramatic increase in remote working that is taking place outside the traditional 9-5 workday. A study from Cisco shows that 60% of the current workforce believes being in an office is unimportant. Erik Dolan-Del Vecchio from PivotDesk puts it very well describing the way millennials are seeking “work-life integration rather than work-life balance” – they are choosing to integrate the two seamlessly through constant connectivity. All of this translates into new changes in the flexibility of office space and the overall function that helps these employees succeed.

Office Space and Employee/Manager Connectivity

The next-generation set of workers achieves maximum productivity and workplace efficiency when they can share their creativity and ideas with their co-workers and managers. The modern office is changing not only to accommodate this need for connection, it is creating intentional opportunities for collision within the workplace. These points of connectivity are seen in a reduction of space allotted for private offices and a greater investment in open, collaborative spaces where knowledge and ideas can flow seamlessly between workers in a more shared environment. (You can read about the points of collision we created in our own office space in my in the first part of this series here.) These changes take significant investment and mental shift to achieve, but more executives also realize that creating this environment of creativity and collaboration is vital to attracting and maintaining top talent rising within the millennial generation.

Office Function 

Shifts in workforce demographics have led to office spaces becoming denser and more efficient in their design and function. The square footage per employee has steadily dropped in recent years, decreasing from 300sf per employee in 2001 to 176sf per employee in 2012. Current rates are even dropping as low as 125-150sf per employee. Large private offices and dedicated executive suites are being replaced by collaborative space that benefits the larger workforce within an office. As a case study, we experienced the MullenLowe Group move to their new space that does not include any dedicated private offices. All employees and managers share bench-style seating where the office hierarchy is flattened, literally and figuratively, and everyone works in a dense, collaborative and open environment. This is a clear example of a company valuing the exchange of ideas and points of collision as a way to achieve maximum productivity for their clients. A survey done by Great Place to Work discovered that companies that have changed their offices to incorporate fun and engagement among its employees are on average 15% more innovative and experience, on the whole, higher net profits. The formidable barriers of the old-school office environment that stressed exclusion and closed doors to management is being broken down by the influence of the millennial generation. The new office design and function is based around the communication and workforce style that the next generation needs to succeed. They want to engage with their co-workers but more importantly want more connection with and feedback from their direct managers. The shared and collaborative office environment that the millennial generation is famous for inspiring is breaking down the traditional office hierarchy and helping drive profitability in new ways.

The rise of every generation changes something about the way things are done, and this generation, as we have seen, is no different. It will be interesting to see the ways the millennial generation continues to turn the office sector on its head! Stay tuned for another look at trends in the office market!

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Coleman Team

Written by Coleman Team

A co-founder and partner of Linville Team Partners, Coleman’s experience encompasses every aspect of the commercial real estate industry. With LTP, Coleman focuses on the development and brokerage of office, life science/biotech, health care and investment properties. From publicly traded institutions to individual office users, Coleman’s expertise includes build-to-suit development, brokerage strategy, historic property renovation and syndicate investment real estate.

In office design, office space, office trends