Patrick McGrath, chief information officer of Savills, speaks to PlaceTech about the forces challenging corporate office occupiers as they compete to attract the best workers.
We are seeing a once in a generation shift towards supply side availability as demand for offices reduces in most of the major markets we cover. That is a precursor for understanding what the dynamics are on the demand side in a different way. The focus from the occupier side of the asset class is all about talent. Our corporate occupier constituents and stakeholders are focused on making sure they have access to the best minds, and how to make those minds as productive as possible. We’re seeing an increased level of scrutiny around what the interaction points are with the physical asset base, where those capital investments are being made, how they’re turning the physical environment into a more productive work experience for that talent base that they’re investing in.
We’re seeing more chief people officers involved in real estate discussions than we ever have before. It’s a little bit different than it was in the in the pre-pandemic environment where maybe you had a corporate real estate team reporting directly into a CFO. I think there’s definitely an awareness that it’s not necessarily just the real estate, fixed cost. The trade-offs are being seen in light of these headlines around the great resignation, or the great re-evaluation. The stakes of missing the mark on this mean you face the loss of really important critical human capital investments that are going to be very difficult and expensive to replace. So, I think that’s driving a lot of the sort of conversations from a people perspective. I think a lot of organisations were thinking that way before, but it definitely feels like it’s a common thread in discussions now.
It’s hard to make good decisions if you don’t have data to support those decisions, because there’s obviously a lot of potential political hyperbole, as you make your way through organisations, around these types of discussion points. So, I think what we see is, over the next couple of years, there’s going to be a great opportunity for organisations and technology systems, that that can help create a little more of a common footing in data to support the strategies around that talent and workforce investment that these organisations are making.
The starting point for that data is understanding where the talent is, unpacking from an organisational perspective the tasks that are performed under the various different functions and how that aligns with talent bases, from a geographic and demographic perspective. We’ve definitely seen some big shifts during the pandemic.
I’ve seen some data to support that millennial workforce in the New York metro region had purchased single family homes, I think something like 15 to 20 minutes further away from the prior core in Manhattan. So just that alone would tell you that, buildings that had been viewed as attractive from an amenity perspective in certain areas, and sub-markets within the island of Manhattan, may not have the same appeal to that demographic sector, given the commute times would be significantly further from where they had now bought single family homes during the pandemic. So, if you really wanted to bring that group back to the hubs that you had built out, or that you were building out the island of Manhattan, you might think a little bit differently about where the optimal location would be. Perhaps getting closer to the regional rail lines would be a more strategic location to draw that talent in. Having access to that data to inform the site selection, obviously becomes pretty important as you’re making a capital intensive, long-term decision that is meant to really activate a very significant human capital investment in that region.
Taking the corporate hat off on and putting on the hat of the talent is important. Really thinking through what’s missing from the experience that they have today, and how to supplement that to really create a better experience for them tomorrow, across probably a more diverse set of physical assets that they’re going to interact with. Thinking through the component technology and systems that enable you to have visibility into that experience for the talent is something that there’s a lot of focus on. We have seen capital raised by companies like HqO that are trying to help landlords bring those component technologies to life in a much more 2022/23 digital experience perspective, and that could be visitor management that could be keycard access, with mobile phone instead of the traditional keycard. We’re seeing a lot of that component technology come to life and then the data being brought together to help inform the corporate occupiers around what’s working, what could be improved, what the interaction points are across the various different physical assets.
This has to be one of the hardest operating environments for leadership teams. It’s not been easy for anybody. But it’s also very early days, in terms of how all this works. At times it has been really manual, exhausting and clunky. At the same time, I think we’ve got to be realistic that however horrible, or less than optimal, the environment has been from a remote perspective, it’s the worst it’s ever going to be today. The technology is only going to get better from here. I do think there’s different levels of willingness to be open to change within organisations. And that’s probably some of the root cause of the challenges.
The allocation of how property owners invest capital moving forward probably needs to shift. And I think there needs to be an increased allocation towards delivering a more unified and thoughtful digital layer to the physical asset. That would be something I would be thinking about if I were an owner. And it’s hard to navigate right now, because there’s just so many startups out there, and there’s so much noise. It’s a very fragmented ecosystem. But I do think they can definitely lean into the technology leaders because I think you have an opportunity to differentiate. Focusing on what that value is and how it will activate the talent for the corporate occupier side is really where people need to need to focus. That’s the conversation that a lot of office users are obviously having right now.