The purpose-led office
Does anyone have the appetite for another post about the future of offices? Sorry - here goes;
Needless to say, reams have been written on this subject in the last few years from the death of the office to the rebirth of the office, from stranded asset to ‘the emergence of super prime’ by way of market ‘bifurcation’ (a word I suspect had rarely if ever cropped up in real estate circles before).
Of course, more than anything else, what this illustrates is the degree to which all marketplaces become an echo chamber at times of change. A market (whether real estate or fruit and veg) is really an information exchange, so perhaps it’s little surprise that we develop eddies in the flow of gossip and opinion that develop into industry groupthink.
But those patterns, while not inherently wrong, by their nature tend to reinforce thinking rather than promote ‘rethinking’ and can perhaps sometimes end up slightly superficial; it’s enough to say that the key theme in the office sector is ‘a bifurcation between the best and the rest’ but without really digging deeper and asking ‘why’?
So, let’s clear some large territory quickly with a few premises which might be open to challenge and debate but that I think are well covered in plenty of commentary recently;
For me, the answers to this come from the ‘bottom up’. These aren’t investment questions or market questions in the sense of pricing dynamics. These are behavioural questions around people’s motivations at a granular individual level. What is it that makes you come to work? For that matter, what is it that makes you choose a job? Frankly – why work?!
My suggestion is that, as an industry, we have focused too much on relatively superficial motivations (the technical specifications of a space, the level of amenity on offer) and not engaged enough with much stronger drivers of demand. Look at the economic definition of demand; ‘desire backed by the willingness and ability to pay’. There’s a strong emotive force to that word ‘desire’ which is what I’m driving at. What is it that people really want? I’m pretty sure it’s not a four pipe fan coil.
The other key aspect to this of course, is the changing nature of employment and whether fundamental motivations have actually changed or not (I am always a sceptic of an argument built on ‘it’s all radically different – there’s never been a moment like this’) there seems undoubtedly a shift in the relationship between employers and employees and the lengths that employers are prepared to go to in attracting and retaining talent and with it a recognition of the vital role that real estate has in that.
So, how do these themes coincide?
I would argue around the notion of purpose. The great shift it seems to me, and perhaps I would say this having taken Bywater through the BCorp certification process ( B Lab UK ), one of the first in the UK to do so, is the pivot towards purpose-driven decisions. People are declaring, and I suspect this isn’t a new thing, just newly articulated and prominent, a desire to work for organisations with a greater purpose than simply making money. And people, I believe, find a greater sense of self-worth and fulfilment when they feel part of a collective effort to have a positive impact as well, of course, as making a fair financial return for their efforts. I heard about some research recently about the activities that created the strongest sense of mutual [satisfaction] between couples, and perhaps it should not have been a surprise that engaging together in voluntary charity work had by far the greatest resonance, not a luxury meal out for two.
So, how does this relate to offices?
The link, of course, is the employer, the decision maker selecting office space that articulates and fosters that winning corporate culture, who are really waking up to harnessing that sense of purpose. But the link to a luxury meal for two is deliberate on my part; the ‘best in class’ office spaces aren’t, I believe, about luxury. And those that are about luxury, I suspect, will rapidly find themselves outdated. That’s not to say that the roof terraces and shower facilities, food offerings and tenant lounges aren’t important and might not be of the highest standard, luxurious even. It’s that these amenities in the ‘best buildings’ are driven by empathy, not luxury; it’s about nurturing, not reward.
Just as increasingly the most in demand jobs are those that capture a sense of purpose, I would argue that best buildings, those at the top of those bifurcated rental charts, the ‘super-prime’ are being joined by a generation of buildings that exhibit a sense of purpose.
And with responsibility for 40% of global emissions laid at the door of global real estate, there’s no greater sense of purpose, it seems to me, than being transparent about the challenges of tackling the climate crisis through low-carbon buildings.
Obviously, BREEAM certificates, WELL scores, and NABERS ratings all have an important part to play, but this is more about buildings that find a way to articulate a set of core beliefs and wear their ‘hearts on their sleeves’ if you like. This ultimately ties back to the culture of the developers that deliver them and recognise the ‘golden thread’ that links the passion that we feel as a business, through the buildings that we aim to contribute to society and the built environment, to those fundamental motivating drivers that compel people to come to work and strive for a better future.
A sense of purpose is empowering, and as a proud BCorp, we aim to deliver a new generation of purpose-led offices.
Theodore Michell
COO and Co-Founder at Bywater Properties