By Matt Fanoe
By the year 2020, a gathering of corporate real estate executives has recently predicted, non-Asian real estate markets will experience 40 percent vacancy rates.
That seems like a pretty bold statement. But with downtown vacancy rates in many U.S. cities today approaching 30 percent, a 40 percent projection for mature markets isn’t so outlandish. Neither is the probability that the U.S. global share of the middle class will only be 10 percent, while Asia’s will be 54 percent and Europe’s, 22 percent. Or that 67 percent of new employment will be created in emerging Asian countries versus only 1.8 percent in Europe.
These and other predictions from within and outside of corporate real estate are only scratching the surface of what a radically changing world could look like by the year 2020.
To kick off Corporate Real Estate 2020, an initiative designed to predict the future of work and the workplace, senior-level corporate real estate leaders gathered recently in Dallas and made additional predictions:
- Rising transportation costs and oil prices will result in more localized manufacturing;
- There will be a resurgence of U.S. manufacturing, mainly through regional operations and reverse foreign direct investment;
- At the portfolio level, corporate occupiers will become energy producers and consumers;
- Power will increasingly come from microgrids that lessen reliance on centralized delivery of electricity;
- Wireless power, delivered in Ethernet fashion, could also become a reality;
- Work will go to people, as opposed to people going to work;
- Within the corporate organizational structure, procurement will become part of corporate real estate;
- The computing function will be outsourced to the “cloud,” but information technology will get more involved in delivery of handheld collaborative devices;
- Hand-held devices will allow for “collaboration in the pocket” anytime, anyplace;
- Workers will be encouraged to “BYOT”—bring your own technology—to work, further blurring the distinction between personal and business technologies.
Any of these individual predictions would have dramatic consequences for the workplace. For example, the assertion that “work will go to people” speaks volumes about the increasingly flexible and often remote nature of work, and it links directly to another interesting 2020 prediction: that 40 percent of workers in developed countries and 20 percent in emerging countries will work remotely at least part of the time.
This metric in turn relates significantly to a new, central adage for the CRE executive of tomorrow: CRE will not be about buildings or bricks and mortar, as Steve Hargis, senior vice president of architectural firm HOK Inc., pointed out in Dallas. It will instead be about enabling work and will test the theory that ROI on people may be more important than ROI on facilities and property. While it may seem an unimaginable task to predict the nature of work in 2020, CoreNet Global’s similar studies prior to 2000 and 2010 have served as useful guides through the trajectory of mobile work, high-speed telecommunications, economic globalization and their respective influences on the workplace. These changes have resulted in reduced office floorplates but more open spaces conducive to collaboration, teleconferencing and temporary— as opposed to fixed—offices and workstations.
An understanding of these trends early on is critical to developing real estate—and overall corporate—strategy. Throughout the year, CoreNet Global will be assembling panels and studies geared toward a final report that will be delivered in spring 2012.
Will we see 40 percent vacancy rates throughout non- Asian markets? We hope not. But if such a trend is on the horizon, better to understand and plan for it today.
Matt Fanoe is chairman of CoreNet Global (www.corenetglobal. org), the world’s leading association for corporate real estate and workplace professionals, service providers and economic developers. He also serves as vice president of real estate for Coca-Cola Refreshments USA Inc.