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The future of corporate real estate:
How technology will shape the next decadeCBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT
Technology affects every single aspect of human life; it is ubiquitous and influences us personally and professionally. Nowhere has the impact of the technological revolution been felt more than in the way companies conduct business and the way we work. However, the world is only at the cusp of the real impact of the digital age. Further and significant change is forecasted to occur in the coming years across a number of key areas, including:
Introduction
Automation and Jobs: The adoption
of new technology is already impacting
many of the activities that we undertake
and the jobs that we create. All routine jobs,
whether manual or cognitive, will be affected
in some shape or form.
Technology and Talent: Business
models are being disrupted by
technology and resulting in
dramatically different cycles of change within
companies and industries, all of which is
making it more challenging for organisations
to attract, retain and train talent.
12
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 02© 2017 CBRE, Inc.
The Transformation of the Workplace: Technology is impacting
the way we all work, not only
millennials, and forcing a real shift towards
greater collaboration, a more holistic
employee experience and true wellness in the
workplace environment.
This CBRE Special Report, based on discussions at The CBRE Institute’s recent Asia Pacific symposium,
and drawing on CBRE’s previous research findings, explains how these trends will present unique
challenges and opportunities for corporate real estate organisations in the coming years. Companies
must take steps now to adapt to a future that will see a real convergence between the physical and
digital worlds.
The Emergence of Millennials: The increasing prominence of the
millennial generation is being
facilitated and accompanied by the adoption
of new technology, as 20-somethings demand
the freedom to work anywhere, anytime, and
seek unique and inspiring workplaces.4
3
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT03 © 2017 CBRE, Inc.
Automation refers to the use of control systems including robots, computers and information technology to perform processes handled by human beings.
Automation and Jobs1
While the increasing use of automation has raised the spectre of machines replacing humans en masse,
and eradicating millions of jobs, the reality is far more nuanced. Although automation is set to affect the
functions and processes of virtually all professions in the coming years, it will eliminate only a limited
number of professions entirely.
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 04© 2017 CBRE, Inc.
according to the report. In contrast, within
the low-skill and low-wage roles that are
automatically assumed to be the first and
easiest to be automated, there are many
positions such as care work and maintenance
staff where only a very small percentage of
activities could be automated with existing
technology.
Creativity and meaning still a challenge: The report acknowledged that it will be
challenging to extend automation to
capabilities that are very human in nature such
as creativity and sensing emotions. However,
the findings showed that the amount of time
that workers spend on activities requiring
these capabilities was low, with just 4%
requiring creativity at a median human level
of performance, and just 29% requiring the
ability to sense emotion.
Automation brings with it multiple challenges,
not least of all those related to the human cost
such as job losses and dislocation that will occur
as companies separate activities that can be
automated from the individuals who currently
perform these tasks. Putting underutilised people,
which the McKinsey Global Institute estimates
account for 30 to 45% of the working age
population, to work will be especially difficult.
Other concerns include the impact of automation
on privacy, increased quality and safety risks,
and the legal and regulatory implications. The
pace of transformation brought by workplace
automation also remains unclear. Corporations
are advised to keep themselves well informed
about advances in automation and identify
areas where they can invest in automation at an
appropriate time.
The McKinsey Global Institute published a major
research report in January 2017 entitled
A Future That Works: Automation, Employment
and Productivity. The report explores the impact
of automation and investigates the potential that
such technology holds for jobs, organisations and
the future of work. Top level findings included:
Many job activities can be automated: The
study analysed around 2,000 individual work
activities and assessed the requirements for
each of these activities against 18 different
capabilities that potentially could be automated.
The results showed that around 45% of the
activities individuals are paid to perform
could be automated by adapting currently
demonstrated technology.
Jobs and business processes are likely to be redefined: Although the study found
that just 5% of occupations could be entirely
automated using current technology, the
results showed that around 30% or more of
the processes could be automated in 60% of
occupations. This implies that automation is
likely to drive significant change in most jobs
and will require organisations to redefine many
occupations and transform certain business
processes. In addition to labour savings,
redefining roles and processes will create value
by increasing employees’ capacity and enable
them to focus on more important work.
Both high and low wage occupations can be automated: The study found that there
is significant potential for automation to be
implemented within highly paid occupations.
Numerous activities performed by financial
planners, physicians and senior executives can
be automated by deploying current technology,
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT05 © 2017 CBRE, Inc.
Figure 1Average company lifespan on S&P Index (in years)
Technology is driving rapid change in the business environment and compressing the lifecycle of companies and, in some cases, entire industries. In 1950, the average lifespan of a company on the S&P 500 Index was around 60 years. Today, it’s just 20 years (Figure 1). While companies are moving more quickly through their lifecycle, people are also living longer. According to the World Bank, Global life expectancy at birth in 2014 was just over 71 years, compared to 52 years in 1960.
Technology and Talent2
70
60
50
40
30
20
10
0
Average company lifespan on S&P 500 Index (in years)
Year (each data point represents a rolling 7-year average of average lifespan)
Data: INNOSIGHT/Richard N. Foster/Standard & Poor’s
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Projections based
on current data
2025
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 06© 2017 CBRE, Inc.
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT07 © 2017 CBRE, Inc.
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
Simultaneously, the onset of the “Fourth Industrial
Revolution”, which the World Economic Forum
says is “characterised by a fusion of technologies
that is blurring the lines between the physical,
digital, and biological spheres”, is connecting
the world with mobile devices and driving
technological advances in fields including
artificial intelligence, robotics and the Internet
of Things.
The hyper speed at which firms are now moving
through the lifecycle, combined with longer
life expectancy, particularly in high income
countries, is resulting in decreasing tenure at
organisations. All age groups are now spending
less time working for the same company (Figure
2) than ever before. New models of work
Figure 2Median job tenure by age and birth cohort
such as the “gig-economy”, or workforce that
signs up for individual projects on-demand;
the increasing number of workers earning
income as freelancers via online platforms;
and the tendency for companies to use more
temporary and contract staff are also driving this
phenomenon.
All these factors have significant implications for
the talent landscape, according to the Human
Capital Leadership Institute (HCLI), which has
conducted extensive research on leadership
and human capital strategies for Asia. The way
organisations traditionally define roles and
responsibilities will change, as will the way they
develop their talent. Companies will need to
be more innovative, agile and prepared to re-
tool and re-train their staff for other roles and
responsibilities, and vice versa.
1413121110
9876543210
1933
Source: US Bureau of Labor Statistics, CurrentPopulation Survey
Year
s w
orki
ng f
or s
ame
empl
oyer
Birth year
Depression Babies
1943 1953 1963 1973 1983 1993
Baby Boomers Millennials
20-30 31-40 41-50 51-60
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 08© 2017 CBRE, Inc.
HCLI recommends companies overhaul their
talent strategies by focusing on the following
key areas, all of which will have major
ramifications for how they utilise physical space
and structure work:
Think differently about jobs: Organisations
should focus on disaggregating the functions
and processes of jobs into different parts
and identify those components that can be
automated or performed by different talent
sources.
Integrate technology and artificial intelligence: Automation and artificial
intelligence is set to affect the functions and
processes of virtually all professions in the
years ahead. Many activities that individuals
are paid to perform can be automated,
thereby reducing labour costs while freeing up
workers’ capacity to engage in more complex
and value-added tasks.
Think differently about careers: Companies
must rethink the messaging they communicate
to their talent about their career development.
There will be less linear progression in the
future as companies focus on attracting more
rounded individuals with a variety of skills who
can perform different tasks.
Leverage the gig economy: Many
organisations aren’t yet drawing on the
rapidly increasing number of workers who
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
choose to operate as independent contractors,
often through online applications or portals.
Companies should think about which jobs,
or which parts and processes of jobs, could
be outsourced. In some cases this may be to
individuals in an entirely different part of
the world.
Update human resources strategies: Most
companies’ human resources strategies are
still predicated on the post-industrial model
and need to be overhauled to meet the
challenges posed by the digital age.
Hire and promote for potential: With
many jobs set to change radically in the
coming years, what people did in the past,
or their knowledge of certain practices and
procedures, is not going to be as relevant as
their ability to learn, adapt and engage. This
trend is likely to make the workforce younger
as they tend to be more willing and able
to adapt.
Upgrade and reskill talent: Preparing talent
for the future will be fundamental. Companies
don’t have the time to wait for universities
or other educational organisations to do this
job, and will therefore need to take more
responsibility in helping their talent move up
the curve. The key will be identifying people
who have the ability to learn and migrate into
new roles.
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT09 © 2017 CBRE, Inc.
Millennials comprise one-fourth of the workforce in Asia Pacific and are a rapidly growing source of spending power. A recent special report published by CBRE Research entitled, Asia Pacific Millennials, Shaping the Future of Real Estate, found that millennials’ growing influence is already driving new trends in real estate markets across the region, making it essential for corporate real estate organisations to gain a thorough understanding of their behaviours, requirements and priorities.
The Emergence of Millennials3
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 010© 2017 CBRE, Inc.
The impact of the millennial generation is set
to be felt most acutely in the workplace, where
those aged between 20-29 now account for 25%
of the working age population in the region.
While Generation X and baby boomers place a
far stronger emphasis on corporate identity such
as a company’s reputation, culture and business
Figure 3Factors millennials regard as important when considering a job
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
practices, the study found that commuting time,
location, office design and flexible working are
the critical factors millennials consider when
deciding on a new job (Figure 3). Companies
with offices that score highly in these categories
will put themselves at an advantage in the war
for young talent.
FACTORS INFLUENCING MILLENNIALS WHEN THEY CONSIDER A NEW JOB
COMMUTING TIME AND OFFICE LOCATION
Salary/financial package
HR policies/benefits
Get on well with colleagues/manager
Commuting time
Location
Learning and development
Reputation of the company
Company culture
Ethical business practices
Variety of work
Quality of office design
Ability to work flexibly/remotely
Diversity policies
Environmental credentials
are among the top five concerns millennials consider when deciding to take a new job
0% 25% 50% 75%
Source: CBRE Research, October 2016.
Percentage of respondents
The workplace is a major consideration when taking a job
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT11 © 2017 CBRE, Inc.
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
CBRE Research found that, compared to
respondents in other regions, Asia Pacific
millennials are less satisfied with their current
office design. About 60% rated their office design
and layout as ‘good’ which is significantly lower
than in other regions. The results underline the
importance of a high quality office environment
in attracting millennial employees. More than
70% of respondents said they believe that
employers should put more thought into their
working environment and that good office design
can have a positive impact on staff.
Figure 4Millennials’ willingness to give up other benefits for a better office environment
The importance millennials place upon their
office environment was reflected by the large
number of respondents who said they would be
willing to make sacrifices such as moving to a
less attractive location or travel further to work
(Figure 4). The findings also suggest that start-
ups and other emerging companies can use
their offices to attract talent, a strategy already
widely employed by firms in the tech sector which
have been very successful in leveraging on their
office design and facilities to project a modern
corporate image.
71%22% 21%
10% 9%
21%
are willing to give up other
benefits for a better office
environment
would move to a
less attractive
working location
would give up
some progression
and promotion
would accept a
modest pay cut
Source: CBRE Research, October 2016
Would
travel further
would moveto a
similar but less well
known company
Office design matters
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 12© 2017 CBRE, Inc.
Other desirable requirements identified by millennials included:
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
A flexible working environment: The advent of mobile technology is
prompting millennials to demand
the freedom to work anywhere,
anytime. More than 60% of Asia
Pacific millennials said they desired
flexibility at work. In reality, however,
the majority still work in traditional
office settings with fixed offices and
desks. Fewer than 20% can choose
a place or desk to work to suit their
needs. Respondents already working
in a flexible working environment that
allows them to access a variety of
different work settings demonstrated
a strong preference for this type of
office setting.
More amenities: Millennials view their office and
its immediate surroundings as more than just a
place of work – it is a place where they can relax,
socialise and engage in other activities, all of
which can improve their job satisfaction. The onus
is therefore on employers to provide a wide range
of amenities to cater to their employees’ needs.
The survey found that food and beverage facilities
such as canteens and coffee bars are millennials’
most wanted amenities. The survey found that
food and beverage facilities such as canteens
and coffee bars are millennials’ most wanted
amenities. Among individual markets, respondents
in China and Hong Kong displayed the strongest
demand for rest and relaxation areas, which
enable them to take breaks during frequently long
and arduous working days.
A focus on wellness: Although there is a general focus on
wellness among all generations, millennials are more health
conscious and place higher importance upon exercising and
a balanced diet. This is driving strong demand for gyms,
other exercise facilities, games rooms and green spaces in
the workplace.
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT13 © 2017 CBRE, Inc.
According to Citrix’s Workplace of the Future report, about 89% of global organisations will offer mobile
workstyles by 2020 enabled by mobile working technology. As the world shifts from workplaces to
places to work, the information technology, human resources and corporate real estate functions must
work together with leaders and staff alike to craft new workplace policies and solutions that respond to
this change.
Advances in technology are driving the transformation of the workplace. Traditional working arrangements, whereby all employees come to work at one site at the same time and sit at rows of homogenous individual assigned desks, are being challenged. Not only boring and culture destroying, these mostly open plan environments no longer respond to the diversity and complexity of work activities, work processes and team relationships. However, new technology provides alternatives.
The Transformation of the Workplace4
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 14© 2017 CBRE, Inc.
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT15 © 2017 CBRE, Inc.
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
Traditional workplaces and basic hot desking workplaces are generally well understood workplace
options. However, a recent special report by CBRE Research, Winning the War for Talent: Leveraging on
diversity, choice and community to ensure employees are happy, engaged and productive, has identified
two high performance options for companies to consider:
Figure 5The High Performance CLUB Activity Based Workplace
High Performance HUB:This workplace is characterised by
each person having an assigned
workspace. However, it also
allocates a higher proportion of
space to shared activity spaces to
support collaboration and focused
work. The high performance HUB
recognises the human need for
personalised space and a sense
of belonging.
High Performance CLUB: This is an activity-based
workplace which enables people to share a diversity of
different ergonomic work settings that support a variety
of focused and collaborative work activities. These
workplaces are very responsive to business change and
project needs and allow staff to self-organise themselves,
trading off flexibility and choice for the ownership of
their own desk. Aside from work preferences, these
environments also cater to introvert and extravert
personality types – each able to choose the type of setting
that best suits their needs (Figure 5).
This illustration below is a representative image of an Activity-Based Workplace. Space types and names are included, but not limited to the below.
Source: Haworth
Enclosed meeting roomAn acoustically insulated room to support multiple work modes ranging from focused to collaborative activities.
Work CafeMulti-functional space for social interaction, team gatherings and individual work.
Enclosed officeAn acoustically insulated room to support focused
work or light collaboration.
Open shared tableSpace for team collaboration.
Ergonomic work settingUnassigned desks to support both work and light collaboration.
High-walled podDesigned to support focused work.
Open meeting spaceSpace for ad hoc activities
and informal meetings.
Focused touchdown areaAn acoustically insulated
room to support focused or confidential work.
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 16© 2017 CBRE, Inc.
1. Automation and Jobs 2. Technology and Talent 3. The Emergence of Millennials 4. The Transformation of the Workplace
CBRE Research has identified three key areas for
consideration when companies design their high
performance workplaces:
Balancing “Me” and “We” spaces: A major
focus of the high performance workplace is
providing a range of different workspaces to
balance the “Me” (focused, solo and quiet
work) and “We” (collaborative and often noisy
work) within the same office, and for people
to choose the workspace depending on the
tasks they need to do. The “Me-We” balance
also ensures workspaces are provided for both
introverts and extroverts. The next generation
workplace should provide a range of space
options for employees to choose from,
depending on whether they want to work
alone or in collaboration.
Designing an inclusive workplace: Companies’ workforces are increasingly
diverse in terms of age, gender and ethnicity.
A well-designed high performance work
environment can easily take into consideration
all aspects of employee diversity including their
needs and aspirations and therefore be more
inclusive than traditional office solutions. In
addition to providing a diversity of settings, a
high performance workplace should include
ergonomic design such as height-adjustable
workstations (ideally with a sit to stand range)
and ergonomic chairs; provide amenities such
as daycare facilities; showers and changing
rooms for staff who cycle to the office; and
factor in wellness by ensuring their workplaces
provide features to promote physical health,
such as natural light, temperature and indoor
air and water quality, but also mental wellbeing,
such as space choices to reduce stress.
Connecting the workplace with its surroundings: The adoption of mobile
working means the quality of the space outside
a building is becoming more important than
ever. When a building does not have sufficient
internal common area to accommodate
amenities, external locations can be used to
house facilities catering to staff and help build a
sense of community. Examples include outdoor
furniture and dedicated areas for events,
games and performances, which can be linked
to other amenities such as F&B, gyms and
entertainment areas. Combining internal and
external placemaking can create a complete
experience for employees and help attract and
retain staff. Relatively straightforward measures
include making better use of common areas at
the building entrance.
Fundamentally, people come to work with a sense of purpose. Companies therefore need to design workplaces that offer premium experiences around
each of those purposes. By following the steps outlined
above, companies can get their staff excited to come to the workplace and ensure they create real value while they
are together.
CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT17 © 2017 CBRE, Inc.
Advances in technology are driving
workplace transformation. Traditional
working arrangements no longer respond
to the diversity and complexity of work
activities, work processes and team
relationships. The high
performance workplaces of
the future will offer premium
experiences for all employees.
The macro trends discussed in this special report will have significant implications for corporate real estate organisations in Asia Pacific in the years ahead.
Conclusion
Companies are advised to be cognisant of these trends and move proactively to address
the challenges posed by the convergence between the physical and digital worlds.
The adoption of automation and artificial intelligence will see
organisations redefine many occupations
and transform certain business processes.
In the real estate sector, many companies
have already introduced
initiatives such as automated
security systems in lobbies,
while others have adopted
smartphone apps to control
lighting and temperature at
individual desks.
The digital impact on talent will require
organisations to reevaluate the way
they develop people and their skillsets.
Companies’ increased utilisation of the gig
economy and the outsourcing of certain job
processes and functions will influence their
requirements
for physical
space.
The emergence of millennials, a
generation with its own unique set of
behaviours, requirements and priorities, is
already driving new trends in real estate.
Occupiers and landlords need to provide
more than just mere spaces for millennials
– they should include amenities, events
and experiences that enhance the everyday
experiences of users.
For more information about this regional major report, please contact:
CBRE RESEARCHThis report was prepared by the CBRE Asia Pacific Research Team, which forms part of CBRE Research—a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real estate. All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy, completeness and currency of the information of this publication. This report is presented for information purposes only exclusively for CBRE clients and professionals, and is not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities or other financial instruments. All rights to the material are reserved and none of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party without prior express written permission of CBRE. Any unauthorized publication or redistribution of CBRE research reports is prohibited. CBRE will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person using or relying on information in this publication.
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