The biggest challenge facing commercial property owners, along with the rest of the world, is uncertainty. The workplace will continue to change to address the needs of a mobile and remote workforce. Supply chain disruptions will not disappear overnight, and the economy will adjust in unpredictable ways. How do companies chart a path through this chaos?
In his book Thriving on Chaos, Tom Peters applied chaos theory to business management. He based his philosophy on the unpredictability of events and behaviors. He believed that systems move towards complexity, making them more rigid and less adaptable to change. In other words, companies need to leverage chaos, not control it. His solution encouraged organizations to prepare for environmental and technological changes by focusing on customer needs.
How can commercial property owners leverage today’s uncertainties to develop a culture that thrives in chaos? They need to look at their biggest challenges and devise a path that responds to the unpredictable.
The Office
The pre-pandemic office is never coming back. It may appear in isolated locations, but the need for a flexible, adaptable, and shareable workspace will outpace the traditional cubicles and enclosed offices. Commercial properties have to reposition themselves to meet these changes.
The challenge is knowing what these workspaces will look like when the occupants are unsure of what they want. Trial and error will be commonplace. Companies may start with a smaller space but find they need larger rooms for in-person collaboration when everyone is working from the office.
Commercial properties could be reconfigured to offer sharable space for large meetings, leaving the individual businesses less dedicated square footage. Property owners could incorporate service industries into their buildings, giving office workers the convenience of coffee shops, restaurants, and laundry services.
People’s behaviors have changed over the last few years, and few are willing to go back to the way things were. They enjoyed the flexibility and time-savings of working from home. They took advantage of open spaces to break up their workday. Many escaped the urban environment, looking for a less congested place to live. Commercial property owners must re-evaluate their spaces to ensure adaptability.
Technology
Accommodating technology is challenging no matter the property’s age. Older construction may not have the infrastructure in place to support the increased communication demands. New construction must consider future technologies as they build commercial space. Finding a way to address technology challenges poses a threat to a building’s long-term viability.
Businesses accelerated their digital transformation to address supply chain shortages, remote workforces, and cybersecurity. The acceleration tested technology’s vulnerabilities, allowing high-profile data compromises and breaches of electronic security systems. Commercial property owners must devise solutions to address tenant requirements while providing security to protect digital assets.
For example, the 2021 Facebook outage required physical access to a facility so equipment could be reset. The technology in place to protect against unauthorized access complicated the return to service. Property owners should view the incident as a warning to strengthen their use of technology while planning for future deployments.
Environmental, Social, and Governance
Environmental, social, and governance (ESG) initiatives are becoming more of a factor as younger generations begin to invest. In fact, many corporations publish an ESG score as part of their annual report to illustrate their contributions to a better world. With more focus on ESG factors, commercial property owners need to ensure that their buildings reflect a strong commitment to ESG principles.
McKinsey surveyed corporate executives on the impact of ESG on stock performance. Over 83% of those surveyed said that ESG initiatives play a part in how investors view their companies. They also indicated they would pay a 10% premium when doing business with companies with a strong ESG score.
For commercial property owners, focusing on ESG factors means re-evaluating facilities to ensure they adhere to standards. Potential tenants will want to know how the construction supported sustainability goals. They may look at how the commercial property supports social initiatives in the neighborhood. Having plans for how the facility will contribute to a circular economy may be a condition of occupancy.
Although ESG concepts have been discussed in the past, today’s conversations are tied to corporate performance and investment dollars. That change would indicate a shift in how ESG initiatives are viewed. Commercial property owners need to look at innovative methods for protecting the environment and supporting social initiatives to maintain a high occupancy rate.
Adaptive Reuse
Adaptive reuse in the commercial real estate market has focused on rejuvenating single properties to decrease urban blight. Now, the term has expanded to include how to reuse suburban malls and empty big-box stores that occupy suburban space. With the move towards remote work and more flexible hours, commercial properties could see a drive to move offices and supporting industries to the suburbs.
Moving adaptive reuse to a neighborhood focus supports ESG initiatives but aligns with the changing behaviors in the workforce. With a strong adaptive reuse philosophy, commercial property owners could:
- Reconnect communities to strengthen the social fabric
- Prevent urban blight from spreading to the suburbs
- Restore green spaces to encourage interaction
- Promote ESG initiatives through diversity and sustainability
The commercial real estate industry has an opportunity to leverage today’s chaos into tomorrow’s success. Through adaptive use of existing properties, commercial property owners could become more active participants in global change.
Final Thoughts
The challenges facing the commercial real estate market go beyond these four trends. There are supply chain or logistic challenges that make locating properties closer to transport centers essential. These supply chain challenges also make building or adapting properties more difficult.
Given the chaos that uncertainty brings, commercial property owners need to look to resources that can help their properties adapt and promote ESG initiatives. They need to lean into the chaos to find solutions that can help them adapt their properties to meet the changing demands of their tenants. As technology evolves and offices require more agility, property owners need solutions that help overcome their challenges.
Gridd® is an adaptive, low-profile raised flooring system that helps companies overcome the challenges of an uncertain future. With a system of flexible components, Gridd delivers the flexibility property owners need to reconfigure office space and strengthen infrastructure. Its adaptive capabilities support ESG initiatives and make virtually limitless reuse possible.