The move to a new office is increasingly being used to drive a wider process of business transformation.
There was once a time where firms looked to have the largest office space in the most prestigious areas, to attract and occasionally retain the best talent. Additionally, when firms looked to develop a global profile they tended to replicate the same strategy.
As the way of doing business has changed due to technology and evolving work habits and the definition of best-in-class office space has changed, businesses are having to rethink this strategy. More so they are using this as an opportunity to reshape their organisations, as they look to access innovative ideas, and the talent pools generating such ideas.
Therefore, the days when the office was viewed by businesses as simply a container in which to place people are long gone. Today, the office has become a mechanism through which wider strategic objectives can be advanced. Consequently, the relocation process has a lot hinging on it.
In reviewing the key leasing transactions that have taken place in global cities over recent years, it is abundantly clear that the majority of deals are indeed underpinned by one or more of the five broader strategic considerations.
A case in point is the recent reconfiguration of the Australian offices of KPMG. These moves saw the Big Four professional services firm commit to over 300,000 square feet. in Tower 3 at the International Towers Complex in Sydney’s new Barangaroo district, and to a similar amount of tower space at Collins Square near Melbourne’s Southern Cross Station.
KPMG realised that a relocation into a new space presented a tremendous opportunity to reset the business away from a “conservative” image towards one that was more innovative and progressive. In short, an image that was aspirational to the next generation of KMPG people; but which also excited and empowered the existing workforce, whose average age is just 28.
It was also a move that illustrated to clients that KPMG was a business that created innovative solutions and services, via a collaborative ethos. In this sense, the internal configuration and fitout of the space was as important as the modern, cutting-edge exteriors of the buildings.
Associated with the relocations therefore was a corporate mission to create the workplace of the future — space that is productive through the application of technology; that enables collaboration between employees by encouraging agility; and space which perpetuates a true sense of community. The total space taken by KPMG across the two cities has actually reduced — something that clearly supports the inevitable financial considerations of occupation.
Yet despite this, the business is firmly reset through its innovative use of well-considered and well-designed real estate.
This theme of using new office space to make a statement is also evident in the relocation of the New York office of global law firm, Cooley. Moving from 100,000 square feet in Midtown Manhattan’s Grace Building, Cooley has committed to 130,000 square feet across five upper floors at 55 Hudson Yards — a 50-storey tower at the heart of an exciting new neighbourhood emerging on Manhattan’s West Side.
As the firm approaches its centenary year in 2020, there is clear symbolism in a move to a LEED gold-rated building, which represents what Cooley’s CEO, Joe Conroy, describes as being “among the world’s most sophisticated law firm office spaces”. This is a building which, as well as being a clear corporate commitment to New York City, also makes a bold statement about Cooley as a global law firm best positioned for the next generation.
These are just two examples of real estate being utilised by occupiers to drive wider transformation of business profile or processes. There are many more playing out across global cities on a daily basis.
Real estate moves enable strategic objectives to be fulfilled and also provide competitive advantages. This creates pressure for others to follow suit. On this basis, real estate decisions will forever represent a clear statement of corporate intent.
Dubai’s occupier market has developed rapidly over the last decade and as a result has offered occupiers the opportunity to use relocation as a tool for organisational change. However the reactiveness of firms has been somewhat two-speed.
Historically, in Dubai we have seen even the largest occupiers choose the most cost-effective office space and often in turn sacrifice the most fundamental requirements of their workforce, such as ease of access, car parking and fit-for-purpose office space. This effectively ignores the long run costs of such decisions, something which has been to the occupier’s detriment as more reactive businesses have relocated to fit-for-purpose locations.
These locations are an extension of the workplace, offering a live-work-play environment. These reactive occupiers are taking a long-term approach and taking along with them their top talent and poaching from those firms who have failed to do the same.
As Knight Frank works with key international and local occupiers across the Middle East, we see these fundamentals continue to develop. This is also evident by international developers such as Brookfield reinvent the workplace environment within DIFC. The future certainly looks bright for employees in the UAE.
— The writer is Senior Analyst at Knight Frank.