Sarah has been transforming and revolutionising commercial real estate spaces across Australia, North America and the United Kingdom for over a decade. She has been a pioneer of workplace change and driven the growth of co-working spaces. We sat down and spoke with her about the challenges facing the commercial real estate industry in light of Covid-19 and the outlook for the future.
How have workplaces changed over the past decade?
The role of the workplace as the center of culture and collaboration, rather than just a place for an individual to work, has become more important as organizations prioritize attracting and retaining talent, and enabling innovation to respond quickly to change has increased.
The design of workspaces today focus on enabling curated organic interactions, providing a range of work settings to align with the activities of teams and deliver services modeled from the hotel industry to create desirable destinations that are productive.
What sort of differences have you observed between the various cities you’ve worked in?
The primary difference is culture between countries, specifically how the social symbols, rituals and lifestyles impact expectations of the office.
Australia has some of the most active lobbies thanks to our love for coffee, and bike culture, company incentives and development requirements in London have created exceptional bike parking and shower experiences. Australia is the world leader of progressive workplace designs thanks to our flatter organizational cultures, however New York has struggled to move away from cellular office environments where individual space has been so closely aligned to hierarchy and social status.
Cities that offer rich amenity offerings in the downtown areas force companies creating campuses to supplement these onsite if the office is in the suburbs, as seen in Silicon Valley.
What is the most significant impact that COVID-19 has had on coworking spaces?
Well, firstly the value of co-working is the flexibility of the agreements. Most coworking operators have a majority of their clients on 12 month license agreements, some on a month to month rolling basis. The short term impact was negative for most operators globally, with many clients cancelling their contracts early on the pandemic as they waited to see the duration and impact working from home would have long term on the demand for an office from employees.
The significant decline in revenues, and looming lease liabilities resulted in some locations closing (WeWork excited over 100) and bankruptcy for some operators - including Knotel. Industrious rose to become one of the best positioned operators, thanks to the majority of their 100+ locations structured with management agreements with landlords.
For those operators who could brave the pandemic storm, the future appears bright for co-working operators as organizations right size their real estate portfolios to respond to the anticipated demand from their employees to work from an office. Co-working offers companies the flexibility to overflow and expand within a location, and provides a network of offices for their employees to choose from without the upfront capital and long term lease liabilities.
The majority of large multinationals are now looking for flexible operators to outsource an on-demand office solution for any workplace outside of their headquarters.
How is working from home challenging the status quo?
Working from home has demonstrated it is possible for most organizations to do, thanks to technology tools and internet connections having the capacity to support this on a large scale outside of the office. Research has also revealed employees are feeling more productive working at home and enjoying not having to commute.
However, organizations have also struggled with engaging employees, acknowledged collaboration and innovation are best done in person and concerns are growing for individual wellbeing as the separation between work and home has been difficult for some. Younger team members looking to learn and advance their careers are keen to return to office to develop their relationships internally.
What do organisations now look for in a workplace in light of these changes?
A place that people want to come back to. More than ever the office now has to compete with the home and other places where people work to be the most effective and productive place to be.
Design solutions will need to address the rising need for virtual inclusivity - where remote team members feel equal in meetings with attendees in person, and the intention of many to come into the office with the intention to see and collaborate with others. This will likely reduce the allocation to individual desks, and increase the amount of collaboration areas in the office.
Services and experiences will also play a significant role in bringing people together, as engagement with the company’s culture and creating positive relationships with managers and team mates have never been so important.
What are some of your boldest predictions for coworking spaces in the future?
I believe organizations will increasingly outsource their offices to co-working or flexible space operators through subscription.
Employees will have the choice to work wherever, whenever they need to, in a space most appropriate for the activity - at home, a quiet office space, a shared office space, a meeting space, innovation lab, executive club - the list goes on and will evolve faster as workplace trends accelerate to respond to the new ways of working.
This will be enabled by technology platforms that manage space booking, utilization, services and procurement in one place.
What suburbs or spots in NSW are you loving right now?
Thinking about what I’m seeing from a workstyle and commercial perspective, there are some themes that guide where I see future demand in NSW:
- Connection - it needs to be easy to come into the office occasionally. Central Coast with the express train network to the city for an easy commute when required, with the added beach lifestyle for the weekends will continue to create growth in this region. I still believe you can’t go wrong with the inner city suburbs, especially as the work day will become even more fluid and the luxury of a short commute to manage personal and in-person work commitments will be highly valued, and achievable.
- Culture - people still want to be close to things outside of the office, and the home! The inner city suburbs will continue to be popular with young people. Country towns with culture that are attracting professionals with the ability to work remotely most of the time with quality restaurants, arts and service enjoyed in city centers are ones to look for.
- Sustainability - Size and efficiency of your property, and the proximity to the things you need will be increasingly important as government policies to incentivize sustainable lifestyles will only become more important. So while we are seeing a flight to the suburbs and beyond during this pandemic, the longer term benefits of densifying in the cities for the sake of the environment will become clear.