CBRE Survey Reveals Talent Is Driving Most Office Real Estate Decisions

Attracting and retaining the right talent is the top challenge for office occupiers nationally, but economic uncertainty is also driving real estate decisions, according to a new CBRE survey. 

Of 176 corporate executives surveyed, 52% cited an uncertain economic environment among their major concerns, up from 36% in CBRE’s 2016 survey.

CBRE vice president Andrew Ewald, leader of its tech and media practice in the San Diego region, said the increase in economic uncertainty is the result of a combination of the political climate and uptick in interest rates, which is causing tenants to review plans for expansion, often putting them on hold.

In San Diego, the economic outlook for 2017 is very optimistic, according to the University of California-San Diego’s Economic Index, which predicts continued positive growth and funding for all major industry sectors. There is uncertainty around politics involving the U.S.-Mexico relationship and a potential reduction in federal funding that would have a major impact on some industries, Ewald said.

“Our San Diego microcosm will certainly remain positive through 2017,” he said.

Ewald said a good indicator of growth is that 50% of the 3.8M SF in absorption tracked last year was new deals by new companies.

“All companies are more conscious of space, but they won’t do anything at the sacrifice of talent,” Ewald said.

The survey found while 87% of occupiers are managing economic uncertainty by downsizing or disposing of excess space, they are focused on aligning their corporate culture with the values of young workers and creating a workplace experience that motivates them to work in an office environment, rather than virtually.

While office users are shrinking the physical workspace per employee, they are increasing shared spaces, including bigger break rooms and spaces for relaxing, meetings and company events, as well as alternative, interactive, multifunctional workspaces that create a more interesting environment to encourage collaboration, promote connection and increase productivity and innovation.

They also are incorporating an array of amenities, from free snacks, meals and barista bars to ping pong tables, basketball courts and outdoor gathering places with picnic tables and BBQ grills. Ewald said one of his clients, Renovate America, provides employees free full breakfasts and lunches.

He said amenity-rich office buildings and campuses, like DiamondView in downtown’s East Village and The Alexandria at Torrey Pines campus, are driving the highest rents at near 100% occupancy. Of survey respondents, 67% cited employee satisfaction as the key measure of the success of their workplace strategy programs, which were considered more relevant to success than either cost per square foot or achieving a target reduction in costs.

Fifty-five percent of respondents said talent attraction or retention was among the top three drivers of their organizations’ workplace strategy.

Ewald said the planned relocation of CBRE’s central San Diego office to a 32,700 SF office space on the third floor of a new project at Westfield UTC mall is a prime example of providing employees a workplace experience. The new office will be the same size as the current one, but features a more efficient floor plate and design that can accommodate up to 215 people — space for all 160 employees on one floor. 

CBRE San Diego managing director Paul Komadina said having all employees on one floor enhances the ability to work collaboratively across all lines of business.

“We also wanted to create a hospitality-focused environment for our employees and clients, and from that perspective, the opportunity to be part of one of the premier shopping destinations in Southern California was a perfect fit,” he said.

Komadina said Westfield’s focus on service and hospitality provided an opportunity to create an experience for employees and clients with a full range of on-site amenities and services that lighten their load, such as concierge, valet and dry cleaning services, as well as meal delivery and personal shopping.

The space will incorporate CBRE’s Workplace360 initiative, a workplace strategy designed to promote flexibility, mobility and productivity through a technology-enabled, paperless office with no assigned workspaces.

This concept allows employees to move around throughout the day, working at a workstation bench or six other alternative workspaces that provide quiet, collaborative and casual workspaces, including conference rooms; an outdoor patio; and a large concierge-lobby that expands into a large employee amenity space with comfortable seating, snacks, a coffee bar and recreational amenities, Komadina said.

The survey showed employers are recognizing the importance of employee health to productivity and the bottom line and are investing in wellness programs. Seventy-six percent of survey respondents reported offering employees wellness programs.

While CBRE’s new office will not be attempting WELL certification, like at the CBRE headquarters in downtown Los Angeles, it will incorporate WELL program principles, such as lots of natural light, adjustable workstations that allow employees to stand while working, healthy snacks and hydration stations throughout the office.

The survey also revealed a boom in CRE technologies, including a new breed of technology that can efficiently monitor buildings, optimize space utilization and engage employees. While the budget required to implement and maintain these new technologies is quite large, it will turn the operational task into a transformational gain and is top of mind for occupier executives and investors alike.

Technologies that are now mainstream include WiFi throughout office buildings, outdoor furniture with USB/electrical outlets, cloud-based technologies eliminating server rooms and expansion of common areas that are incorporating technologies to serve as alternative workspaces.

Ewald said CBRE’s new office space is no exception, with the latest technology innovations incorporated into all aspects of the work environment to facilitate mobility, increase productivity and reduce waste. WiFi everywhere and 100% digital documents allows employees equipped with laptops to work from anywhere in the office, inside or outside.

John Frager, CBRE executive managing director for the San Diego region, said the new office will have dedicated space for Liquid Galaxy, a state-of-the-art presentation technology that uses sophisticated mapping data to provide panoramic, comprehensive property and market tours, complete with 3D building images and street views.

CORRECTION, APRIL 13, 2:45 P.M. PT: The information describing two of the renderings in the story did not identify them as being part of Alexandria Real Estate's UTC Campus Pointe complex. Those cutlines have been updated.