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The future of corporate real estate: How technology will shape the next decade CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT

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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.

CBRE RESEARCH ASIA PACIFIC GWS SPECIAL REPORT 18© 2017 CBRE, Inc.

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.

To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at www.cbre.com/research-and-reports

For more information regarding global research and activity, please contact:

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Nick Axford, Ph.D.Global Head of [email protected]

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Spencer LevyHead of Research, [email protected]

© 2017 CBRE, Inc.

RESEARCH

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