The Changing Workplace

Office space has traditionally been seen as an inevitable and costly overhead, but economic pressures have forced businesses to review all costs, with 'property' being scrutinised as never before.

Simultaneously technological advances have enabled employees to work remotely. The use of part-time workers has increased and flexible working hours have led to greater efficiency of office space.

The working population is changing with more women seeking employment, and the ageing population is producing increasing numbers of post-retirement individuals looking for work.

Companies have been able to downsize premises or increase employee density within existing space. Offices managed on a third-party basis are no longer a niche for small companies or branch offices. They now offer a viable alternative to property leases for large corporate businesses who are attracted by the flexible accommodation and contractual options they can deliver.

In the past commercial property costs have been relatively fixed, and therefore accepted as inevitable. For most businesses the only options have been to own property or to sign long, inflexible leases. The result of property's low profile has meant the true cost of property was poorly understood. (j)

Leading economist, Roger Bootle, drew attention to the fact that UK business was wasting up to £18bn a year on inefficient use of space. He said, "There is a fundamental change taking place in the way which office space is used and managed. A change driven by technology-enabled organisational transformations. More and more occupiers are introducing flexible working styles to improve efficiency and effectiveness, allowing staff to become highly mobile and to make work-life choices." (j)

According to the British Council for Offices (BCO) the economy and employment regulations are the key drivers for office occupiers to implement new flexible working practices. The BCO found key drivers behind flexible working included:

• Business risk with travel disruption, health scares and terrorist attacks all contribute to occupiers making their space more flexible
• Efficiency – in reduced space and reduced absenteeism leading to improved team-working
• Environmental concerns reduce an occupier's carbon
• Personal benefits to improve employees' work-life balance and reduce travel time and costs (n)

"Ten years ago, maybe space wasn't considered important," says John Hughes, principle of the consultancy firm, Applied Research Group Steelcase. "Managers are increasingly recognizing space-management as a way of reducing costs, increasing effectiveness and changing work culture and behaviour. Space has become a strategic concern." (h)

Occupiers are looking for flexibility because real estate costs are the second largest operating expense for many companies, after staffing. Many companies adopt spatial planning strategies to use space more efficiently and open plan offices are widely sought. (a)

Flexible space is not the only issue for cost-effective business models. Occupiers require flexible lease structures in order to allow their activities to expand and contract. As power has shifted to the occupier, especially during the recession, owners agree to more flexible terms such as short leases, break clauses, and rent-free periods. (a)

Furthermore, an alternative property solution that combines space and infrastructure (environment, IT and telephony) on a managed service basis has emerged. Termed, Managed Office Solutions (MOS), it is the provision of accommodation configured to the exact requirements of the occupier at a location of their choice, comprising completely managed facilities with a fixed price per workstation during the contract length, with no capital expenditure or risk carried by the occupier. (x)

The service sector, which has become the most prosperous sector in the developed world and employs the largest number of staff of any sectors in the economy, currently requires face-to-face communication. The service sector is likely to demand more office space as business activities grow nationally and expand globally. (a)