1、HISTORY AND FUTURE OF THE OFFICE PURPOSE OF PLACE NEW PERSPECTIVE: FROM PANDEMIC TO PERFORMANCE | PURPOSE OF PLACE: HISTORY AND FUTURE OF THE OFFICE KEY FINDINGS. 4 OVERVIEW. 6 FOUR ECONOMIES THAT LED TO THE RISE OF THE OFFICE. 8 HISTORY OF CITIES AND THE OFFICE. 12 FIVE DYNAMICS FOR THE FUTURE OF T

2、HE OFFICE. 18 1. PRODUCTIVITY AND OUTPUT. 19 2. INNOVATION AND CREATIVITY. 22 3. CULTURE AND BRANDING. 24 4. EMPLOYEE SATISFACTION AND RETENTION. 26 5. LOCATION: WALKABLE URBAN VERSUS DRIVABLE SUBURBAN. 28 CONCLUSIONS AND NEXT STEPS. 32 APPENDIX: MOVING FORWARD. 34 TABLE OF CONTENTS ABOUT THIS STUDY

3、 This report is the second in a four-part series that provides a new perspective on COVID-19s effects on the commercial real estate industry and the future of the office. In this study we partner with senior researchers at George Washington University to do a thorough review of academic literature a

4、nd industry studies, examining the benefits of office and working from home (WFH) focused on several key areas including productivity, creativity / innovation, corporate culture, branding, employee engagement and walkable places. The learnings from this study also lay the foundation for a part three

5、 report that will include occupier and investor input and modeling of future workplace ecosystem scenarios. David C. Smith Vice President, Global Head of Occupier Research Cushman beyond 2.5 days per week the researchers found that there were greater harms to relationships with coworkers.1 DRIVERS O

6、F WORK CULTURE U.S. Bureau of Economic Analysis NEW PERSPECTIVE: FROM PANDEMIC TO PERFORMANCE | PURPOSE OF PLACE: HISTORY AND FUTURE OF THE OFFICE Even if employees do not necessarily work from home, the majority of them have access to some work from home benefits. According to Glassdoor, one of the

7、 worlds largest job and recruiting sites, 54% of workers in 2020 reported having access to some work from home benefits, compared to only 28% in 2011.7 Another study by the Bureau of Labor Statistics, using U.S. Census data, indicates that upwards of 44% of all U.S. workers have the ability to work

8、remotely, although only 11% actually do.8 And, a recent University of Chicago study pegged the upper bound of all occupations across all industries in the U.S. that can be conducted from home in a similar range (37%).9 Globally, this ranged from under 10% on the low end to over 40% of occupations in

9、 10 different European countries, including Denmark (41%), the United Kingdom (44%), Switzerland (45%) and Luxembourg (53%). EXAMINING THE ROLE OF THE OFFICE Given the rise of distributed workforces in response to the COVID-19 pandemic, it is important to scrutinize the pros and cons of different ty

10、pes of work and the varying locations required to support business goals. Through an extensive academic and industry research review, we identified five dynamics that will determine the future of the post-COVID-19 office.10 Productivity / Output: How does the office provide productivity gains? For w

11、hich types of work? Innovation / Creativity (Agglomeration Theory): How much benefit do companies gain by having groups of people congregate on a regular basis at the office? How does the office environment optimize socialization and agglomeration? Company Culture and Branding: What are the attribut

12、es that impact culture, connection with colleagues, mentoring and learning and which of these attributes rely heavily on face-to-face interactions? What internal and external benefits for a companys brand does the office offer? How does this vary by quality of building, by quality of interior space,

13、 and by offerings in and around the building? 5 U.S. Bureau of Economic Analysis (2020, Sept. 30). Gross domestic product (third estimate). 6 Bloom, N. (2020, June). How working from home works out. Stanford Institute for Economic Policy Research. (Policy Brief). https:/siepr.stanford.edu/research/

14、publications/how-working-home-works-out 7 Zhao, D. (2020, March 18). Work from home: The future of work arrived? Glassdoor Economic Research. https:/ home/ 8 Dey, M., Frazis, H., Loewenstein, M.A., and Sun, H. (2020). Ability to work from home: evidence from two surveys and implications for the labo

15、r market in the COVID-19 pandemic. Monthly Labor Review. Washington: U.S. Bureau of Labor Statistics. https:/www.bls.gov/opub/mlr/2020/article/ability-to-work-from-home. htm 9 Dingel, J. I. and Neiman, B. (2020). How Many Jobs Can be Done at Home? Becker Friedman Institute for Economics at Universit

16、y of Chicago. https:/bfi. uchicago.edu/wp-content/uploads/BFI_White-Paper_Dingel_Neiman_3.2020.pdf 10 For the purpose of this report, “post-COVID” refers to the time period after the current health concerns have subsided and while COVID-19 is still in the public consciousness, the direct health risk

17、s are relatively small or non-existent. Our assumption is that this post-COVID era will begin in approximately 2022 or 2023. For more information on global office demand scenarios, see Cushman in fact, they continued to absolutely grow, but their relative share of workers and the GDP output as a sha

18、re of the total fell. The peak of the Industrial era is considered to be 1960. The graph below shows the share of total employment for each year from 1960 until 2019. The one constant in a modern economy is Trade, Transportation and Utilities. This foundational component of the economy has been rema

19、rkably stable over the past 60 years, employing about 25 percent of U.S. workers, in spite of the substantial technological changes (8% when retail is included in the Experience economy as in the chart below). Starting around 1960, the knowledge economy began growing as technological, scientific, ma

20、nagerial, higher education, professional services, design and other “creative class” jobs grew. Educated at the burgeoning U.S. university system, the number of college graduates in the workforce grew dramatically in the late 20th century, as did the need for masters degrees, doctorates and medical

21、degrees. Over this period, the share of U.S. adults over 25 years old with a college degree increased from 8% to 36%.13 Much of the work performed by knowledge economy workers takes place in offices, whether conventional, lab space, university, professional service or R Educational attainment in the

22、 United States: 2019. 14 Cushman “experience” includes retail, leisure and hospitality, and personal and laundry services; “knowledge” includes financial activities, professional and business services, education and health services, and other services excluding personal and laundry services. 16 Worl

23、d Bank; International Labour Organization, ILOSTAT database. Data retrieved in June 21, 2020. 17 World Bank; International Labour Organization, ILOSTAT database. Data retrieved in June 21, 2020. 18 According to American Alliance of Museums website. https:/www.aam-us.org/programs/about-museums/museum

24、-facts-data/#_edn9 19 Cision PR Newswire (2017, July 27). Retails most profitable square footage. PRN. https:/ profitable-square-footage-636947493.html. Source: World Bank SECTOR EMPLOYMENT16 (SELECT COUNTRIES, 2020) 19% 27% 24% 25% 18% 20% 79% 72%73% 70% 81% 79% 0% 20% 40% 60% 80% 100% CanadaGerman

25、yJapanKorea, Rep.United Kingdom United States AgricultureIndustryServices Source: World Bank SERVICES SECTOR EMPLOYMENT 17 (SELECT COUNTRIES, 1991-2020) 45% 50% 55% 60% 65% 70% 75% 80% 85% 02005201020152020 CanadaGermanyUnited Kingdom JapanKorea, Rep.United States significantly in markets

26、 such as Amsterdam (+64%), Central London (+65%) and Dublin (+80%). More recently, during the most recent economic expansion, cities across Asia Pacific saw office inventories double (for example, Shanghai, Beijing, Hyderabad, Jakarta and Manila). As with the previous economies, it is widely expecte

27、d that the knowledge economy will peak at some point. Its becoming increasingly clear the next growth economy is the experience economy, which includes tourism, restaurants, live music events, professional sports and culture. These are high-growth areas in part because tourism is one of the largest

28、five industries in the world, and more people visit museums than attend all professional sporting events.18 In many ways the experience economy is where workers who in previous economies would have worked in heavy industry now find employment. From an economic perspective, one of the great misfortun

29、es of the COVID-19 pandemic is that it has disproportionately impacted the experience economy. Proximity and in-person interaction, which the pandemic is currently limiting, lie at the heart of the experience economy. The vitality of the experience economy has led to the absolute and relative absorp

30、tion growthas well as the price and valuation premiumsof walkable urban places. This energy and activity is on hold in many markets, but will come back in a post- COVID-19 world if workers, businesses and consumers regain confidence in the health and safety of experience economy environments. NEW PE

31、RSPECTIVE: FROM PANDEMIC TO PERFORMANCE | PURPOSE OF PLACE: HISTORY AND FUTURE OF THE OFFICE THE EXPERIENCE ECONOMY Many other business sectors are going to be transformed by the experience economy in ways that we can only speculate. In the retail sector, a great example has been the Apple store. Th

32、e concept was met with great skepticism in 2001 when Steve Jobs announced it. A computer maker getting into retail seemed like a misalignment of strategy to many observers. Despite the skepticism, the Apple Store became a success story. How successful? As a baseline, the average retail store in 2017

33、 had sales of $325 per square foot according to a report by CoStar.19 Historically, the highest selling retail category (outside of gasoline sales) are jewelry stores, selling very valuable but small items which means they lease very little space. Brands such as Tiffany 17 times the average. This is

34、 due to both relatively small products (computers, phones, tablets, etc.) but also because Apple created an educational experience. Formerly low-skill retail clerks were transformed in Apple stores into computer consultants. Customers not just go for the initial purchase but continually come back fo

35、r instruction at the Genius Bar, which allows for sales of new and improved products. 11 BACK TO TABLE OF CONTENTS While weve considered how the U.S. economy has shifted from its agrarian roots towards a knowledge and experience-based economy, we also consider where the office plays into our urban f

36、ootprint and what its role might be in a post-COVID-19 future. For humankinds basic economic survival during the agricultural economy, we tended to only build shelters and a small amount of commerce and manufacturing structures. Palaces were built for wealthy aristocrats and royalty, representing th

37、e then-one percent. The only high-rise structures of the agricultural economy were religious and honorific structures. The purpose-built office is a result of the industrial and knowledge economy. NEW PERSPECTIVE: FROM PANDEMIC TO PERFORMANCE | PURPOSE OF PLACE: HISTORY AND FUTURE OF THE OFFICE 02 H

38、ISTORY OF CITIES AND THE OFFICE Stepping back in time to consider why we have offices at all gives us a perspective on how we use land, and where the office fits in to a future urban landscape when technology continues to decrease the cost and time of communication. What might history suggest to us

39、about the future of office? We offer that offices grew into existence for four primary requirements: 1. Management requirements for centralized command and control. 2. Productive environments for work completion and knowledge / information exchange between office workers. 3. Capital requirements uni

40、que to the office space and location 4. Social needs for the employees that reinforce the culture of the organization. A quick view of cities and the history of offices highlights these four requirements that are familiar to many real estate professionals. Each plays a role in the history of the off

41、ice. In a post-COVID-19 world, there may be shifts in the prevalence and priority of each for businesses and employees. WHY WE HAVE OFFICES IN CITIES Before considering why we have offices at all, we should consider why we have cities and why people and organizations choose to locate close to one an

42、other. Economists call the forces that lead to cities the “agglomeration” forces, a concept that goes back to Alfred Marshall in 1890.20 The three main agglomeration forces are the desire of people and firms to be near materials and inputs, to be close to other people, and to be around important ide

43、as. The latter two are the most important to office-using organizations. Over time, the access to peopleor “labor market pooling”led to the agglomeration of tech talent in the San Francisco Bay Area, for example. Companies knew there was a critical mass of specialized workers there, and new tech wor

44、kers understood they could maximize their employment potential by locating in that region. Access to ideas, known as “knowledge spillovers,” is that soft force of cross-pollination from one idea to another, and the innovation in the finance industry in powerhouses like New York and London are a test

45、ament to it. We will discuss these forces when we talk about walkable urbanism as one of the five trends for office in the post-COVID-19 world, but theyre worth thinking about in the context of office more broadly. These agglomeration forces are what gives us the classic skylineits no coincidence th

46、e tallest building in the center cities of the 30 largest U.S. metropolitan areas is an office towerand it is why so many organizations choose to occupy these buildings. In its architecture, Salt Lake City speaks to the history of American society: the tallest building was once the Salt Lake Temple,

47、 which was subsequently surpassed by its City and County Building, only to all be surpassed by the glass and steel Wells Fargo Center office building. Offices role in urban history is quite new. The urban theorist Lewis Mumford in The City in History21 notes cities developed and grew to facilitate r

48、eligion, provide security (e.g., city walls) and enable commerce. Today most cities exist for commercial reasons. Fewer cities serve as pilgrimage sites compared to ancient and pre- Modern times. If there was a structure that dominated the skyline in pre-Modern times, it most likely served a religio

49、us purpose, whether it was the ziggurats of the Mayan Mesoamerica or St. Pauls Cathedral of London. Today it is usually an office building, and it is there because office-using organizations have a need for that unique kind of physical space and a need to be close to one another and commerce. Source: Moodys Analytics analysis of various government sources. SERVICES SECTOR EMPLOYMENT 22 (SELECT COUNTRIES, 1991-2020) Australia, 19% China, 13% France, 27% Germany, 22% India, 4% Japan, 13% Netherlands, 27% United Kingdom, 30% United States, 24% 0% 5% 10% 15% 20% 25% 30% 1980 1985 1990 1995 2000 2