There is an unattributed quote flying around the web these days: work is an activity, not a location that perfectly captures the paradigm shift in the office market.
I think we are witnessing an unbundling of employment (getting work done) and workplace (where we go do it). As it happens, I think the relationship between the users and providers of space will become more direct and the ensuing competition between space providers will drive an improvement of the quality of work environments across the board, making them more vibrant, easy-to-use and human-centric.
How did we get here? Let me explain.
1. The bundled workplace & the old office user relationship
For most people in the pre-COVID world, workplace was bundled together with employment into one. Office workers show up at their employer’s premises to perform their duties. Work meant location, not an activity.
It’s even embedded in the language:
- In French “Je vais au travail”
- In German “Ich gehe zur Arbeit”
- In Czech “Jdu do práce”
- … all say “I go to work” (as a place).
That meant that among other things, the relationship between the landlord and the space user was:
Indirect – As a knowledge worker I use the space my employer occupies. My relationship is with the employer, not the office landlord.
Undemocratic – The location is chosen by company management with business metrics (unclear to an employee) in mind – the management may or may not consult the employees during their decision-making.
Rigid – Typical institutional office lease here in Prague was 5 years pre-COVID, and it’s on average 6 years in the US and 10 years in London. As an employee I still have the choice of employer – if I don’t like the premises, I can change employment. Typically, that’s not something you do on a whim (but a valid reason and a factor in deciding where to work).
As a result, office leasing was very much a B2B industry.
Until a global pandemic put everything on its head.
2. Impact of COVID and the unbundling
We all know what happened.
A global workplace experiment.
Both office workers and their bosses realized that work can be pretty much done from anywhere and companies took notice. Twitter, Salesforce, Apple to name a few sent their people home long-term, possibly forever for those who wish so. More recently, Citigroup announced it will be transitioning to the hybrid model globally as a new normal measure. It’s fair to assume that more companies will follow – especially if they wish to retain their employees and remain an attractive employer for top talent.
While it is not yet fully clear how the tectonic shifts regarding work and workplace are going to play out, I am personally confident that the prevailing trend will be more Citibank than Amazon. I.e., the global war for knowledge worker talent will push employers towards more flexibility (Here is Twitter VP of Workforce and Remote experience asking those unhappy with their workplace arrangement of their current job to apply at Twitter).
As a result, work and the workplace will become unbundled. Maybe not immediately, not for everyone, not 100% of the time. But the norm is changing. Employees will increasingly be able to choose where and when to work and they will have multiple workplaces to choose from. In other words, work is now not a location, but an activity.
3. The new office user relationship
So I don't HAVE to come to the office? Well, if I don't and I can choose where to work day-to-day, the model of the relationship becomes:
- Direct – as a consumer of office space, I am in a direct relationship with the space provider.
- Democratic and transparent – it's clear who makes choices about office space consumption and why. Me.
- Flexible – I don't have to sign a 5-year office lease as a company, nor leave my employer as an employee if I don't like something about the premises (location, amenities, the air quality, sufficient number of meeting rooms etc. ).
Voting with my feet on change of workplace becomes easier, more intuitive and hassle-free. Compare that to agonizing over whether to accept that job despite a long commute or lacking amenities.
Because I now have a choice and liaise directly and flexibly with my provider, I am effectively a consumer of office space. In the same way, I choose where to get my daily bread, I will freely consume office space of my choice, be it company HQ, a convenient coworking hub, a local cafe, my cottage... Hence, its providers are no longer in the B2B business, but very much in the B2C business, in the competition for my attention.
4. THE IMPACT
I personally believe we, office users, are in for a ride in the next couple of years. The space providers can compete on many levels. By quality, comfort, ease-of-use, flexibility, variability, amenities, services, and support. Ultimately, they will need to give us a reason to come.
That means offices will have to evolve feature great service on par with successful hospitality brands, understand our needs and individual traits to enable us to do great work, be easy to communicate with and resolve any issues (potentially even before they arise).
Space operators who do not adapt to the mindset of a customer-centric B2C business will be left behind and forgotten. But also, operators, who do not leverage technology to communicate with, serve and above all understand their new consumers will struggle in relation to the competition.
There will be winners and losers among the providers as it always is in business. But to me, it looks like users will be on the winning side for sure, enjoying beautiful, vibrant spaces with welcoming service and tailored amenities, and using technology to simplify use and communication.
Question is – if you are a landlord, is your space and your mindset ready for B2C?
