Globally, commercial buildings are experiencing a number of dynamic challenges. Following the impact of the COVID pandemic, tenant needs and behaviors have drastically changed. The cost of property has grown as interest rates continue to escalate in an ongoing effort to curb inflation. At the same time, the energy crisis has raised operating costs and has forced property owners and businesses to plan for and adopt entirely new initiatives, such as energy efficiency and net-zero carbon standards. And then there is the global labor shortage, which has impacted facilities management as much as any other sector.
These obstacles and others create a complex situation. Facilities managers planning and preparing for the next few years will have to understand the main trends that are happening right now to efficiently master the challenges ahead.
Hybrid Work Has Become the Norm
Prior to 2020, before the world knew what COVID-19 was, the quarterly vacancy rate across the U.S. office real estate sector hovered around 12%. However, as the pandemic unfolded, vacancy rates surged to over 15%. In the first quarter of 2023, approximately 16.1% of office space nationwide was unoccupied. In some U.S. markets, vacancy rates have soared to as high as 30%.
While macroeconomic challenges such as supply chain deficiencies and rapid, record-breaking interest rate hikes have contributed to this problem, the pandemic has had the most significant impact. Many U.S. employers and employees have shifted to remote or hybrid work. For those companies that still require office space, their needs and preferences have changed dramatically.
Offices have evolved from primary workspaces to hubs for collaboration, exchanging ideas, and interacting. This shift in focus has led businesses to seek out modern, adaptable office spaces designed to cater to the workplace of the future. In this sense, the pandemic allowed organizations to reassess their office policies and adapt spaces to meet their evolving needs. Consequently, firms are placing a higher emphasis on quality—newer, energy-efficient buildings.
Facilities managers need to rethink their roles in managing these new workspaces. They need to work closely with their IT peers to provide an optimum experience for those present in the room, as well as the people connected virtually.
Sustainability Remains a Focus
Many businesses are recognizing that their operations can have significant environmental, social, and economic consequences—and that adopting sustainable practices is crucial for long-term viability.
Organizations with a large real estate footprint are responsible for a large portion of the world’s carbon footprint, as well as generating a considerable amount of energy waste. They are being called to task for this now more than ever.
As a result, the corporate duty and responsibility to be more ethical and sustainable has led to a significant increase in environmental, social, and governance (ESG) planning. Many organizations are developing corporate ESG policies to position themselves well in addressing climatic change and show societal responsibility. This trend will continue to unfold in the years ahead, with an increased focus on sustainable measures like energy efficiency, water conservation, and indoor environmental quality.
Technology will play a significant role in advancing sustainability efforts in facilities management. Businesses will need to make investments in data analytics, building automation systems, renewable energy integration, and Internet of Things devices that can help gather crucial data on energy usage, occupancy patterns, and equipment performance.
Data Is More Important Every Day
The continued digitalization of physical spaces—ultimately turning them into smart buildings—will increasingly provide facilities managers with actionable insights to enable informed decision-making around offices and other commercial buildings.
Operational technologies used to manage, monitor, and control building operations are becoming more integrated and are converging with IT. These smart tools generate large amounts of quantitative, measurable data that can help determine how spaces are designed and used. For example, understanding actual occupancy and space utilization allows facilities management professionals to make appropriate management and strategy decisions.
This is now more important than ever. We’re seeing a rapid increase in the need for flexible solutions to meet the changing needs of buildings and what’s inside them—such as more agile, adaptable workspaces with healthier building environments and improved air quality.
Using the right data tools to help with such analysis is also important. As more and more enterprises realize the unique strategic importance of data quality, a new class of data analysis tools will rise to the forefront, achieving a higher level of data quality excellence.
Businesses will come to understand—if they don’t already—that you can’t fix what you don’t measure, and data analytics tools will help with a plethora of problems, from proper project testing and implementation, to reducing irrelevant costs and serving as the communication point between stakeholders.
A New Generation of Talent
Attracting talent has never been harder, and facilities management is certainly no exception. According to ProFMI’s 2022 FM Training Outlook Survey, approximately 66% of facilities managers and staff have left or have considered leaving their job within the past year. Moreover, 86% indicated that there is a significant gap between their team’s current knowledge and skills and what they need to excel at their jobs.
It will take some time and considerable resources for organizations to train younger generations of workers. However, a younger workforce will not only fill the gap but also bring tech-savviness to the industry, helping organizations leverage digital technologies to get more done with less.
Changing Workplace Expectations
Finally, there are many factors to consider when it comes to employee well-being and expectations. Employee expectations have changed dramatically in recent years, and there has been significant upheaval in the workplace as a result.
According to research by Gallup, just 23% of the global workforce is engaged—i.e., involved and enthusiastic about their work and workplace. Employee engagement matters because engaged employees are less likely to miss work, are more productive, and are less likely to look for work elsewhere. The physical space in which employees work is a critical component of overall employee engagement.
For instance, according to Zach Russell, Bungie’s senior director of employee experience, newly designed workspaces feature stations “on the outside of the office, and when people get a cup of coffee or go to the bathroom, they have to move to the center of the office, where they run into other people. There are also some wide-open spaces with couches and seating areas where people can hold Zoom calls or play video games.” Over the next five years, employers will continue to reimagine the workplace to find new ways to improve the employee experience.
Already, in many situations it does not make a difference where an office-based company’s staff are working from. And, as the location of work is increasingly flexible, the concept of the digital workplace is important. To allow workers to be flexible in choosing their work setting, it is paramount that they are provided with access to the digital tools needed for their daily work. Reserving a space to meet with colleagues now morphs into setting up a meeting where some of the members are present in a physical space and others through digital meeting tools like Microsoft Teams.
Now more than ever, it’s crucial to ensure a seamless integration between the physical and digital workplace. Users are becoming less tolerant of solutions that are prone to glitches or have cumbersome configurations.
Navigating the Challenges Ahead
Corporate office workplace strategies have a direct and growing impact on a business’ bottom line. Getting facilities management right is therefore taking center stage on many business agendas. Organizations must be able to effectively manage and optimize the use of their office spaces. Monitoring occupancy, lowering maintenance costs, minimizing downtime, effectively managing space utilization, understanding headcount—these are all must-haves, now and in the years to come.
With an understanding of the current trends, organizations will be able to respond effectively as they navigate the challenges ahead.
Richard Leurig is chief product and technology officer at Accruent, a provider of software solutions for facilities, energy management, IoT monitoring, and space planning.