As CBRE’s Global Head of Occupier Research, Julie Whelan oversees all research about the office market for the world’s largest commercial real estate services provider. Her research spans a broad range of topics, from office demand and occupancy to the flex-office segment to patterns in office use. She is the lead author of CBRE’s semiannual office-use surveys. The latest survey, conducted in August, covered the office plans of 176 companies across the globe.
Many employees believe they can do their job from anywhere. So why should they commute to the office? Rather than focusing on when, where, or how often employers should use the office, CBRE’s Julie Whelan has a different view: let’s unleash the workforce. Let’s release any preconceived notions we have about the way work is done and take a bigger, holistic approach. In this insightful discussion, Julie touches on workspace design, rightsizing, the flight to quality, how companies are engaging with flex space, and why hybrid work – in its many forms – is the future of work.
Jo Meunier [00:00:52] Hello and welcome to the Future of Work Podcast by Allwork.Space. I’m Jo Meunier and today I’m joined by Julie Whelan, global head of Occupier Research at CBRE, who oversees all the research about the office market for the world’s largest commercial real estate services provider. Julie’s research covers a huge range of topics, including office demand, occupancy, flexible space usage and how people are interacting with the workplace in the post-COVID era or in the current COVID era, since we’re not technically out of it yet. Julie is the lead author of CBRE Semiannual Office Use Surveys, and we’ll be digging into their most recent pulse date during this episode. So, I’m looking forward to learning the latest and I’m sure I’m not the only one. So, thank you so much, Julie, for joining us today and looking forward to our conversation.
Julie Whelan [00:01:40] Thank you, Jo, for having me. I’m excited also.
Jo Meunier [00:01:44] Okay. Well, we’ll jump straight into the questions. So, looking at your most recent research, The Office, your survey suggests that most employers want people back in the office most of the time, but employees seem to be dragging their feet a little bit. So, what can you tell us about that and about current office use patterns?
Julie Whelan [00:02:03] Yeah. So, it is extremely interesting what is happening out there right now. We are in the fall period and as we predicted, there has been an uptick in office usage. But we also predicted that that uptick was probably not going to meet the expectations that many organizations had for the fall period. Now, when you think about fall and you even just stumbled over your words a little bit when you were talking about are we in the COVID period, are we post-COVID, where are we? And it feels like life is back to normal everywhere but the office right now. And so, when I say that we didn’t meet expectations around return to office, I think many organizations had a belief that because things felt so normal, that why would an office patterns return after summer? Now, as you say, there is a disconnect that is happening right now between employees and employers, and there is a really simple reason for it. The reason is that the communication is there, but a huge piece of the communication seems to be missing in that it is the why around the office. Many, many employees that are out there right now just simply believe that they can do their job from anywhere successfully.
Julie Whelan [00:03:19] And they really don’t understand what the justification is for them coming into the office more often, because in their minds, they’re weighing what are the benefits of coming into the office, which they can’t really see clearly against the frictions that it would cause in their life to do things like endure a long commute and have to engage with all the things that come along with going into the office. So, commuting is a whole other thing that we can talk about. But I also argue that those organizations that have employees that naturally have longer commutes are more staff right now around this disconnect between employer and employee expectations than those that have shorter commutes.
Jo Meunier [00:04:03] Okay. And will get on to the commutes in a moment. But one thing that ties into what you’re saying just now, ties into something else about the report that I noticed about companies needing to implement more than communication measures to encourage an increase in office usage. And that led on to say that new manager skills should be brought in to support a new way of working. And this is fascinating because we knew we all knew that COVID had completely upended the workplace.
Jo Meunier [00:04:27] But it does sound like a lot of companies really need to go further and completely overhaul their management approach and retrain their managers and really take some quite big steps here. So, what is your view on that?
Julie Whelan [00:04:41] Managers, especially good ones, are the unsung heroes of this right now because they hold a lot of the power to help start to change the norms and behaviors of their people. Now, they’re the unsung heroes, especially the good ones, because many of them just are not aware of how to do that, because they are trained in the old ways of managing, which is you set your annual goals. You might follow up on those goals midyear. And generally, if you’re seeing people that are coming to the office, then you’re assuming that they’re working and trying to accomplish those goals. And what we’re seeing now is that we need a new way of managing. But most organizations aren’t doing much to reskill their managers around things that are new expectations that even the organization themselves may not understand yet. So, with this world of hybrid work that we’re in, the reason that we’re here is because people want more autonomy and more freedom over how they work. And what that means is that. They have to understand what my directive is? And there needs to be a feedback loop that is giving them constructive advice and criticism and success stories around whether or not that feedback is being met and their goals are being met. And that means that there needs to be much more often communication between managers and employees than ever before. Now additionally, what is interesting is that managers are really tasked with needing to change what I said before, which was the norms and the behaviors of employees.
Julie Whelan [00:06:22] Now, some of those norms and behaviors are simply around what is the time that I’m expected to come to the office, and how are we going to set those times as a team and all buy into the fact that it is the best use of our time to come in together? And additionally, things like presence awareness are really important. And I think down the line, technology is going to help us understand who is going to be an approximate location to us at any given time. But for now, there are little tips and tricks that managers can instill through best practices that allow us to really start to understand when my team members are going to be in or an approximate location to where I am? And therefore, maybe it’s best for me to go into an office on a given day. So, there are a lot of nudges every day that I think if managers gave to employees, it would start to shift the winds of sort of this return to office. But they’re very simply not trained to do that right now.
Jo Meunier [00:07:21] And by doing that, it would tie into a larger sort of company culture change, I should imagine. So, the company itself, perhaps from the top down, needs to accept that flexible work is now a norm that people want it. That seems to be the way forward.
Julie Whelan [00:07:38] Yes. You know, culture is a really, really interesting thing to talk about because in a way, we are tying the office to culture and that is very biased in the way that things used to be. Now, what we believe is that office is absolutely a piece of culture, especially when it is oriented correctly. And what that orientation needs to be is, again, I keep coming back to what is that justification to the office? What is that value of the office to the way that employees work and how is it acting? It is actually an asset, a true asset, not just a physical asset in the way that employees live their life. So, we never, ever thought that the office was not important in culture. We just have to realize that we have to take a bigger, holistic approach to culture right now, and we need to back into why the office is an important tool, because just by having the office alone, it doesn’t mean that we have culture.
Jo Meunier [00:08:37] Mm hmm. Absolutely. And one of the things that your report touched on quite heavily is the need for space design to create this environment that people want to go back into. Now, I know that a lot of companies are sort of overhauling their space design and bringing in new services and amenities to make it a more comforting environment, perhaps a more homely environment to match what people have been used to.
Jo Meunier [00:09:01] So what can you tell us about the type and the scale of design that’s happening in some workplaces?
Julie Whelan [00:09:07] Yes. And I love that you said, you know, some people have called it Reza Merchant, Reza Marshall, you said homey design. And I think the idea is that the office is now competing with home. And so that office of 20 years ago that was very neutral in color had very hard surfaces with sort of institutional to engage with is not what we see at all the office of the future going to be now? Clearly, collaboration spaces and better video conferencing technology are major pieces of the equation right now, and that is the lowest hanging fruit. It is not super disruptive to create even an existing space. It is an extremely costly and the justification and sort of the critical nature of meeting those things is well known. And there are many organizations that are moving the needle in that direction. But real transformation comes over time, and it took decades of transformation before the pandemic to even get where we are now, which is in a much better place. But we cannot fool ourselves and think that, especially in the face of a recession right now, that this transformational change around space design is going to happen quickly because costs are even going to have to be more heavily justified and they’re going to be very heavily scrutinized.
Julie Whelan [00:10:29] So what we’re seeing right now is that when there are big portfolio events that are coming up, things like expirations, we’re seeing many organizations choose to relocate space. And I’m sure you’ve heard of the term flight to quality. And it’s this idea that organizations are moving to different spaces in the best located locations, in the best buildings. And willing to pay for that space because that end of the market is actually still doing quite well, but they are taking less space. So, there’s a bit of a tradeoff for spending money on all the square feet and instead putting it into less square feet, but really going all in on the design. So, I think that there are different levels of change that we’re seeing right now in space design. But the idea for everybody in the future is to have these spaces that are much more conducive to making people happy, engaged and productive when they are in the office.
Jo Meunier [00:11:23] Absolutely. And it’s maybe too early to tell, but is this approach working? Is it helping to encourage people out of their comfort zones and back into the office?
Julie Whelan [00:11:32] It’s a good question. And I would say, well, is it working? We still see very muted office occupancy. Now, the big question is what will office occupancy end up looking like in a steady state? And I don’t think that anybody can answer that right now. But when I hear the question, is the approach working, I really want to talk about the fact that this is actually not about the physical office alone. The physical office is one factor. It is a building block to really help retrench people with the affinity that they have to the office. But there are things that have to come first before we even get to the physical space design. I’m going to repeat that answer of why how does coming into the office make me a better employee, and how does that help us to be a better organization? So clearly defining that and persuading people to believe it is really, really important. Secondly, we have to solve the pain points of people. I have heard some very interesting stories from companies who have some of the best office space in the world, and they see actually some very low occupancy in that space. And the reason is because you have to understand the pain points that people feel when they have to come back to the office right now. And many times, that’s around commute.
Julie Whelan [00:12:55] So whether that means we have to change the location of the office or how well-located it is on public transit or the type of car parking that’s in the space or even changing core hours to get around the real commute challenge, maybe things that organizations look at. And then lastly, before you get to the space, you have to look at the overall location that the space is in. We know that safety is really, really important. So, making sure that we have safe locations that people are going to where the buildings are, that they’re vibrant, and that they’re not just business districts that business is happening in, but that are communities that have all the areas around living and working and playing that people want to engage in and that are very, very human centric. So, the office is the building quite literally, but the rest of that is the foundation that that building is built on. And we will create a very weak structure if we just focus on the space design, and we don’t focus on those other things around the why. What are the pain points of people in coming back to the office? And is my office in a very desirable location that is first and foremost safe?
Jo Meunier [00:14:07] Absolutely. And that’s really interesting because what we what you’re saying about the commute made me think of over the past couple of years, we’ve seen a lot of talk about satellite offices and hub and spoke as potential solutions for this commuting problem. So rather than having the old fashioned central office that everybody would come to, regardless of where they are, people can now use smaller branch type offices that are perhaps closer to home. And have you seen that trend and are you still seeing it?
Julie Whelan [00:14:40] Well, having spoke his was something that was talked about all the time earlier in the pandemic, because it seemed that that was the way that some organizations were going. And very early on, we said we don’t think that that’s it. Because if you have logically people coming into the office less often than they need to come into a centralized place so that you have more of an ability that people are going to see each other when they’re in that place. And assuming that, you know, you have all those manager behaviors and norm changes that they’re instilling. You have that centralization zone to instill them through. In all of our survey results have told us the same thing. Organizations are centralizing, they are rightsizing, and fewer buildings are better. That does not mean, though, that spokes are not going to be created in a different way. And my prediction for the future, and we’re only starting to see a glimmer of this right now, is that we begin to see smoke locations in densely populated suburbs and rings around the city that have a large population of people, that are knowledge workers that commute to the city sometimes, but that also have a desire to be in a third location. So not their centralized office, not home, because of potentially the distractions and the ergonomically unfriendly design that their offices might have been just the feeling of isolation that some people have in their home office. But they actually might want to go into a third location that is close to their home where they can get their work done, even if it’s not in a collaborative nature. And this is where we see that actually flex locations are starting to pop up in these highly, densely populated areas to support what they think is going to be a trend of moving forward in that direction. Now, whether it’s employees themselves that pay for that space or employers begin to pay for that space, the jury is out on that. But I think it’s going to take a number of years, especially in the face of a recession, for us to really figure that out.
Jo Meunier [00:16:47] Okay. And while we’re on the subject of flexible space, I have a few questions about that. So, I’m glad you mentioned it in the report. It said that more than half of respondents now expect flexible office space to make up a significant portion of their portfolio looking ahead. And this could be a way to reduce capital expenditure and also to, as you said, create more collaborative environment for employees in different locations. So yeah, I’d love to know more about what you’re seeing in terms of flexible space being used in this way.
Julie Whelan [00:17:19] Well, all signs point in the direction of flexible office space. And I think first, it’s probably important to define flexible office space. So back when I started talking about this a decade ago, seven or eight years ago, maybe really heavily talking about it, it was about co-working, which is really sort of suited towards individual people or small startups. Right. It is typically not your large organization that is going to want to go use a co-working facility. Since then, flexible office space has morphed into a number of offerings that have also sort of different use cases, because by the nature of flex, it’s a nimble in. So that means that it can satisfy a lot of different needs for different companies. And I’m even seeing an uptick in what we would call pre-built spec suites right now, which is an element of flex because you don’t have to put a capital expenditure into it. You can go in for normally short term and you can get in very, very quickly. So, there are a lot of different reasons that different size organizations want to use Flex. But in this time of not only uncertainty, but in planning for a portfolio that we know is going to have to be nimbler, I think most organizations right now are saying, how does flexible office space play into this and what am I going to use it for as a strategy going forward? I would say many are still in the experimenting and learning phase. We are not yet at a structural change yet where organizations are using flex in a very deliberate, consistent, strategic way. But we are rapidly, rapidly moving towards that.
Julie Whelan [00:19:02] And as more providers add more flex space because it’s still a very small percentage of inventory today being at about 2%, as that type of space meets demand and starts to get built out more, then you’ll see more and more people engaging with it. And we see a lot of landlords themselves that are actually engaging with this space and building their own offering, some managing and operating it themselves, others working with third parties and sort of a white label agreement in that space operated and managed because it is very time intensive to do it.
Jo Meunier [00:19:38] Yes, absolutely. And all these decisions and discussions that are going on around allowing people to work flexibly and the potential for using flexible space, the redesign that we’re seeing in a lot of the company’s offices. And how is this impacting employers ability to hire and retain talent? Because with all this turmoil going on around, you know, back to the office and as you mentioned, the potential for a recession. There’s a lot of uncertainty going on right now. And we’ve all seen the headlines about quiet quitting and quiet firing and the great resignation and so on. So, I’m interested to know everything that’s happening at the moment. And yeah, how is that impacting an employee’s ability to hire and retain talent?
Julie Whelan [00:20:22] So it matters. I mean, talent is looking at a lot of different facets of organizations from their social consciousness to their environmental consciousness to the flexible offerings that they give. And in I would say, you know, just the ability to garner a lot of information about the company that you joined before you joined. It is more prolific today than it ever has been. We actually just did a survey of thousands and thousands of consumers around the globe, and we asked them different questions around their work habits, their living habits and their shopping habits and around their work habits. We actually asked them, when you are looking at a new job, what are the top factors that you assess when deciding whether you’re not, whether you’re going to take that job or not? And not surprisingly, number one, with salary and benefits, it’s always going to be the factor of taking in new net, new job with the company. Secondly was commute. And commuting is very then closely tied with the third, fourth and fifth, which all had to do with work life balance and flexibility. And I would argue that the longer the commute, the more they’re going to want those flexible factors and the shorter commute, the less that they’re going to care about them.
Julie Whelan [00:21:40] So it is extremely important to make sure that as an organization, you are being very clear with what your policy and your culture is around hybrid work and flexibility and autonomy so that those that are looking to join your organization can feel good, that it fits with what is important to them. Now, once an employee is in an organization, this is where we believe and we’re getting signs that flexibility can actually hold some monetary value to having employees be happier, longer term and more engaged with the organization that they’re with. And I think that that’s a major factor that employers that want to hold on to their talent have to realize because in some cases, just instilling more flexibility and autonomy and freedom and really showing it through not only your policies but your culture that you uphold could hold monetary value for many of your employees.
Jo Meunier [00:22:37] Absolutely. And that choice is so important. And it’s interesting because when I was looking into the research, 85% of respondents said they want employees in the office, at least part of the time, at least half of the time. But what struck me is that there seems to be little consensus about how they do that and also what they do going forward. And this is a big question still over how they should continue doing hybrid work. Should they be more flexible? Should they not? So, it all seems a little bit haphazard at the moment.
Julie Whelan [00:23:10] Yeah.
Jo Meunier [00:23:11] Yeah. And is this what you’re seeing?
Julie Whelan [00:23:13] Yes. So, you know, there is little consensus around how organizations are welcoming people back to the office. But what we increasingly believe is that once that Y is answered, I’m going to keep coming back to that. Why its name? Why is the office the best place for me to do my job and do I believe it? There do have to be guard rails around office expectations because if there’s not, then we’re leaving it too much to change in. That chance is not going to work out. And so, for some, it may be a 2 to 3 day week cadence that we want to see in the office. And there are others where it might be driven less by frequency of visiting the office and more by circumstance around what’s happening when I’m in the office and then there’s everything in between. So, I think that what most organizations are doing right now is looking at functions and they’re saying, what is this function depending on to have success in their daily tasks? Where our colleagues located that these people normally collaborate with, like I normally collaborate with people all over the world, not here in the Boston office where there are others of my colleagues that only collaborate with people in the Boston office. And so, understanding that is really important. And then understanding what meetings do I have that are best driven for success by being in person? And if I can answer all of those things as a manager or as an organization, then I can start to create transparency around expectations. And if it is that you want people to be in 2 to 3 days a week, then I think setting core anchor days to make sure that there’s at least a few of those three days that people are together in maybe even core hours within those anchor days where everybody is expected to be physically present. Now, if it’s more than based, where you have a deliberate reason for coming into the office, then making it clear what those meetings are, where attendance is critical to have in person, and then building other events around those meetings could be really important. And so, there is not one answer to this, but generally we think guardrails are important, but ensuring that those guardrails meet the needs of your employees and how they do their work, and that they’re not just random. And ultimately these deliberate interactions are going to lead to what everybody wants, which is the more serendipitous interactions that everybody says that they’re missing. So, you kind of need to drive deliberate actions in order to drive the serendipitous actions right now.
Jo Meunier [00:25:55] Absolutely. And one thing I’m getting out of our conversation is that hybrid work is very much a future of work.
Julie Whelan [00:26:02] Without a doubt. There is no doubt in my mind that hybrid work is the future. And some people in our Workplace Strategy group, this one particular woman by the name of Suzette Sparks, who runs our change management organization, and I have learned so much from her. And she says we need to just unleash the workforce and release any preconceived notions that we had about the way that work is done and then put the puzzle back together again and figure out how does the office then enable work alongside all the other places that make up the platform of workplace? And instead of thinking that the office is still the core, and we all have to figure out how to fit in around it, even if it’s less of the time. It’s a perspective shift that is going to take a while to get there. But if we can just unleash all of our preconceived notions of what the office was, I think it would help a lot. But that’s going to be difficult to do.
Jo Meunier [00:26:59] Unleash the workforce. That is fantastic. Yes. And we are nearing the end of the episode. But just thinking back over the conversation and drawing on your knowledge and experience and all the research that you do, how do you think we’ll be working and using the workplace over the next, say, year or two? Do you think we’ll be unleashing the workforce?
Julie Whelan [00:27:23] I think that’s going to be difficult. Right now, we are in the face of a recession, and it is going to not only shift the strategy away from necessarily. Investing in the workplace, which it will probably shift that strategy a little bit, but it’s also just going to potentially create a moment of pause where some organizations try to leverage more mandates to get people back in the office in order to see their desired outcomes as they potentially shift between employer and employee leverage happens. So, I do believe that we are going to have a bit of a pause over the next 12, 18 months as some organizations try to grapple with getting through a recession and seeing what it means for the future of work. However, I think that once we’re through that and organizations realize that it did not shift the dynamic and that hybrid work is still here to stay even after a recession, that’s when we will really see escalated change start to take place again.
Jo Meunier [00:28:33] Fantastic. Well, thank you so much for your insights today, Julie. I really appreciate it very much. Enjoyed our conversation. And how can our listeners get in touch with you to learn more about the research?
Julie Whelan [00:28:45] So our CBRE dot com website has a wonderful research and insights page that any buddy around the globe or real estate, professional or not, can log into and ask. Subscribe for our research.
Jo Meunier [00:28:58] Fantastic. Thank you very much. Well, and you have a good rest of the day and I hope to catch up with you again soon.
Julie Whelan [00:29:04] Thanks to you also.