Foundation Recruitment’s commercial real estate industry insights
The current global business climate is an unprecedented one. Never before have trends in technology, employment culture, and environmental, social and governance been driven so exclusively by a single, extraordinary event.
The commercial real estate outlook for the next 5 years
Two years of such upheaval has left it difficult to predict where the employment market will be in the next five years. However, whilst the near-term outlook for the commercial real estate industry continues to be impacted by the effects of COVID-19 restrictions on gathering for both work and leisure in the longer term the industry has a key place in the global recovery.
Key market trends
As companies seek to position themselves for recovery, to grow and to get back on track, demand for talent is extremely high. Overall, the number of UK job vacancies rose by over half a million from October 2020 to October 2021 and the commercial real estate industry is no exception thanks to its position as a bellwether of recovery.
Additionally, many in the workforce are reluctant to change positions at this time due to loyalty to business that have been supportive throughout the pandemic but also due to fear that the overall situation may continue to be poor.
This has led to a shortage of candidates entering the job market and ultimately to an excess of opportunities for those candidates that are considering a move. What is yet to be seen however is the full impact of the ending of the government’s furlough scheme with regards to an increase in job seekers and subsequent decrease of vacancies.
A major trend has been the shift in employee expectations that has been ongoing for some time but that has been accelerated by global changes to employment culture. Whereas previously many were willing to adapt their personal lives to the demands of work and were willing to make sacrifices to obtain higher salaries, monetary bonuses and pension contributions employees are increasingly concerned with work/life balance and are attracted by incentives and benefits such as:
- Higher prioritisation of office work culture
Whilst money is still a concern, more employees are looking for a positive, caring office culture with strong team dynamics and a focus on wellbeing as an incentive. Prior to 2021 over 43% of employees reported experiencing burnout and this has risen to 53% in 2021.Wellbeing and a strong workplace culture leads to greater employee satisfaction with 80% of employees who feel their organisation has a strong culture also reporting high levels of satisfaction.
- Training and opportunity to learn
Greater uncertainty in the job market has led to employees and job seekers putting greater emphasis on their long-term professional development. Over 74% of employees are willing to learn new skills or retrain completely to remain in work. The training, up-skilling, and development opportunities a company can offer has a huge impact on talent attraction and employee retention. 76% of employees consider a company more appealing if it offers development opportunities yet only 34% are currently satisfied with their current opportunities.
- Greater emphasis on giving back
As younger millennials and Gen Z continue to enter the workforce there is an increased focus on the wider ethos of employers and brands. A recent report found that 44% of Millennials and 49% of Gen Z employees had made choices over the type of work they are prepared to do and the organisations they are willing to work for based on personal ethics.
People increasingly want to work for companies that align with their values and that offer them the opportunity to give back, both to their immediate community and to wider society. - Flexible working
Possibly the most visible and long-term change to employee expectations going forward is the idea of increased flexibility. Whilst long-term working from home may not be feasible for many commercial real estate businesses, employees are increasingly looking for employers who can offer hybrid working models such as job sharing, flexitime or remote working.
This is especially true for those who bear much of the burden of care, be it childcare or elder care.
Equally commercial real estate employers are refocusing and placing more weight on what they can do to provide for employees’ concerns. By emphasising their commitment to wellbeing and culture they ensure talent acquisition and retention. Measures such as:
- Robust benefits packages
Employers are responding to changing employee expectations by shifting benefits packages to focus on flexibility, paid time off (PTO) increases and mental health and wellbeing and away from subsidised travel or meals. 74% of employers say they plan to continue to expand these incentives going forward. - Employee wellbeing
As shown in changes to benefits packages there is a greater focus on overall employee health and wellbeing. Many employers are seeking to address issues like mental and financial wellbeing, absenteeism, stress, and long-term health conditions as part of a wider company culture as well as part of benefits packages. Over 50% of companies now have a formal wellbeing strategy. - Mentoring opportunities
As part of training and development strategies many employers are seeking to put in place mentorship programs that seek to empower employees, strengthen workplace culture and communication as well as improve employees career development and progression. 56% of organisations now have mentorship schemes in place and mentorship can have a huge impact on employee satisfaction and retention with over 68% of millennials with a mentor intending to stay in their organisation for five years or more. - Equality, Diversity & Inclusion
76% of jobseekers consider a diverse workforce to be important when evaluating an opportunity with a company. For employers, creating a supportive, respectful, and welcoming workplace and culture is increasingly key in nurturing employees from underrepresented groups and improving employee satisfaction and retention.
What does the future of commercial real estate look like?
So, what does the future hold for the commercial real estate industry and its future employment growth? Despite upheavals the outlook looks positive, although it remains to be seen how further pandemic restrictions might affect the industry in 2022:
- Hybrid working models
93% of businesses anticipate changing to more flexible hybrid working models with only 5% intending to work solely from an office. Because of this we have seen a significant migration out of commercial offices especially in large cities which, although unlikely to remain permanent, will have a significant impact on the industry.
- Steady demand for leasing experts
In a related shift large numbers of neglected shopping centres and retail parks have come onto the market for low prices, leaving opportunities for landlords to snap these deals up and deliver exciting strategies aimed at those local communities. An Increasing amount of space to fill will lead to a steady demand for leasing experts. - Long-term development of retail and leisure parks
During restrictions there was greater consumer appetite for community and convenience-based shopping and a move to hybrid and hub working models. These changes were already happening; however COVID-19 accelerated the pace of this change. The industry has responded with a long-term future development pipeline of refurbs, expansions and developments of retail parks, leisure parks and outlet centres.
- Redesign of assets and change in tenant mix
COVID-19 also accelerated the need for redesign of assets and change in tenant mix. Shopping centres were already moving to more leisure and lifestyle focussed strategies, but there has been an increase in co-working spaces, health centres, market halls and parcel services taking space in these destinations. There is an abundance of town centre shopping centres on the market, paving the way for landlords to buy, revitalise and repurpose.
- Increased demand for industrial space
Whilst demand for office space experienced a pause during the last two years, demand for industrial spaces such as warehousing soared thanks to a growth in e-commerce as new companies sought to take advantage and physical stores scrambled to meet fulfilment challenges, shocks to the global supply chain and increased consumer demand for quicker delivery times. Demand for industrial space continues and space is in short supply. Many businesses are considering new leasing solutions such as overlapping on on-demand leasing or utilising unused industrial space.
- Businesses office needs shift away from traditional demands
At the beginning of the pandemic employers were largely avoiding considering moving or renewing leases for office space leading to a slump in demand. Whilst a return to work has led this demand to recover the type of office space business are looking for has shifted away from larger spaces to smaller, more flexible spaces that allow for hotdesking and other remote working solutions. Businesses are also moving away from traditional leasing arrangements towards leases that allow for more flexibility.
- Increased demand for Environmental, Social and Governance (ESG) specialists
Pre-pandemic, ESG was already on the agenda. The pandemic has brought with it an increasing awareness of the environment around us and sustainability. Customers, investors, tenants – at every point of the relationship the client is looking for a focus on ESG. Each has the power to decide where to spend their money. Each wants smarter, more environmentally friendly spaces. - Ongoing boom in the residential housing market
In response to the ongoing housing crisis, a boom in the residential housing market and the increase in underused commercial property there has been an associated uptick of investment and development in residential housing. Much investment is directed toward Senior housing developments in a push to free up existing family properties.
How Foundation Recruitment can help
At Foundation Recruitment, we are committed to delivering successful hiring outcomes and the highest quality of services in equal measures. Our approach is to simplify and improve your resourcing experience, whichever services offering may be appropriate for your hiring needs. If you’d like to discuss the current market or scaling your team, please get in touch with one of our expert consultants today – we’d love to hear from you.
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