Key trends for FM and property in 2018

THE PROPERTY EXPERT’S VIEW
POLLY PLUNKET-CHECKEMIAN,
PROPERTY MANAGEMENT DIRECTOR, BROADGATE ESTATES

Beware the two dominant themes this year of technology and the terms of our departure from the EU. Both topics are all-consuming and distract from strong undercurrents.

Only six years ago the Occupy London movement transformed the steps of St Paul’s. It was an uncomfortable time for those of us with responsibilities to the buildings around the London Stock Exchange. The most visible activism seen in the UK since the start of this century, it challenged capitalism and the excesses of those that serve it. Since then, digital activism has become a superior tool for shining lights where they are least wanted. Last November’s Paradise Papers came closest yet to the doors of this industry and its difficulties with transparency.

London’s housing crisis affects us all irrespective of where we may choose, or indeed can afford, to live. It is no surprise that movements such as ‘Right To The City’ are on the rise and that housing is evolving from a social issue into a strategic business priority. Groups like Fifty Thousand Homes, formed by RBS and scores of London’s smaller businesses in 2015, are working tirelessly to transform the political agenda and for good reason.

Each year, London housing bluntly prices out different demographics and sectors. Shortages, affordability and the replacement of homes with a global investment product is one side of the equation. The other is the lack of any political will to provide social housing for the country we need to be. This is hitting employers hard in talent sourcing and wage distribution, particularly when the rising pension bill and removal of right to free movement is added to the mix. For FM, as with other customer service industries, 2018 is the year that contract increases and the start of unprecedented staff attrition will bite. Whether paid directly or through service charges, these increases will force businesses to find efficiencies elsewhere.

Perhaps then it’s no coincidence that according to Retail Gazette, 2018 is set to be a “pivotal point” for retail with predictions from a major thinktank suggesting it will “flatline at best”. British retailers face these costs whilst battling weakening consumer confidence, rapidly rising business rates and a weaker pound. The highest failure rate this year since 2008 is predicted by some.

Corporate focus on wellbeing and mental health has added a welcome humanity to board conversations on its people, but with increased visibility of gender pay gaps and sustained salary stagnation continuing, the employer proposition will remain a tense one. McKinsey’s research this month on the long term rise of incivility in the workplace is one such indicator of this. It ably describes the toll taken on engagement and productivity from resentment and worry and is a timely reminder of the fragility of the psychological contract.

The progressives will listen to their employees and supply chain and in so doing find authentic solutions which are fair and respectful of issues in common to us all. For those, 2018 will be a year of humane capitalism. 

THE PROPERTY RESEARCH EXPERT’S VIEW
TOM CARROLL,
HEAD OF EMEA AND UK CORPORATE RESEARCH AT THE GLOBAL PROPERTY CONSULTANCY JLL

We expect flexible working and smart building technology to remain high on the agenda of corporate occupiers this year. Both developments were featured in our report, UK Property Predictions 2018, which identifies three major trends for the year ahead. First, we expect a rise in the number of organisations providing staff with the ability to work flexibly or co-work, moving away from the more traditional static portfolio concepts. Secondly, we predict that this will be the year that the property industry really takes technology seriously, with a further acceleration of its use at building and workplace levels. Finally, we expect 2018 to be a year where a greater number of businesses recognise the fundamental role that the office plays in enhancing employee experience and wellbeing, and driving business performance as a result.

The proportion of flexspace within occupier portfolios will continue to grow in 2018
Our report, ‘Workplace – powered by Human Experience’, showed that UK employees are increasingly mobile both within and outside the office and the rise of the flexible office market is a natural response to a structural change in the way people are working. Traditional static portfolio concepts are being redesigned to incorporate new formats of space, co-working and a more fluid and diverse range of options that support creativity, innovation and collaboration. A greater number of large organisations will explore flexible space and co-working in 2018 for multiple objectives ranging from servicing a mobile workforce, supporting business development, to delivering swing space or driving innovation. Companies will gravitate towards locations where they can easily expand and contract, accessing different types of space where and when they need it.

Smart real estate – growing adoption of technology will redefine buildings, workplaces and portfolios
Digital technology continues to redefine real estate and 2018 will see further acceleration in this area. The adoption of smart building technologies will continue to grow as leading-edge organisations focus on a seamless integration of proptech throughout their buildings. At a workplace level, AI and machine learning are being deployed in various ways to improve utilisation, monitor employee experience and measure financial performance and operational excellence objectives. This year we will see a deepening level of integration and adoption of digital technology across corporate real estate portfolios.

The office – a home away from home
Businesses are also becoming increasingly aware of the role that offices play in shaping employee wellbeing. No one wants to spend their working life trapped in a dull, stale cubicle. UK employees want to be inspired by workplaces that make collaboration, innovation and efficient working easier and not harder. Whether it is through the provision of breakout spaces, co-working options or onsite meeting pods, we can expect 2018 to be the year in which businesses come to see their offices as not just bricks and mortar, but the beating heart of their organisation.