By Dr. Pamela Hoerr, Member of the Board of Management, Real I.S.
Home office, shared office, hybrid working, and similar - all these workplace models have been predicted to replace the traditional office sooner or later. To some extent, this may well be true of offices with isolated individual rooms. In fact, these are becoming increasingly scarce. Indeed, COVID-19 and accelerating digitalization have shown that mobile working works and the workplace does not have to be located exclusively in an office building. But does this really mean the end of office real estate? The answer to that question is probably a resounding no. Ultimately, these modern ways of working complement or even reshape the conventional workplace rather than replacing the office as such.
The measures to combat the coronavirus have heightened our awareness that humans are social creatures and how important direct contact is for maintaining a genuine sense of "we" within a company. Although video conferencing can convey information quickly and efficiently, technology is no substitute for the personal exchange that inspires team spirit and creativity. Especially for new employees, office space is essential for them to identify with the company and to integrate faster into the new environment. Representative and modern premises in central locations are becoming increasingly important, especially in the "War for Talent". This observation is currently also reflected in the office market trend, as the lifting of the pandemic restrictions has brought a return to the office. This is also corroborated by figures on the office property market. JLL continues to view the asset class as a "rock in the wall", and the top 7 locations in Germany in particular continue to enjoy great popularity. For example, according to JLL, the take-up volume in Berlin’s office leasing market totaled around 377,100 square meters, up three percent on the previous year's result and seven percent above the ten-year average. In Munich, the first six months of the previous year delivered a result that was even exceeded by 71 percent (a total of 396,300 square meters). Demand in the city for space in the premium segment ran at 69 percent.
The new role of the office
Home office and hybrid working do not mean that the office as a place of work has had its day. Companies have understood their new task of creating a meeting place with their presence office. After all, employees are increasingly demanding more from their workplaces. Gray, closed rooms lined up next to each other no longer attract young talent. New concepts are needed for employees to feel comfortable and enjoy coming into the office. And this is not the only advantage of contemporary space concepts. Breaking up conventional individual offices into open spaces can optimize work processes by reducing disruption and fostering togetherness. Retreats for undisturbed telephoning or concentrated work should, of course, not be neglected.
Many tenants are focusing on premium space in the city center within walking distance of important transport hubs. In addition, modern real estate and office space that is sustainable or ESG-compliant are increasingly weighed up - not only by employers and employees, but also by real estate investors for a long-term investment with stable value. Not only ecological factors are in demand, but also flexibility in how the space is used.
The office of the 21st century: Real I.S. Munich as a practical example.
At Real I.S., we not only understand the new significance accorded to the office in theory, but also put this into practice. Our company headquarters on Innere Wiener Strasse in Munich is currently being completely redesigned. The conversion of the first two of a total of five floors has already been completed and offers a completely new working atmosphere. Instead of cubicle offices, there are open spaces that both promote networked collaboration and break down classic hierarchical structures. Managers sit between employees, and executive offices can be booked and used as meeting rooms. Enclosed "meet-and-talk rooms" - suitable for brainstorming and workshops - are available, as are comfortable lounge corners with sofas and stools, for collaborative exchanges or spontaneous meetings.
Topics such as sustainability also provide a good opportunity to involve employees in corporate decision-making processes. This is also part of the corporate philosophy of Real I.S. Our employees have therefore actively contributed with suggestions for a better environmental awareness in the new premises. This ranges from smaller ideas such as using an environmentally friendly coffee machine without capsules to choosing sustainable materials and furniture.
Our new office concept also shows how remote working and face-to-face offices complement rather than being incompatible with each other. Despite the new space in Munich, our employees still have access to mobile working options. However, office space is still essential for us to live a shared corporate culture and for the successful integration of new employees.
As a real estate asset manager, we see it as the clear task of every company to create contemporary premises that meet the changing requirements of the modern working world in the long term. In embracing a corporate philosophy of this kind, office real estate will retain its commercial significance.