Evolution of work leads to changes in CRE
Thanks to Eric Odum of Net Lease Commercial RE for inviting me to join his monthly podcast to talk about the growth of tech start-ups and the impact on commercial real estate. Three years ago when we met, Coworking was not even on the radar for CRE & economic development. Now that small (& virtual) is the new big, government officials and business leaders are trying to understand what has happened to their traditional market for office space and how should they react. With most of economic development’s efforts focused on development and not economics, this has put a real crimp in many regions’ strategy for growth. Shovel-ready has been replaced by bandwidth and workforce-ready leaving many areas that are dependent on new construction wondering how they are going to recover from the current economic downturn.
In this video we talk about Coworking as an ideal option for start-ups that needs office space, but we also discuss how the trend toward smaller offices and a distributed workforce started back in the early ’90’s. In 1992 Compaq shrunk their office footprint and outfitted their field sales force with home offices. This encouraged the sales team to spend more time with customers and less time taking up space around the corporate water cooler. Several years later IBM followed, introducing the concept of office hoteling. This was simply desk space you sign out for a day when and only when you needed to be in the office (sound familiar). While there were some unintended consequences and this strategy was relaxed in later years, the trend toward a smaller footprint and more mobile workforce in tech had begun. This should have been plenty of warning for CRE and economic development agencies to adjust, but during the high times of the Internet boom and the take no prisoners commercial real estate / residential mortgage bubble, there was little incentive to heed the warning and plan ahead.