5 Major Forces Driving Change for Tech Real Estate


The pace of change in the Technology, Media and Telecoms (TMT) sector will increase, forcing companies to transform their workplaces and realign real estate strategies, according to a new report by commercial real estate agents Cushman & Wakefield.

In its report

The Future of the TMT Workplace, the agency identifies five major forces that are driving change for TMT businesses and their real estate needs.

It argues that everyone involved in the development of workplace strategies, from facilities managers to CEOs, needs to understand the forces shaping the TMT workplace of the future and how these will impact their organisation.

“The changes taking place in the TMT sector are demanding a fundamental rethink of workplace and real estate strategies," the report says.

"In interviewing those involved in the provision of workplaces from across  the sector, we identified five forces at the core of  this shift."The five forces are: 

  1. Transformation - Accelerated adoption curves and shortening product lifecycles means that competitive advantage in the TMT sector is increasingly derived from an organisation’s ability to develop new products and services to unlock new sources of growth. Workplaces, location strategies and the composition of workforces at TMT players are all changing to accommodate the new products and services that companies in the sector are developing.
  2. Disruption - New applications of technology, the falling costs of computational power and the availability of platforms to easily build, distribute and market new products is empowering the rise of disruptive new entrants to the sector. Young companies and new business units can scale rapidly, making it harder to develop strategies for the long term. In this context, forecasting workplace and real estate requirements is a significant challenge – as one corporate real estate professional for a large technology company said, ‘Technology moves quickly; property doesn’t." Increasing the flexibility of their portfolios is a key priority for the companies Cushman & Wakefield spoke to.
  3. Cities - Concentrations of customers and talent in cities are drawing TMT players to base their operations inside urban locations, rather than in out of town ones. Cities can act as testbeds for new technologies for TMT companies, but heads of real estate need to be able to identify which cities have the deepest talent pools, best universities, most vibrant start-up ecosystems and established networks of peer companies.
  4. Emerging Markets - The shift in economic dynamism from the developed economies of the West to the emerging economies of the developing world is leading TMT companies to think more seriously about their emerging market strategies. These countries not only offer huge opportunities for growth, but also deep pools of talent. While this makes them attractive locations for TMT firms, they’re also home to ferocious local competition that developed market firms will have to tackle head on.
  5. Talent - There’s a war going on for top technical talent. Demand for developers, data analysts and engineers already outstrips supply, and as technology is high up on the agenda of businesses beyond the TMT sector, the competition for talent is growing more intense. Furthermore, the generational divide between younger coders, who tend to be proficient in different programming languages, is leading to an impending skills gap for many companies. Attracting the right talent is driving decisions about location and workplace.

Source: Cushman & Wakefield[/caption]It recommends that TMT businesses do three things urgently to future proof their workplaces.

  1. Scenario Plan - Scenario planning is increasingly important in a more volatile competitive environment. The sources of disruption are increasing and M&A activity is at a record high. Property teams should spend more time planning for ‘what if’ scenarios – ‘what if we acquire a business of 2,000 people?’, ‘what if our new business unit exceeds growth expectations?’, ‘what if we need to streamline our portfolio?’ The implications of a major acquisition, exponential growth of a new business unit or a decision to invest heavily in a new market for corporate real estate are complex. Scenario planning will significantly speed up decision making when it’s needed most. This planning should take place in cooperation with different levels of the organisation and across different geographies to ensure strong alignment throughout the company.
  2. Build Flexibility - The economic, demographic and technological drivers of change identified in the report have profound implications for workplaces and real estate. The only constant in the TMT sector is change. To survive in this turbulent environment, directors of property need to focus on making their real estate portfolios as flexible as possible. Modular workplaces that can be easily refitted to new roles and workstyles are essential, as the products, services and composition of employees at TMT firms is set to change significantly over the course of the next few years.
  3. Align Workplace Strategy with Corporate Strategy Workplace and real estate strategy must be totally aligned with business strategy. Too often property is "siloed" from the rest of the business and directors of property are not aware of strategic decisions the business makes until after they have been made. The workplace is the operational level in which strategy is brought to life and should be part of any strategic decision from the beginning. Without frequent discussions between the property team and the business leadership, companies can’t create work environments to support the aims of the business, and strategy consequently fails. Heads of property must take a more active role in the leadership of the company, and the c-suite must take a more active interest in workplace and real estate.
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