As an office space rental agency, it’s necessary to constantly rethink our business to understand market innovations and society’s demands regarding the workplace. We had the opportunity to talk with Dror Poleg, a real estate specialist that works with the world’s leading developers, operators, and technologists to bring to market products that will reshape the industry. His analysis and various talks have been seen and read by more than 20,000 executives from companies such as Blackstone, WeWork, British Land, Cushman & Wakefield, AirBnB, and Sequoia Capital.
With more than two decades of experience as an executive in a large estate development firm, a CEO of a technology startup, and a partner in a digital design agency, he shares with us his views on tomorrow’s real estate.
1. Do you think office space is changing due to the fact millennials are now a great percentage of the working force?
I tend to think it is less about millennials and more about the way technology changes the way we work, interact, and access different on-demand services. Millennials were “born” into this world so it is more natural to them, but it affects employees of different age groups as well.
2. How can coworking spaces affect the infrastructure and design of other places? For example, do you think residential buildings might change their layout or distribution thanks to the benefits coworking spaces have had?
Flexible spaces are becoming more common in large residential projects, as well as within office projects. Some retailers and hotel companies are also integrating flexible workspaces into their products. Landlords keep thinking about new ways to differentiate their projects, and including flexible workspaces or multipurpose lounges that can be used for work during certain hours, is currently a popular approach. It’s important to note, however, that in some markets this is already becoming a standard (like a gym) — something that is expected and is not considered a differentiator.
3. How do you imagine offices in the future?
While everyone talks about technology, I think the outcome of all the “soul-searching” that developers are currently going through might result in a return to basics: Increased natural light, improved air quality, super fast internet access, ample bathrooms, better tools for noise control and fewer distractions. The differentiators might be less about what happens inside the office (which will always vary between companies) and more about what happens around the office: childcare facilities, showers, space to walk and “tune out”, and easy mobility for those who walk, run, or cycle.
4. Do you think office space is now being considered a significant issue regarding “emotional salary”?
I think it has more impact in the negative sense: Some companies offer an environment that hurts their ability to attract and retain talent. On the other hand, having an amazing space will not be enough to captivate the best and brightest. Nevertheless, it DOES make a difference as a complement to other considerations.
5. In your opinion, do you think companies will tend to rent office space or buy office space? Why do you think so?
I expect shared and furnished office space, provided as-a-service, to grow substantially over the next decade. This will happen through a combination of several trends: The rise of large operators such as WeWork and Knotel; the explosion of smaller spaces offered by traditional landlords, and traditional renters who start managing their own space in a flexible way directly or through sale-and-leaseback arrangements with third parties.
6. There are places and services we once thought were never going to be part of a rental portfolio (hot desk, virtual office). Can you imagine any other places or services that will be rented in the future?
Technology makes it possible to break time and space into smaller and smaller pieces — by the minute, based on a specific use — and for everything to be priced in a dynamic way. It’s hard to predict where this radical reduction in transaction costs will lead, but it is guaranteed to drive more innovation.
7. What advice do you have for rental agencies?
Don’t think you can escape disruption by running upmarket and focusing on your largest and most profitable customers. You have to start doing the things that look unsustainable today — dealing with smaller clients, for shorter-term leases, and providing more comprehensive solutions beyond just an introduction to space. The biggest threat is not from direct competition, but from the fact that operators are developing their own distribution channels that reach tenants directly.