JLL’s Global Corporate Solutions Research Team have recently carried out a number of sectoral research studies to analyse key trends across various markets and the impact that these are having on Real Estate. One of the most interesting was the research carried out on the Tech Market. The purpose was to review the current situation and to establish what the main concerns of those who run these companies were - all with a view to establishing what the Real Estate demands will be in the future. JLL is a Real Estate firm after all!!
A number of Key Trends emerged from the study:
Competition for Talent is a Global issue with 80% of CEOs in Tech firms citing this as a major concern
Drive for Market Share with the big firms such as Apple, Google Microsoft, Salesforce, Facebook and Amazon growing and acquiring relentlessly to increase share, the M&A market in the US alone is estimated to be $415 billion in 2018.
Sector Convergence with 48% of Tech Firm CEOs seeing convergence and increased competition from companies in other sectors as their top two disruptors.
New Growth Opportunities in the areas of Big Data, Drones, Wearables, VR, IoT and Robotics
Digitisation is also seen as a major threat to Core business
Acceleration of Innovation is the top area that Tech CEOs want to strengthen in their businesses.
Impact on Real Estate
So what does this mean for the world of Real Estate? It means predominantly that we are going to have to look at the issues that the Tech firms have and innovate with them. Why? – because it is not just the Tech firms thinking this way so these issues need to be managed and solutions found across a large number of industry sectors. Standard leasing arrangements will still have a place for sure, but these will be blended with other approaches to managing space needs.
We will see the rise of Portfolio Optimisation to increase agility as an integral part of the workplace to allow for fluctuations in the workforce from general growth, large project work and also the rise in M&A activity. This will mean increasing use of Co-working facilities and the inclusion of accelerator and incubator spaces into portfolios.
Decisions on the Strategic Location of new work spaces will cluster around emerging innovation districts and tech hubs on a Global basis. Ireland is particularly well placed to take continued advantage. These locations will be driven by a number of factors including costs especially for the emerging tech businesses but will also be driven by talent pools.
Investing in workplace to attract Talent is key to recruiting and retaining the types of innovators that are required to drive these Tech businesses forward. This means not only great buildings and design, but also providing employees with a distinguished human experience to boost their well-being productivity and job satisfaction.
What we must also remember is that not everyone is working for a Tech Giant but that does not mean that all employees want anything less than the best and the struggle to find and retain talent is not just confined to the Tech industry. In a separate Understanding Human Experience survey that JLL carried out covering 3,682 employees across Europe some interesting results came to light.
These results can be interpreted in a number of ways, but suffice to say that the results of these kinds of surveys have a very real effect on how new offices spaces are designed and how the wider property market will have to react to new trends and requirements.
Ultimately we have to create an agile real estate environment supportive of Collaboration which will in turn be supported by the ever increasing use of Technology. It has started with the likes of WeWork amongst others providing options outside of the traditional leasing structures.
We are very fortunate in Ireland to have a very privileged position in the Tech World and the IDA continue to travel the world to attract the biggest and the best to our shores under their 4Ts policy of Talent, Track Record, Technology and Tax. It is our job in the Real Estate and Construction world to be here to support these efforts with appropriate and flexible buildings and leasing structures to ensure that the growth of these companies remains Ireland centric.
How will this all look in a few years nobody can be sure but it will be interesting.
Director – Project and Development Services
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