Radical workplace change will overhaul portfolio ownership by 2040

Long-term ownership of real estate will be seen as a hindrance by 2040, according to new research about the future of real estate.

Against a backdrop of radical change in the workplace – including the rise of AI, occupiers’ increasing need for flexibility and adaptability, and the requirement for on-demand services – core portfolios are expected to become smaller and more people-centric, with the age of ownership coming to an end and companies adopting an asset-light approach.

These core asset portfolios will most likely consist of smaller, trophy workplaces and luxury spaces, let on longer-term leases. Everything else will be shared, partnered or outsourced, CBRE’s new report, Portfolio 2040, predicted.

Meanwhile, flexible assets – those with shorter and much more flexible leases – could account for as much as 50% of a portfolio.

For occupiers, this could mean shorter portfolio planning cycles, which will create more frequent review, reset and adapt events.

Investors and developers will need to develop new pricing structures, such as fluid pricing based on real-time and dynamic market capacity or all-inclusive pricing for on-demand space.

It is also expected that smart buildings will be able to adjust themselves to tailor space for tenants whose workforces are predicted to be made up of more than 50% contingent workers, unattached to a single company.

Amanda Clack, head of strategic consulting at CBRE, said: “Today’s rigid business processes will become completely fluid, with companies adapting instantly to changes in external market conditions and consumer behaviour.

“This will be mostly enabled by the widespread use of AI on a foundation of more and better data. This will lead to a more frictionless business environment, but will also drastically disrupt how businesses operate.”

Ken Raisbeck, head of advisory services at CBRE, added: “Portfolio-level procurement will emerge. Rather than acquiring specific buildings, companies will secure capacity across multiple buildings. This could see landlords creating cooperative communities that bundle portfolio capacity, in order to attract this new breed of occupier.”


Read the research and learn more about Portfolio 2040 here.


Video transcript:

CBRE's Portfolio 2040 research project is about pushing the boundaries of what CBRE and our clients consider when thinking about the future.

Think about how much has changed in the past 20 years-- population growth, advances in science and health and, of course, technology.

The way we live has undergone a fundamental change and so to has the way we do business and the way we view and use real estate.

Society, cityscapes, and workforces are all set to change. In a future where nothing is certain, speed, agility, and flexibility will be the keys to corporate survival. Real estate will need to be an enabler of that. Portfolio 2040 uncovered four distinct themes.

It will be an age of permanent disruption. We will see the rise of the sharing ecosystem.

Talents will be transformed and enabled by virtual and digital technologies.

Our entire concept of a place will radically transform. The next 20 years of portfolio planning will be radically different. Many of our customers tell us that traditional ways are no longer fit for purpose. There are so many competing pressures of talent traction or attention, digital disruption, technology, and how we really create the right experience and activate the brand of your organisation. And therefore, new and alternative ways and processes for planning that future are required.

The speed of change is upon us. And organisations, to survive, need to be rapid in their response. But not only to be efficient with their response, but also effective.

By 2040, companies will buy talent on demand globally where and when required. More than 50% of employees will be contingent workers, and job descriptions may no longer specify location with a focus on talent enabled by technology. Are robots set to take over our jobs? Not quite. Data and artificial intelligence empower decision making and the human workforce. But what is the role of a building in this new world? With such a large and flexible workforce, how does a company create a workplace experience and a sense of community for its people? That will become one of the biggest challenges companies face in the next 20 years.

2040 will see a dispersed, diverse, hyperconnected workforce. In this world, the governing principle of real estate decision making will be the people, place, property mix, and creating the experiences which bring this new work force together.

By 2040, the age of ownership will be over. Unless occupiers absolutely need to own a building or assets, they won't. Leases will therefore become shorter and more flexible. Buildings themselves will become fluid. Even today, we're seeing some companies using temporary mobile walls to create and dismantle entire new workspaces within hours. In the future, we think smart buildings will do this themselves. Because change is so rampant, we'll see ecosystems emerging within companies, even competitors sharing spaces. The developers and landlords who can build in this new age of flexibility within their buildings will be the ones who succeed.

By 2040, the relationship between cities and countries is going to change dramatically. We're already seeing cities like Shanghai with a population of 24 million people equating to that of Australia. The role of cities is going to become ever increasingly important as we move towards 2040, and we need to be taking investment decisions today about where we locate and also how we develop those cities to really take their place on the global stage.

Place will need to be people centric. The built environment will revolve around people, the human experience, interaction, green spaces. Wellness and sustainability will be core offerings rather than add-ons. We need to think about the way in which people are going to interact with their environments in a very different way in the future. It's very much like looking down the telescope the wrong way around, such that we're actually setting the strategy and vision for what our cities and places needs to be today so that they can be implemented by 2040. Because by 2040, place will be right at the heart of making sure that cities are successful.