NEW ERA AHEAD FOR CORPORATE PORTFOLIO PLANNING, SAYS CBRE
- Environment of continuous change and disruption underpinned by high-volume data and the growth of AI
- Companies becoming averse to ownership of inflexible assets, in favour of adopting an asset-light approach and outsourcing non-core business activities
- Major shifts in companies’ approach to sourcing labour including the ability to buy talent on demand globally as required
- Corporate portfolios shifting from being a collection of fixed assets towards being a bundle of adaptable capacity
The period to 2040 will bring profound and far-reaching changes to corporate real estate portfolios according to CBRE, the world's leading real estate advisor.
The new report Portfolio 2040, published today, approaches the issue from a portfolio perspective, examining how business, buildings and perhaps even cities themselves, might look in 20 years’ time.
One of the key drivers for change is identified as pervasive availability, and creative use of very high-volume data and the growth of AI, enabling companies to adapt almost instantaneously to external change and offer increasingly personalised solutions. Rapid and fluid specialisation, either temporary or permanent, will characterise most businesses and real estate will need to reflect this by being increasingly flexible, multipurpose and rapidly adaptable.
Amanda Clack, Head of Strategic Consulting at CBRE commented: “Today’s rigid business processes will become completely fluid, with companies adapting instantly to changes in external market conditions and consumer behaviour. This is mostly enabled by the widespread use of AI on a foundation of more and better data. This leads to a more frictionless business environment, but also drastically disrupts how businesses operate.”
Portfolios will no longer be viewed as a collection of fixed assets, but a diverse range of adaptable capacity which can be shaped and repurposed in response to consumer demand. Spare or “just-in-case” capacity will be eliminated.
Amanda Clack continues: “The age of ownership is over, with companies adopting an asset-light approach and outsourcing all non-core business activities. Core assets will remain, often manifesting as ‘trophy’ workplaces, luxury spaces, but these will be smaller and on longer-term leases. Everything else will be shared, partnered and outsourced.”
The workforce we know today will also likely no longer exist, with the next 20 years bringing radical changes in demographics, labour procurement and organisational culture.
Ken Raisbeck, Head of Advisory Services said: “Companies will buy talent on-demand globally, as required. Many job descriptions won’t even reference a location. This represents a challenge to corporations as they are no longer able to predict supply and demand and therefore require new solutions to connect the business, activate the brand and create a culture for the organization.”
With long-term ownership seen as a hindrance, new forms of sharing of assets, people and equipment will be commonplace. There will be radical changes in workforce structures, procurement and organisations which will require companies to support labour in a variety of ways, including through real estate. The challenge will be creating a culture that binds an increasingly transient and dispersed labour force with a growing need for authenticity and experience.
Ken Raisbeck continues: “Portfolio-level procurement will emerge. Rather than acquire specific buildings, companies will secure capacity across multiple buildings. This could see landlords creating cooperative communities who bundle portfolio capacity, in order to attract this new breed of occupier.”
Brand will also be key, as labour resources become more dispersed, the quality and role of place becomes paramount, both as a draw for talent and as a conveyor of brand. Locational networks will need to provide high quality experiences which support the training, brand immersion and collaboration of hyper-networked talent communities.
Portfolios in 2040 will need to operate in an increasingly dynamic and adaptable environment. Whether delivering tomorrow’s stock or driving the occupier agenda, to successfully navigate this complex landscape will require the support of a broad ecosystem of partnerships.