Although tech adoption has increased in recent years, the commercial real estate industry is still pretty old school. But that won’t be the case forever, and from the industry age gap to changing preferences in the workplace and market, Millennials, and Generation Z are already making waves throughout the industry.
Many segments of the CRE world are in need of young talent. The latest National Association of Realtors Commercial Member Profile said the median age of a commercial realtor was 60 years old. That dynamic is pushing companies across the industry to hire younger workers, and when it comes to work/life balance and commercial space needs, America’s younger generations have different expectations than their predecessors.
From a growing demand for remote work to market changes impacting future space needs, Millennials and Generation Z are forcing the industry to evolve.
1. Remote work
More than any previous generation, Millennials are pushing to work remotely. Deloitte’s 2017 Millennial Survey said 75% of Millennials want remote working to become an acceptable practice in their workplace. And while Millennials value the flexibility remote working offers, they also think it boosts productivity.
Given that Millennials are the largest generation in the workforce and many are taking on higher level positions, it’s only a matter of time before remote work becomes a feature across most industries. And as telecommuting technologies continue to get better, making remote work more and more feasible, it’s likely Gen Z will also expect to be able to work remotely at least part of the time.
This trend promises to change corporate culture across the CRE industry. It could also drastically reshape demand across office markets.
That’s because, as remote work becomes more mainstream, companies will need less space per employee. That could trigger a drop in demand for traditional office centers as organizations begin to reassess their space needs.
While this change may threaten some brokers, it’s an opportunity for those who manage to get ahead of it. So rather than relying on outdated strategies, consider creative solutions like flexible workspaces when thinking about how this trend will impact your market.
2. Technological fluency
Millennials are the most technologically advanced adult generation in history. But that’s changing as more Gen Zers enter adulthood and join the workforce.
Gen Z covers people born in 1995 or later, and while Millennials can remember dial-up internet and AOL, Gen Z grew up with smartphones. As both generations increasingly join the ranks of CRE professionals, the industry will feel even more pressure to speed up tech adoption as employee tech fluency increases. That’s good news for an industry that’s struggled to keep up with technology, but it could exacerbate generational challenges in the workplace.
As companies feel more and more pressure to up their technological game, it’s critical to find a balance that fits both young workers and older workers. That’s especially true in the CRE world, where many high level, high performing workers are older and not as familiar with technology as their younger counterparts.
Many brokerages are tempted to rush into the latest technologies, and although the right technology does make a huge difference, it’s important to make sure nobody gets left behind. That’s why, especially as younger workers become more commonplace across the industry, it’s essential to take the time to teach every employee how to use new technology.
Sloppy tech integration widens the technological divide and makes generational challenges worse. So as Millennials and Gen Z push the industry deeper into technology, make sure your organization takes the time to ensure all employees know how to use it effectively.
3. Redefining space needs
When they aren’t working remotely, Millennials and Gen Z have different space needs than older generations. From creative retail concepts to open offices that focus on collaboration, younger generations are forcing the industry to rethink how space is used faster than ever before.
The open office is the most obvious example of this, but the trend extends beyond the office sector. Nordstrom’s new Los Angeles inventory-less store is a great example of how space needs are also changing in the retail sector.
Nordstrom’s new store offers experiences rather than inventory, which fits perfectly with younger generations who take e-commerce and two-day shipping for granted. Much smaller than a typical Nordstrom store, Nordstrom Local measures only 3,000-square feet and aims to bridge the online experience with the in-store via personal stylists, espresso and beer.
It’s too early to say if Nordstrom’s strategy is working, but it’s clear this type of concept originates from shifting commercial space needs. Millennials and Gen Z are the driving forces behind these changes, and whether it’s new commercial space preferences or changing technological fluency in the office, organizations and individuals who manage to get ahead of these trends will reap the rewards.