The “hotelification” of the office is not a new concept

Shiraz Jiwa, CEO

As we begin to look past the pandemic, there has been much crystal ball gazing as to what the “new normal” will look like. The office sector in particular has come under the microscope, with much talk of its “hotelification” – learning lessons from the hospitality sector on how to create new office experiences – built around collaboration, flexibility, social interaction and the associated amenities.

Some commentators would have you believe this is a pandemic-induced phenomenon. And whilst there has been an acceleration over the past 18 months, this concept has been systemic, not episodic. At its core is the shift from the office no longer being a cost centre but a revenue generator and how this impacts employer space requirement, which has been taking place over years, not months. The clear connection between the office space and talent, productivity and therefore revenue is not new.

I have to go back 10, 15 years to a time when conversations with existing or prospective tenants were the preserve of CFOs or COOs, who were simply focused on how many people they could fit in per sq ft, what the cost was per sq ft and what the cost was per workstation. Of course, on occasion there was the added allure of certain addresses. But talent and how it was intertwined with productivity and experience was nowhere near the top of the agenda, if on it at all.

Over the past decade we have started to see a steady shift in mindset. It manifested itself most clearly in those senior people in companies making the decisions. We started negotiating with Head of People, Head of HR or Business Development Manager types.

And whilst the big tech companies out of Silicon Valley drove this change, it was also professional and financial services companies.

I remember in 2010 discussing a 100,000 sq ft lease renewal with a City law firm in their office and being amazed at the investment they had made to engineer the space around the individual, both employees and visitors. They were already moving away from cellular space, for so long the go to of the legal profession, to coworking and collaborative space. They had also created a real hospitality feel, with a lot of art, elegant use of materials and soft furnishings and had employed people only from the hospitality industry to enhance the visitor arrival.

Over a decade ago, occupiers and by definition landlords, understood that the space they were curating was both reflective of their business culture and had the ability to impact on people’s subliminal. For an aspiring lawyer, or accountant, asking themselves ‘am I going to self-actualise in this space?’, non-verbal communication is hugely influential.

A building’s sustainability credentials and the link with productivity is another theme that has been a criteria in Investment Committee memos for longer than people think. Three years ago, we were having conversations with tech tenants around CO2 levels and whether we could track levels of endorphins to see if we could connect air quality and productivity.

At the same time the employee mindset is changing irrevocably, with many now believing they deserve a better experience if they are going to thrive in the office. This is especially the case with millennials and Gen Z, who are more socially conscious of their environment and will prioritise employers who demonstrate a clear commitment on this front.

This next generation of professionals are also the first to have enjoyed the boutique hotel like experience which is increasingly becoming the norm in Purpose Built Student Accommodation. They are attuned to viewing space as contributing to their development, providing a platform for excellence. This stays with them as they move into work, applying this concept of space as a service to their workplace.

Outdoor space, a focus on air quality, multiple working environments, floor to ceiling heights, bike racks, state of the art changing areas. The more progressive landlords and occupiers have been investing in these areas long before they became buzz words.  Visiting the Salesforce tower has always felt like you were checking into a 5-star hotel. Yes, the pandemic has accelerated the trend, but the reality is that the “hotelification” of offices is a decade old concept, as the more progressive businesses connected talent acquisition and retention with the physical environment.