Providers of shared office space such as WeWork are beginning to disrupt the need for traditional office space, Peter Victor, senior management director and head of the international desk, EMEA, at Cushman and Wakefield, said at the ULI Europe Annual Conference in Paris.
Now in its fourth year, WeWork has as its aim transforming how small businesses lease and occupy property. The firm, cofounded by Adam Neumann and Miguel McKelvey, operates by leasing floors, then charging monthly memberships to start-ups and small companies. WeWork has leased 1.6 million square feet (149,000 sq m) in New York City alone, and the company is valued at $5 billion.
WeWork aims to triple its members to 46,000 over the next year and increase the number of locations to 60 from 21 today, adding sites in Austin, Chicago, London, and Amsterdam, according to Forbes. But WeWork is just one of many tech companies promising to change the real estate industry in ways previously unimaginable, Victor said.
“Millions of tech geeks are finding new ways of doing things, and it is impacting massively,” he said. “For many, that disruption is a negative idea. But the way we see it is this: if our business is going to be disrupted. We prefer to be inside the room rather than outside of it.”
Cushman recently partnered with Spire Ventures and Europe’s first property-focused technology accelerator company, Pi Labs, to provide property entrepreneurs with investment, mentoring, and business space.
Pi Labs operates from Second Home, a 24,000-square-foot (2,200 sq m) carpet factory turned office space in London’s trendy Shoreditch neighborhood. It is conceived on the basis of the disrupter model Victor cited. The building is designed to help fast-growing creative companies collaborate and innovate within a unique fit-out: use of transparent acrylic, curved walls, meeting tables that can be packed away when not in use, free coffee, and thousands of hydroponic plants.
Fellow panelist Inma Martinez, business ambassador, catalyst program, for the U.K. Trade and Investment department, said the philosophy of Second Home echoed that of Facebook’s new headquarters on the outskirts of San Francisco. Mark Zuckerberg’s 435,000-square-foot (40,400 sq m) complex is being designed as a large Hadron collider conjuring serendipitous meetings among staff members, she said.
“Innovation happens when people mingle, share ideas, get feedback, and have conveniences built around them,” she said. “They are places that help people work harder. This is the office space everybody wants.”
Martinez also argued that advanced sensor technology is changing the way buildings are occupied, citing tech firm Pavegen’s work developing floor tiles that turn footsteps into electricity and automatic locking systems that eliminate the need for keys.
“Building materials are incorporating software and changing the way people use spaces,” she said. “Soon, sensor management systems won’t just be monitoring gas and electricity usage. They will make decisions based on the preferences of occupiers.”
But Google’s decision to locate a 1 million-square-foot (93,000 sq m) U.K. headquarters at the heart of London’s King’s Cross regeneration project shows tech firms are just as interested in “places,” Victor argued. He said the heritage-led, mixed-use development—with its arts and cultural uses, large area devoted to green space and the public realm, and proximity to major transport hubs—would help the tech giant attract employees. “The war for talent is a new demand driver,” he said.
“Companies need to chase talent, and that is causing real estate to change from a commodity into a weapon that will fight that battle. Google, Twitter, and Amazon are making strategic decisions to drive retention and attraction,” he said.
Twitter’s decision to lease two floors of 1335 Market Place in San Francisco’s downtown Tenderloin district as its corporate headquarters—a space that had been vacant for five years—also shows that tech companies are “breathing new life into buildings teetering on the edge of obsolescence,” he said.
“What would have happened to New York’s 111 Eighth Avenue building if Google hadn’t bought it?” he asked. “These companies want to make their mark on the world and do it in traditional ways.”