The History and Future of Office Space

The History and Future of Office Space

What is the Future of Office Space

Office space has always been a response to the prevailing culture, more specifically the prevailing economy. Today many wonder about the future of office space. As the economic and cultural dynamics change, the use of commercial office space adjusts. While change is accelerating, there is one key truth that has always remained: we are social creatures. We are designed for human interaction and social connection. As of yet, no technology has been able to replace the biological need for true in-person connection. Understanding this driver is critical to understanding the history of the office and its future. Technologies will advance, work will change, and culture will evolve but human interaction is a biological need we must support.

When Did Office Space Start?

We owe many ideas to ancient Rome, and workspace is likely one of them. Our word “office”, comes from the Latin word “officium” which loosely translates to bureau. Ancient Roman cities had a sort of business district they called squares. These squares became not just the place of commerce but also a place to shop. Business owners would often live above their place of work. Many of the businesses had employees, called clerks, and clerks would also live above their workspace.

Introducing Office Buildings

It’s not until the 1700s that we start to see the construction of the first office buildings. Two, in particular, were significant. The Ripley building and East India House. The Ripley building was named after the famous architect, Thomas Ripley, and was built in 1726 in Great Britain. Originally built for the Royal Navy, the impressive structure contained office space, staterooms and apartments. 

The Ripley building

Around 1730 in London, England, the wealthy conglomerate, East India Company, opened a very large and prominent building called the East India House. The building acted as their headquarters where they were responsible for trade from Asia to Europe. The building also had apartments that housed the many employed clerks. For hundreds and hundreds of years, the concept of living where you worked hadn’t really changed, that was until the late 19th and early 20th century. 

East India Company

The End of Work From Home

Today, many more of us are home and dealing with the work from home distractions. There are two key things that happened in the 20th century for office space that changed the work and live mentality. The first was the implementation of factories. The advent of factories and corporations started to drive the division between where one worked and lived. While factories started appearing in the U.S. as early as the 18th century, it wasn’t until the industrial revolution thrived that the factory became common. This is the beginning of the fracture in our culture; where an employee would go to work separately from where they lived. 

Work From Home

The second major 20th century shift is the work of architect Frank Lloyd Wright. He first introduced what we now call the open office floor plan, reducing the amount of walls and in the workspace to make it more efficient. Some claim he created the most beautiful offices ever built. Many have since realized that open office plans have many challenges.

The Modern Office Space

In the 60s we begin to see the term “office landscaping”, the idea that staff should sit in an organic pattern that is made up of a mixture of open and closed spaces. This trend heavily influenced future office design. Additionally, suburbs developed and people lived further away from the city center where they worked. In the 1980s architecture and interior design become important and the cubicle comes into play. Giant open rooms are divided into separate offices that provide a more efficient workplace. Along with cubicles comes computers and a surge in technology. 
The changes in office space are accelerating.

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Office Technology

Fast forward to the late 20th century and early 21st century to find the invention of WiFi. This is when the internet significantly changes how we work. Knowledge work starts to push into the economy which separates us even more from the need to have a presence at the physical office. 

And as offices start to change, so does the concept and expansion of where and when we work. Mobile computers show up and coffee shops that offer wifi become a “third space”. We are now able to work when we’re not even at the office causing the lines to blur between work and home. 

The big push in commercial real estate as we move into modern-day is flexibility. We see things like “hot desking” or “co-working” pop up rapidly and change accelerates. Commercial real estate is a brick and mortar asset with hundreds of years of history. An industry like this has a difficult time adjusting fast enough. Through the early 21st-century office buildings have struggled to adjust to rapid change. It once took hundreds of years for a trend to develop but recently it might take only a decade

Coworking Office

The Future of Office Space is Here

So what will the office of the future look like?
First, we must understand the driving force behind the disruptive change in this article. Up until now, technology was the motivational factor behind change. Shipping and transport in the 1700s. Machines and the assembly line in the 19th and 20th centuries. The internet most recently. All of these technologies enabled new types of work and allowed businesses to accomplish new things.

During this global pandemic, the way business is conducted has changed for a different reason. Now it is cultural and social, which is much more fundamental. Necessity has driven us to work from home and keep our distance. While things may have been trending in this direction because technology made it possible, culture has now mandated new arrangements. Adjustments that may have required 100 years last century and 15 years this century have accelerated in just three to five months.

A number of people will go back to their conventional office spaces after the pandemic. However, the fundamental change is the implementation of more flexible work and work from home plans. Executives will start looking around half-empty office spaces with expensive leases and they’ll begin to roll out a plan for a virtual work environment to minimize their physical footprint. They will begin to realize, if they haven’t already, that commercial real estate for the longest time has been quite inefficient. 

A typical office building sits empty 68% of the week. Buildings have been adjusting to this for a long time as companies have decreased the square footage per person. But perhaps the most efficient office was where it all started – work from home with communal meeting places. Before the factories came online and the separation of work and life increased, most people worked where they lived. These technological, social, and cultural changes have shown:

  1. Traditional office space is inefficient;
  2. Employees are dissatisfied with the use of less square footage per person;
  3. Technology promotes productivity;
  4. The social shift brought by COVID-19 means workers do not want to be close together.

The answer, and likely the future of office space, is flexibility. Employees want more space, but if we spread out with more square footage per person, we’re continuing in our inefficiency. Instead, we’ll likely find people want more on-demand physical spaces like conference rooms and flexible desk options. We are still social creatures and this biological need has yet to change. Because of this, we’ll need some sort of office work environment. The future of office work isn’t fully home or fully in the office. The future is flexible, on-demand, space.

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The Future of Commercial Real Estate

The Future of Commercial Real Estate

Office Space is Changing

What if you could spin up an office space whenever you needed it, wherever you needed it?

What if, no matter the size of your startup, you could have office space anywhere in the world.

It was Marc Andreessen, who wrote the famous piece “Software is Eating the World.” He was right. This software takeover drives more than how we consume digital products. It drives how we expect every kind of product to work.

Software is a part of almost everything we use today: phones, computers, cars, crockpots, shopping, everything. This software is driving our expectations of nearly every product experience. Can you imagine today if someone handed you a set of 10 CDs that you had to use to install Facebook on one computer, and you could only use it on that computer? And you had to pay $99 to own it? Crazy talk. But that’s how it used to be. There was a time when computer software was a fixed, and expensive, asset.

Today, we expect membership fees for products that are continually updating. This is how we get our content now from Netflix. This how we shop with Amazon Prime. This how transportation works with Uber and how food works now with Blue Apron or Door Dash. 

Today, products as a service are eating the world. 

We’ve already seen AirBNB bring this model to the real estate world. But perhaps the most exciting change is coming to commercial real estate, which is the largest alternative investment asset in the world. What would it look like to have real estate as a service?

Space as a Service

Coworking was built from necessity, as many things have been in the history of real estate. Driven by a technology mindset, it was initially a way to repurpose old buildings into usable space. The idea has since exploded. But coworking today is not what it was ten years ago. Especially since the Coronavirus has circled the word and changed the way work happens. The very word coworking doesn’t describe what companies like WeWork or Knotel are building now.

Coworking is an outdated term. What we have now is the idea of Space as a Service or SPaaS. 

There was a time when a company existed in one place. They invested in that physical location, and it made sense to do so. Setting up an office is a significant capital expenditure. You have to buy furniture and other furnishings. You commit to space of a certain size for a long time and build in a way that fits your company. Historically, commercial real estate has required companies to commit to a plan for the next 5, 8, or 10 years. 

Today, how are companies supposed to know what they will be in ten years.

Things change quickly. Remote work is the new normal, and teams span across the globe. The very idea of full-time employment is shifting to fractional workers and contractors. For many companies today, it doesn’t make sense to invest heavily in one location. They may outgrow it in a few years or require locations in new areas.

So, what if real estate worked like software? What if office space worked the way we expect our other products to work? As a service.

Coworking is not about tossing desks in a room and making it cheap. It’s not about providing flexible workspace on flexible terms. It’s about companies spinning up an office like they spin up a remote server on AWS. The office now is about companies adding desks as quickly as they add a seat to Dropbox or Slack. 

Why can’t office space mirror the way we engage with the other products in our business workflow?

The Future is Flexible Workspace

You expect to order a product from Amazon and have it the next day. You expect to add a seat to your software whenever needed. You expect to drop into any city and grab an AirBNB or a Hotel Tonight room. Why can’t we expect to drop into any city and add a desk or two? 

This is Space as a Service: dynamic and flexible workspace-on-demand.

The traditional office space isn’t going to disappear any more than hotels disappeared when AirBNB came along. There is still a need for traditional office leases. 

But consider the size of the commercial real estate market. It’s worth trillions of dollars worldwide. There could be multiple billion-dollar unicorns in the SPaaS model, and that would only be a fraction of the market. This is a massive industry that is ripe for disruption as the workforce and cultural expectations change.

Ten years ago, coworking hardly existed. Over the next decade, SPaaS will be the next iteration that explodes onto the scene. Companies of all sizes, from individual consultants to fortune 100 organizations, will be engaging the SPaaS model to keep their capital costs down and increase their flexibility.

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