As business disruption increases, so too does the mobility of occupiers


For the modern office occupier all the world’s a stage. Three powerful and disruptive forces – slower economic growth, new technology, and the war for talent - are forcing occupiers to adjust or extend their footprint. This is creating robust demand across global real estate markets.


Corporate responses to disruption are set against a backdrop of low economic growth – one which many commentators regard as an entrenched reality if not a ‘new normal’. The IMF, for example, recently issued a global economic outlook entitled ‘Too slow for too long’. This is a neat, if worrisome, appraisal of the operating conditions facing global occupiers. On the one hand this sustained low growth trajectory serves to drag down corporate confidence and acts as a brake on business investment. Yet on the other hand anaemic growth has forced occupiers to adjust their business processes to protect margins and reduce operational costs. 

The insatiable rise of technology is also at work. As well as emerging as a dominant global sector in its own right, technology has challenged the very rationale of traditional businesses. It has permitted the radical re-thinking of the why, how and where of work. Those who have embraced technology are gaining a competitive edge. For instance, 71% of respondents to a recent McKinsey Global Survey believed that enhanced digital capabilities increases profitability. In contrast, those who fail to grasp the significance of digital disruption face uncertain futures.

Yet responding to this hi-tech challenge has brought exposure to a third disruptive force - the need to attract and retain talent in a global labour market. A recent survey found that 90% of C-suite level executives view recruiting and retaining technology talent as their top business challenge. 

What a challenge it is. In the U.S.A., for example, the Council of Advisors on Science and Technology predicted a shortfall of one million technical professionals by 2020. Little wonder therefore that the concept of a ‘war for talent’ has gained increasing traction. 


The challenging realities of disruption are driving increased levels of occupier mobility as a new geography of occupancy emerges – one dominated by the Global Cities. The globalisation of occupier activity is strongly evidenced by levels of global Foreign Direct Investment (FDI) which have been on an upward trend since 2012. According to the OECD, global Foreign Direct Investment (FDI) flows were up 25% year-on- year in 2015 at some U.S.$1.7 trillion. Not only did this constitute the highest volume of activity since the onset of the financial crisis in 2007 but, tellingly, both corporate and financial restructuring were cited by OECD as significant catalysts. 

The notion that office occupiers are spatially fixed is being challenged daily. The fragmentation of business processes has led to the rapid rise of ‘shoring’, whereby functions have been relocated to locations that have clear labour or cost advantages. Bangalore, Shanghai, Warsaw, Bucharest and Manila have all been beneficiaries of this trend, but a range of new locations are emerging in Peru, Trinidad & Tobago, and Kenya.

Mobile occupiers also have an urban focus. Young talent is heavily concentrated in cities. San Francisco, Berlin, Austin, Tel Aviv, Seoul and London have all flourished due to the presence of a strong digital demographic. Occupiers, not just from the tech sector but from across all industry types, are following the talent and taking root in cities. This is forcing inter-city relocations. It is the reason that General Electric recently relocated from Fairfield, Connecticut, its home for 30 years, to Boston. GE recognised that its future success was dependent upon software innovation and that this placed priority on attracting city dwelling tech talent. The same talent driver underpinned Amazon’s relocation of its U.K. HQ from Slough, in Berkshire, to high quality premises on the edge of the Shoreditch tech cluster in London. 

Disruptive forces continue to build. The onset of Artificial Intelligence and robotics, for example, is starting to influence and shape new business processes. What is clear is that as these transformational forces take hold, new location and property choices will be required. Global Cities will continue to feature heavily, but as many age old businesses will testify, complacency never pays in a disruptive environment. 


To Top