Impact Of Innovative Workplace Design Commerce

Innovative workplace designs are widely implemented and considered by office users in the Netherlands. For this research the definition of innovative workplace design is stated as a smarter way of (knowledge) working by an integral approach of FM, REM, HRM and ICT management that stimulates place- and time independent and activity-based working within a differentiated workplace environment and that transfers the style of leadership and employeeship.

Innovative workplace design is strongly related to corporate real estate. Place- and time independent and activity-based working in a differentiated workplace environment alter the possibility for office intensification and request more flexibility. Research done by Gibson and Lizieri (1998; 2001) indicates that although innovative workplace designs are widely implemented in the British corporate sector, the impact on the corporate real estate portfolios is not significant. Proponents of innovative workplace design in the Netherlands, however, express that innovative workplace design causes smarter and better working, which causes in turn an increase in productivity and significant cost reductions by a reduction of the amount of business space needed. This research therefore investigates the impact of innovative workplace designs on the demand en requirements for corporate business space on the Dutch real estate market.

In order to determine this impact, literature and multiple case study research is conducted. The research first concerns drivers for changing the workplace design in combination with the historical context as a reaction of the corporate real estate managers on changing requirements from the organisation. Parallel to this 'demand side' the supply side of the real estate market is discussed concerning market structures, the current situation on the Dutch real estate market and key player response on the changing requirements from the demand side. The impact of the key player (demand side) and the corporate real estate management (supply side) response is influenced by internal and external constraining and supporting forces which finally lead to the impact and consequences for the demand and requirements for corporate business space.

Since 2000 more and more office users are considering new innovative workplace designs driven by economical, social and technological developments. Corporate real estate managers are challenged to find flexibility in the build environment which is inflexible in nature. Innovative workplace designs herald the need for physical, functional and financial flexibility in order to house the workplace concept successfully.

In order to determine the impact of innovative workplace design supporting and constraining forces are discussed. Remarkable are the differences and similarities between the findings from literature research and case study research. Internal supporting forces are considered as the objectives of innovative workplace designs. In addition, case companies considered also the possibility to use the workplace design to support the business and as a branding tool. The internal constraining forces are remarkable similar, however, there are two main differences considering the difficulties to formulate the business case, case companies considered the financial business case more as a supporting force, and the part of personnel that will be affected by innovative workplace designs. Case companies stated that each employee, instead of 15 percent, will be affected but the extent to which each one can make use of the provided facilities is depending on their function and activities.

External constraining forces are corresponding, with the only discrepancy that the case companies considered 'practical Dutch constraints' such as the Working Conditions Regulation and Compliance

regulations. The fourth discrepancy is observed at the external supporting forces. Literature findings considered mainly the driving forces for change as external supporting forces, but lack social developments such as sustainability and mobility which are mentioned by the conducted Dutch case companies.

Both literature study and case study research considered the real estate market as a constraining force for the implementation of innovative workplace due to the institutional market structure, the conservativeness and dominance of the supply side on the market. Change is on the other hand occurring. Market research demonstrated that the constraining force, due to the current economical downturn, is less strong as is stated in the literature. This results in the fact that investors and developers are more willing to build and renovate properties in order to meet the requirements of corporate clients, concerning physical and functional aspects, otherwise they are unable of sell or let the properties. Financial flexibility is, nevertheless, less observable but not absent. The lease lengths have shortened over the last decades to 5 years in 2010 and there are a few other forms of financial flexibility offered by the market such as multitenant buildings and services office space. Also incentives such as contractual break points, rent review opportunities and establishment budgets are widespread and commonly used by the market in order to attract office users.

Literature-, market- and multiple case study research demonstrated that impact on the demand and requirements for corporate business space is clearly observable on the Dutch real estate market. Literature findings articulate the impact in two forms: a reduction of the amount of business space that is requested; and a changing request for business space, based on physical, functional and financial flexibility. Market research pointed out an significant reduction of demand for business space. Characteristic is the use of innovative workplace designs as a counter measure against the economical downturn, in order to reduce the housing costs. Also in practise, as seen at the case companies, the impact of innovative workplace design is established. Interpolis managed to reduce the amount of workplaces with 40 percent so that in the new housing situation one office tower was sufficient instead of two. Also KPN and Achmea tend to reduce the amount of square metres business space and are able to reduce the amount of office locations.

Not only the demand for corporate business space is decreasing by implementing innovative workplace designs, but also the request for another type of real estate is pointed out.

Physical aspects such as large floor plates with small grid dimensions which offer the possibility to separate and restructure the floor space, high level of building services which support changing functions of spaces and the placements of columns, play nowadays an important role in the designing phase.

Functional aspects such as office layout, building design and the location of the property also possibly change by the implementation of innovative workplace design in order to create sustainable workplace designs with flexible workplaces to quickly and effectively accommodate various future changes demanded by corporate clients, and to meet the emergence of new technology and the increase in business competition.

Based on this research can be concluded that the results from the research done on the British real estate market, Gibson and Lizieri (1998 and 2001), differ from the results from this research concerning the Dutch real estate market and that innovative workplace designs do have and significant impact on the demand and requirements for corporate business space, at least at the conducted case companies and, as assumed, this is evident for the whole Dutch real estate market.

Abstract

Research on the British property market indicates that innovative workplace designs have been widely implemented in the corporate sector. More detailed analysis, however, showed that the impact on the corporate real estate portfolio is less significant as often is asserted. Also on the Dutch property market innovative workplace designs play an important role. The research objective for this study was to investigate the impact of innovative workplace designs on the demand and requirements for corporate business space and what constraining and supporting forces do affect this impact on the Dutch real estate market. Based on qualitative research, extensive literature study and multiple case study research have been conducted in order to determine the impact on the Dutch real estate market. Literature review and data analysis provided a theoretical and practical framework for interviews with FM, REM and HRM managers of three large insurance companies in the Netherlands.

Literature research showed major potential impacts on the demand for corporate business space including a reduction of the demand for square metres floor space, but also a changing demand for physical, functional and financial flexibility aspects of the building. Multiple case study research supported these findings. Market research even stated that the introduction of innovative workplace design is one of the most important countermeasures, for corporate office users, to overcome the economical downturn. Potential impacts from the literature are observed in practice at the case companies and real estate market research also detects an impact from corporate office users which implement innovative workplace designs. The conclusion of this research is therefore, in contrary to findings from the U.K, that innovative workplace designs have a significant impact on the demand for and requirement of corporate business space on the Dutch real estate market.

Table of contents

Summary 2

Abstract 4

Table of contents 5

1. Innovative workplace design the Netherlands 7

1.1 Awareness of innovative workplace design by office users 7

1.2 Visions of guru's on innovative workplace design 8

1.2.1 Bill Gates 8

1.2.2 Eric Veldhoen 9

1.2.3 Dik Bijl 9

1.3 Definition of innovative workplace design 10

1.4 Relation between innovative workplace designs and corporate real estate 10

2. Research Methodology 12

2.1 Research questions 12

2.2 Hypotheses 13

2.3 Research design 13

2.4 Limitations 14

3. Drivers for change in the office workplace design 15

3.1 Drivers for change in the office workplace 15 3.1.1 External changes 15

3.1.1.1 Economical changes 15

3.1.1.2 Technological changes 16

3.1.1.3 Social pressures 16

3.1.2 Internal changes 17

3.2 Historical context 17

3.3 Flexibility 19

3.4 Situation on the Dutch office market 19

3.4.1 Interpolis 20

3.4.2 Achmea 21

3.4.3 De Friesland Zorgverzekeringen 21

3.5 Objectives of innovate workplace design 22

3.6 Sub conclusions 23

4. Forces of constrain and support 24

4.1 Internal forces 24

4.1.1 Internal forces of constrain 24

4.1.1.1 Personnel affected and resistance 24

4.1.1.2 Technology conditions 25

4.1.1.3 Financial business case 25

4.1.1.4 Building design 25

4.1.2 Internal forces of support 26

4.2 External forces 27

4.2.1 External forces of constrain 27

4.2.2 External forces of support 28

4.2.2.1 Declining lease lengths 28

4.2.2.2 Serviced office space 28

4.3 Sub conclusions 29

5. The reaction of the real estate market on the changing requirements 31

5.1 Market structure 31

5.2 Situation on the Dutch real estate market 32

5.2.1 Sub conclusions 33

5.3 Reactions and options 33

5.3.1 Revitalization of the current stock 33

5.3.2 Prevent vacancy 33

5.3.3 Chain integration 33

5.3.4 Financial flexibility 34

5.4 Sub conclusion 35

6. Consequences for the demand of and requirements for corporate business space 36

6.1 Potential impact 36

6.1.1 Reduction of square metres business space required 36

6.1.2 Changing requested flexibility 36

6.1.2.1 Physical flexibility 37

6.1.2.2 Functional flexibility 37

6.1.2.3 Financial flexibility 37

6.1.2.4 Sub conclusion 38

6.2 Proof by the market 38

6.2.1 Office of the future 38

6.3 Case companies 39

6.3.1 Interpolis 40

6.3.2 KPN 40

6.4 Sub conclusion 40

7. Conclusions and recommendations 42