Executive search:

Property and real estate

Can hybrid working improve the property and real estate office experience?

Executive search market snapshot from Matt Parkin, partner, executive property, InX.

The property market has had a tough year, with signs of opening up across H2 2023. Inflation has seen the cost of materials go up, and the share prices of construction companies go down. Matt Parkin, partner at InX, highlights the market trends for 2024.

Here are the key areas leaders need to prepare for in 2024:

Hybrid working – is the return to the office improving the workplace environment?
Long-term strategies – firms are moving away from one-year real estate extensions.
Fixed-term transition – why flexible, short-term hires are in demand.

Against a backdrop of macroeconomic uncertainty, there was a significant drop in real estate investment in 2023. Some of our clients believe vendor expectations on the price of commercial property didn’t account for a drop in valuations since H1 2022.

Hybrid working

On the plus side, asset management remained busy in 2023. Where hybrid working models saw some occupiers looking to reduce their office space, they also saw value in improving the quality of the space they used.

We spoke to a managing director from a leading global facilities management company, who said:

“Post-COVID, the Great Resignation did not have as significant an impact as expected. Office attendance levels Tuesday to Thursday are higher than they were in 2019, and with the exception of some US-based customers, most of our corporate clients see this hybrid structure as the way forward.”

COVID has made it more difficult to recruit and retain staff. At a lower level, furlough saw many cleaners and engineers leave the sector, taking jobs in other industries for more money. Junior staff have missed out on two years of not being around more senior colleagues, meaning that learning by osmosis is down, creating gaps in some people skills essential for a relationship-led service.

Long term strategies

At a senior level, we have noticed that there’s been less movement of operational leaders at the managing director level within the sector than in 2021 and H1 2022. As their clients move away from multiple one-year extensions, and towards a real estate strategy of five years or more, our network tells us that this will drive business growth and strategy realignment that lends itself to more strategic senior hires in 2024 and beyond.

Fixed-term transition

Where market uncertainty may have slowed the number of permanent hires, 2023 was our best year in the senior interim market. The demand for short or fixed-term hires to oversee a transition period or implement a key transformation project is the highest we have ever seen.

In summary

Corporate occupiers are putting more emphasis on the office as a driver of workplace culture. With increased awareness of the need for decarbonisation, there is an opportunity for FM and asset management businesses to charge a premium for a higher-grade workplace experience. The market is valuing longer-term real estate strategies as the move to flexible contracts and hybrid working continues.

What’s the take-home?

As the market begins to accept the changes that hybrid working has produced, asset management is focusing on a premium workplace experience. Environmental considerations remain important, refocusing expectations and growth in the sector.