How Major Changes to the Supply Chain Will Transform Corporate Real Estate

By Scott Henley

As the supply chain increasingly turns to automation, there will no doubt be an impact on the workforce. In fact, recent McKinsey & Company research suggests as many as 45% of activities individuals are paid to perform can be automated by adapting currently demonstrated technologies, representing about $2 trillion in annual wages. It’s not only impacting lower-skill or lower-wage roles, but even higher-paid occupations such as financial managers, physicians, and senior executives.

The report noted that organizational and leadership implications are enormous, and c-suite leaders will need to redefine jobs and processes so that organizations can take advantage of the automation potential available—saving labor, increasing output and quality, and improving reliability.

This is not to say automation will totally take over these jobs; McKinsey estimates fewer than 5% of occupations can be entirely automated using current technology, but 60% of occupations could have 30% or more of activities automated. Tasks that once took up a huge portion of the day can now be assisted by this automation, freeing up employees to conduct more meaningful and creative work.

The implications on real estate are staggering—there’s been a huge shift in how companies are leasing and utilizing space. For instance, there’s been a significant increase in collaborative and co-working setups, and many employees don’t even need to physically be present to do their jobs anymore.

Consider a law firm’s real estate needs just 20 years ago. Some of the larger names needed tens of thousands—even hundreds of thousands—of square feet in order to adequately house partners, associates, paralegals, paperwork, and a significant law library. Today, many are leasing much smaller footprints, as technology has reduced their space utilization—all of those books and paperwork can now be accessed quickly with a mere click of a mouse. (In fact, The Atlantic recently highlighted the rise of virtual law firms, which provide traditional legal services through attorneys working remotely, whether from home, a coffee shop, or co-working space.)
It’s important to take this automation into mind when developing or re-evaluating a company’s real estate strategy. It’s critical to have a knowledgeable corporate real estate team on hand to determine how this automation might affect your workforce and your space needs going forward.

For more information about how you can grow your business through corporate real estate decisions, contact Scott Henley at 904-514-2883 or shenley@phoenixrealty.net.

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