Studies have found that Generation Z lacks motivation and loyalty to their employers. One reason for this is that employees in this age group, born between 1995 and 2009, are entering an employee-friendly labor market, can choose from several job offers, and like to negotiate conditions such as working from home, a four-day week, or sabbaticals. The commercial real estate specialists at Larbig & Mortag Immobilien have conducted a forward-looking analysis of why the tide is likely to turn with the next generation, Generation Alpha, and what this means for the use of office space.
(Cologne, June 13, 2023) A recent Forsa survey has found that Generation Z (Gen Z) is highly willing to change jobs and has little loyalty to their employers. Forty-eight percent of this generation, i.e., employees born between 1995 and 2009, are looking to leave their current job. The reasons for their willingness to change jobs include rigid working hours, too much stress, and what they perceive as a poor and outdated management culture. Furthermore, they do not necessarily want to earn more money in their new job, but rather have more time for themselves and others. This is, after all, an argument that older employees also put forward.
"Compared to previous generations, this is a new development and poses major problems for many employers. This is because it takes relatively little to motivate Gen Z to change jobs. This is mainly due to the fact that they are finding a relaxed job market. There is a shortage of skilled workers in almost all industries. They have more doors open to them than any previous age group or generation. They can attach conditions to their employment, such as the option of working from home, sabbaticals, a four-day week with full pay, flexible working hours and locations. This also includes workations, i.e., working in a vacation environment," explains Uwe Mortag, managing director of Larbig & Mortag Immobilien. The real estate service provider, which specializes in office space brokerage, among other things, is familiar with these challenges through its work with a wide range of clients and industries. This is one of the reasons why more and more companies are investing in better office equipment to attract new talent and retain existing employees in more central, urban office locations. "Nowadays, it's no longer enough to provide Gen Z employees with a table tennis room," says Mortag.
Less favorable conditions on the job market for Generation Alpha?
The next generation, Generation Alpha, i.e., people born between 2010 and 2024, who will be entering the labor market from 2028 onwards, could face less comfortable conditions than Generation Z. Their youth will be shaped by the aftermath of the coronavirus pandemic, The war in Ukraine, an uncertain geopolitical situation, their parents' fears of recession, and environmental challenges (climate change,CO2 emissions, water shortages, etc.). Not to mention the technological changes that are also accompanying the increasing emergence of AI. The technological revolutions of the coming decades will be many times faster than those of the past. "While in the 1990s, the spread of IT and automation in production primarily affected the fields of skilled workers and secretaries and cost many jobs, AI will now have an impact on many skilled jobs and change the work of programmers, lawyers, tax advisors, media designers, and journalists, for example," says Mortag Lawyers, tax advisors, media designers, and journalists," says Mortag.
For Generation Alpha, the job market could therefore be less rosy than for Generation Z. It could develop back into an employer's market, where job providers tend to dictate the terms. This was the situation faced by the baby boomer generation and Generation X in the 1990s. Added to this is the increasingly tempting option of outsourcing jobs to other EU countries. This is because Generation Z is already entering the labor market in other European countries with a high level of education, for example in some Eastern European countries. They often have German language skills and a high level of motivation and will be growing competition for future generations in the saturated Western European countries.
Generation Z: Desire for work-life balance poses challenges for many companies
Generation Z's demands for a work-life balance are challenging many companies. Many have so many orders that they would rather hire additional employees than allow existing employees to work fewer hours. In order to promote employee loyalty and score points in recruiting, many are coming up with creative ideas in the areas of office equipment and benefits: They are looking for modern, centrally located office space so that their employees have a good choice of places to eat during their lunch break or can go to the gym just around the corner after work. They are expanding or converting spaces to meet new work requirements. This means that floor plans, furniture, air conditioning, and lighting optimally support employees in their work. Greater emphasis is placed on meeting and communication areas. "For example, there are glass cubicles for undisturbed phone calls and meetings, as well as coffee kitchens with sofas and counters," explains expert Mortag. Such measures increase the attractiveness of companies. In addition, larger companies offer childcare facilities, sports and relaxation options in the office or in the neighborhood, and regular team events.
Nevertheless, the current demands of Generation Z represent a considerable economic burden. If employees work less for the same money, more people have to be employed to compensate for this. In the current job market with its uncertainties, this is a major challenge.
Conflicting demands on future office workplaces
The difference between Generations X, Z, and Alpha couldn't be greater. The evolution from individual offices with private potted plants and coffee machines to coworking. This is important for decision-making about office planning in the future. While Generation X is currently deciding on the real estate of the future, Generations Z and Alpha have very different ideas about jobs. Companies need to respond to this, and managers need to adapt or act with foresight. On the landlord side, project developers in particular should address these upcoming changes. Projects usually have a lead time of five to six years, meaning that future projects will coincide with Generation Alpha entering the workforce. It will be important to understand the requirements of subsequent generations and to recognize the differences early on. This will enable office spaces to be planned and let in line with requirements. Sustainability already plays a major role today and will be particularly important for Generation Alpha. In all cases, the change in requirements for office space will become much more rapid. Flexibility will become even more important.
"We address these issues at an early stage because, as an innovative real estate service provider, we need to keep an eye on future trends. We advise owners as early as the purchase process and provide input for future use. It is not uncommon for the product to hit the market five years later. Megatrends must therefore be planned for at an early stage. We also provide intensive support to companies in the search for new offices, offering workshops and employee surveys. Good planning is half the battle here too. Not literally, of course," says Uwe Mortag.
