Evolving Workstyle Trends Are Driving The Corporate Real Estate FootprintFebruary 25, 2023
I read a recent article out of the Chief Executive magazine on work place trends and how they are changing the corporate real estate footprint. I think that some of the points made in this article will be helpful to the leaders making real estate decisions for your organization. The article was written by three individuals out of Deloitte’s Real Estate Strategy and Sustainability practice groups (authors were Matt Highfield, Michael Gordon, and Christopher Mulrooney). The article can be found here… https://chiefexecutive.net/creating-connections/
The article points to three areas that bring challenges to CEOs and their real estate footprints. The three areas are quality data for their footprint, sustainability mandates, and the mixed economic outlook. The article looks at these three areas and how they impact corporate real estate. The article also noted that corporations are likely to take action as they see their long-term real estate strategies come into focus over the upcoming calendar year.
Hybrid work is impacting workstyles.
It seems that the pandemic created a perfect storm for the employee. Prior to 2020, good employees were in demand and they held quite a bit of negotiating power. When the pandemic hit, it forced people to work from home. Once this was an acceptable practice across the board, employees had a little more leverage on working from home. The root of this may be tied to the employee’s desire to improve both physical and mental health. The perfect storm resulted when employees started to demand that they want to see an allotment of both in their workplace. The net result for leaders is that they will need to “provide flexibility in how, when and where employees work, and provide the guardrails for them to find time throughout the day for well-being – as defined by the individual, not the employer.“
“There has been a renewed focus on both physical and mental health, and individuals feel empowered to set boundaries with and manage expectations of their employers in ways they hadn’t before. “Highfield, Gordon, Mulrooney
As we see new trends, we can only expect that new policies will also be needed to sustain this change. According to the article, “transparent decision making and clear working guidelines have become a major focus for employees as they operate away from the office.” In order to win in the workplace, leaders will need to come up with strategies and implement them so employees stay satisfied and productive. In addition, organizations want to unlock value from their investments in the workplace (i.e. office space) but employees must be present for this investment to be realized. Therefore, working out a strategy for transparent decision making and polices along with your workplace investments will be at the core of the problem to solve within corporate real estate over the upcoming year.
Evolving workstyles are impacting the role of the workplace
How do you make the best decision giving the change? You will need good data to make those decisions. One such area is getting real time utilization of your office space. In other words, what is your organizations demand look like for office space (when, who, what, and where)?
“Having access to quality utilization data is especially important when evaluating different locations within the same city or region for footprint consolidation initiatives given that where people work from is less predictable when provided with optionality. For example, is a once-sleepy satellite office now more bustling than the city center HQ, given the proximity to talent?”Highfield, Gordon, Mulrooney
Companies still recognize that the workplace still plays a role in creating connections and fostering collaboration. “Deloitte’s 2023 Commercial Real Estate Outlook reports that 41% of real estate CFOs in North America expect that their company will perform a workplace redesign in the next 12-18 months, and we can expect a great deal of that investment will be targeted at reducing the amount of individual workstations and providing more places for people to come together for learning and culture building.” The article also pointed out that there will also be an investment in how to improve the digital experience.
Informing location strategy from workplace realities
As a broker, we are seeing the lack of demand for new office space. Listing brokers are a lot more willing to show up for a tour and roll out the red carpet if they have a tour in one of their vacant spaces. Meanwhile, corporations are in the process of deciding how much space they need from their pre-Covid portfolio. The change may take a few years to shake out but it will happen. As leases burn off, it is very important to develop your strategy now so you can start implementing it immediately.
There are at least three strategies/trends that are forming in the marketplace. One strategy is to make revisions to seating by adopting co-working spaces. A second strategy is to increase the proportion of collaboration space and reduce the individual spaces. Another important strategy is looking at the talent pools and moving the office space toward the talent. This last trend is pushing corporations to look outside the big city and into the suburbs where the talent is living. As you work on these strategies, it will be important that you set up good data collection methods to collect the best data you can so you are able to make the most informed decisions.
The challenges and opportunities ahead
There are several challenges to coming up with good solutions to these new trends. One challenge is to develop the right questions to ask. What does your workforce need to be satisfied, productive, and successful? Does location have an impact on meeting those needs? Another aspect is to look at the quantity verses quality when asking these questions. In other words, ask questions that take into account employee needs along with corporate real estate needs. Also, if you focus solely on reducing your footprint, you may be missing the insight on how to increase productivity or satisfaction within your workforce. Another pitfall can be to avoid just looking at what your competitors are doing, take the data that you are getting from your workforce and use it to make good decisions for your company. The last thing to consider is how to look at these challenges. My recommendation is to look at these challenges as opportunities to improve your company and your competitive advantage.
Setting new trends, by creating.
The new normal is no longer new! We are seeing how employees are returning to the workplace and it is time to start collecting data and developing your strategy. This year will likely result in the beginning of a workplace that changes the experience that an employee have along with balancing the needs of the employer which should result in a re-balancing of your real estate footprint along the way.
Don’t forget that I’m available to come in and help you with your real estate strategy. Feel free to call me at 510-915-7645.