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With economic pressure growing, now is the time for CEOs to take a hard look at whether the real estate footprint is right-sized and right-placed for today.

The impact of covid-19 on the office experience has been well-documented. The rapid rise in USPS change of address requests and migratory stats illustrating an exodus from city to suburban enclave, coupled with one of the most significant labor shortages in recent history, led many to liken their offices to a “ghost town.” However, with the crisis stage of the pandemic in the rear view, and the economy sending mixed signals, employers are announcing measures to reel folks back into some type of office rhythm. 

For many, the collective appetite for commuting to work has changed, along with expectations for in-office activities, which appear to be driving differences in the utilization of urban vs. suburban space. Employees, from entry-level to management, recognize the value of face time and in-person collaboration, but the barrier to achieve is often as simple as accessibility. Suburban office parks, offering easy access, abundant (often free) parking and onsite amenities, are humming with activity. However, urban offices are not experiencing the same hustle and bustle, despite mandates to return. With economic pressure growing, now is the time for CEOs to take a hard look at whether their real estate footprint is right-sized and right-placed for today. 

What should a CEO consider when making long-term footprint decisions? 

1) Start with talent, both current and future. Determine where your people now live relative to office locations by running zip code analyses to reveal average commute times. To do this, you need to pulse your organization on changes of address, as many have moved out of high-density small spaces to take advantage of second homes or larger lots outside the city. Identify where your high-performers and associates with skillsets considered difficult to train or replace reside. Consider the future make-up of your workforce and gaps in your current talent pool. Identify which of your locations are well-suited to fill that pipeline, or whether you’ll need to consider new geographies. 

2) Translate to a space demand signal. Once you have a clear view of your people, it is time to look at your space metrics. Is space being used at a level of utilization that exceeds corporate or industry benchmarks? Utilization is relatively easy to track, but it is important to unpack and understand which employees are leveraging various types of space, and why. Jobs requiring in-person customer interaction or hands-on research and development, for example, may drive higher utilization. In these cases, utilization metrics could be masking dissatisfaction and instability within your workforce, given the shift in thresholds for commuting. On the other hand, low space utilization could indicate accessibility issues, or perhaps a need to upgrade space to make it more conducive to the type of activity workers feel is most valuable in-person. The nuances matter in determining your strategy.

3) Right-size and right-place your footprint. Once you understand demand for space, matched with current utilization, you’ll be able to identify where you should be shedding, modernizing or growing. Data collected from over 7,500 C-Suite leaders, executives, managers and analysts showed that 33 percent of those considering a real estate rationalization program plan to reduce the space used for certain parts of the business and expand it for others.1 Creating attractive workplace choices for employees might include a mix of both urban and suburban office spaces. This would allow business leaders to leverage a broader workforce with a diversity of strengths across regions. You’ll want to consider what you own vs. lease, including any relevant terms, to guide decision-making. In addition, it’s important to look at where financial investments have recently been made to upgrade space, and whether the costs of exiting or modifying might exceed benefits. Lastly, when evaluating the geographic placement of your office locations, you’ll need to consider whether the nodes of your footprint are required to satisfy any regulatory/compliance or customer accessibility requirements.

After a comprehensive footprint exercise, CEOs can expect significant benefits, ranging from access to a future-focused pipeline of talent, higher employee satisfaction, enhanced productivity, greater stability (less turnover), as well as significant recurring cost savings. While execution requires time and effort, companies have the opportunity, now more than ever, to work with their employees to design a footprint that blends employee preferences with management priorities. 


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