The pandemic disrupted where and how we work—but it also brought an opportunity for businesses to rethink real estate. While debate about the future of remote work continues to rage, one thing seems clear: CEOs are seizing the moment to rethink not only their time-in-the-office requirements, but their workspaces. Only a handful of companies report intending to go fully or significantly remote, but many see the upheaval of the past year as an opportunity to reimagine workspaces, realizing savings in the process.
In fact, 87 percent of executives expect to make changes to their real estate strategy over the next 12 months, according to a recent survey by PwC. Plans range from consolidating office space in premier locations to opening satellite locations where small groups can gather to collaborate. Some expect to reduce space, others anticipate needing more. Chief Executive recently spoke with Allison R. Ballard, vice president and executive director of 4SITE by CORT, about what companies should be considering and the role technology can play in planning a real estate strategy for the future.
With some exceptions, companies seem to be heading toward a hybrid model where employees will spend some, but not all, of their time in the office. Does that mesh with what you’re seeing?
The variables are all new to everyone but it does seem that the majority of companies are going to be requiring their workforce to be in office at least a portion of time. And, as a result, they are not going to be managing their real estate in the same way they did historically with dedicated spaces for each of their employees. That one-to-one ratio is changing to many-to-one.
How is that shift affecting the configuration of office space?
First, it’s important to understand that this is not a one-and-done thing. Companies that modify their offices to create environments conducive to this new normal will want to understand how their workforces are engaging with that workplace. It will be important for them to gauge whether it’s as productive as they anticipated or if they need to continue to modify the footprint for the way their employees work.
Sensors that collect data on how space is being used can help them make informed decisions about restructuring their existing configuration. That data can be used to optimize space. For example, they may want to flex up on lounge areas and small huddle rooms used by people who only go in for team meetings and down on large conference rooms and individual offices. Data can also be aggregated to evaluate potential changes to the office footprint and eliminate expenses that are not productive.
Is whether you own or lease the space a factor in whether a space optimization study is warranted?
In both cases it’s about mitigating exposure to unproductive real estate, but it is a different conversation when you lease versus own. For example, with office space that you own, an optimization study might lead you to sublet an area so that you gain a revenue stream from space that isn’t being used.
In a lease situation, it may make sense to release the space or negotiate a restructuring of your lease or to sublet. If those options aren’t possible in the short term, you can still explore reducing your cash burn by closing that area off and reducing the operational expenses—air conditioning, lighting, plumbing, cleaning—related to that floor or square footage.
How long do sensors need to be in place for the data to be a reliable indicator of your real estate needs?
We have found that the entirety of the portfolio needs to be monitored for 12 months. However, you can take utilization and occupancy sensors and redeploy them into other areas of your real estate after six months and compare and contrast the analytics. Generally, you need at least six months in each area to account for variation in usage over, for example, the holiday season or other anomalies.
The good news is that it’s never been easier to get objective data to drive real estate decisions. The technology is more affordable than ever to implement and operate, and the data can be sliced, diced and analyzed far more easily. Real estate is one of the most expensive operating costs for most companies, so an inexpensive approach to increasing efficiency can offer a pretty significant quantifiable return on investment.
There are also intangible benefits, such as the value of enhancing engagement as well as the ability to more effectively collaborate and share knowledge. Taking the time to look at the normal ebb and flow of how your workforce uses your space can help companies make informed decisions that will lead to real benefits as we all learn to navigate the new normal.