Corporate real estate: Towards a post-pandemic future
This is the second article in a three-part series exploring why a Corporate Real Estate (CRE) strategy is more crucial than ever before.
In the first article, Mace Director for Strategic Advisory, Shelley Frost, looked at the timing of decisions CRE leaders should take. In this article Shelley goes further by examining what the real estate portfolio will look like and how CRE can support business success in the post-Covid world.
Getting business back to work
Businesses and CRE professionals have adopted a “wait and see” approach to decision-making regarding their real estate portfolio in 2020, as the world waited to see when life could return to “normal”. But it’s become increasingly clear that not only can we no longer wait to make decisions, but the “new normal” means that employees want to work very differently in future. Technology has allowed many office-based professionals to work from home and other locations with far greater ease than previously anticipated and many don’t want to go back to the old ways of always being in an office.
But as the demand for flexibility and more agile working increases, how do CRE leaders plan their estates? No business has a blank sheet of paper to start re-imagining from scratch how their offices might work and totally redesign a portfolio, particularly if they’re capital constrained. Most organisations will need to make do and mend; repurpose as many are calling it. Some will think that downsizing is the answer, but before taking any knee-jerk action, they need to ask themselves whether this will inspire employees to be creative and innovative, or still view them as an employer of choice.
Just because they can, should employees work from home? Businesses don’t want to be in a position of forcing people to work from home because they don’t have enough space or have made a portfolio that is too small or inappropriate. After all, a building is more than just bricks and mortar, it’s a sign of investment in your employees, providing them with the space to be creative, productive and make them feel valued. Also let’s not forget customers, suppliers and partners who often visit offices to understand the culture of a company.
Designing a strategy for the new normal
So how do you plan your portfolio requirements when employees are sometimes making choices of where they want to locate on a daily basis? And it’s not simply the case that collaborative work will be office-based and concentrated work will take place at home. How do you balance the choice you’re offering employees with the cost of maintaining a high quality environment in a range of locations? Some may balk at the idea of planning their CRE based on having the capacity for everyone coming into the office, but again, leaders need to consider the cost of employees (a productive and valued workforce) versus building running costs.
And what will the office spaces look like? There’s a clear need for interaction, allowing for distancing in the short term, but enabling employees to use office space effectively will be critical to the success of a CRE strategy. If people come into the office but spend all their day on Teams or Zoom wearing headphones, what’s the point? How does that benefit people in the office or at home? There’s also an opportunity to use space differently – businesses are being creative, looking at how they can reuse facilities, such as marketing suites, product demo sites, staff accommodation or auditoriums. Converting office buildings into residential units is unlikely to be the solution either.
Building flexibility for hybrid working
But perhaps the biggest issue for CRE leaders is the hybrid model of the real estate portfolio for roaming workers, mixing corporate portfolio with home and third-party space. How do you embed the company culture across not just the CRE portfolio, but extend this to home working, mobile and third-party space? As hybrid working becomes the norm, how can the employee offer adapt? Will a canteen offer for breakfast, snacks and lunch at home via Deliveroo become the norm? How do we turn an illiquid means of production like real estate into something that can be used and paid for ‘on demand’?
There are issues all CRE leaders are grappling with. There will be different solutions to fit different geographies, cultures and businesses. The answer will be in taking a holistic approach and plan for the long-term while building in flexibility to your strategy. While a vaccine is on the horizon and brings a sunnier outlook for 2021, the new normal means we won’t be going back to old ways of working – through need or choice – and companies will have to develop CRE strategies that meet both business and employee needs.