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CEOWORLD magazine - Latest - CEO Advisory - The Office of the Future: Why It’s Time for Businesses to Adjust Their Real Estate Strategy

CEO Advisory

The Office of the Future: Why It’s Time for Businesses to Adjust Their Real Estate Strategy

Matt Giffune, co-founder at Occupier

Contrary to what some might believe, COVID-19 hasn’t ushered in the demise of the corporate office. Instead, it has simply expedited preexisting trends. Occupier’s Matt Giffune explores some of these trends and provides insight into how business decision makers can adjust their company’s real estate strategy in light of these shifts.

These days, one of the most predominant misconceptions about work surrounds the future of the office. With the changes spurred by COVID-19, many people believe the physical office as we know it is dead. And although current workplace trends would have you believing as much, nothing could be further from the truth.

Whether it’s a touchdown space used only occasionally or an entire building teeming with employees, a physical presence helps ground company culture. It fosters collaboration, communication, and innovation. It enables impromptu idea-sharing, problem-solving, and social interactions among colleagues. It also provides a home for professional development and mentoring. In reality, most (if not all) of these perks would be nearly impossible to replicate from a virtual workplace alone.

Saying the office is dead also assumes all people want to work from anywhere, all the time. Not that workplace flexibility trends are on the decline, but people still want the option to work from an office. For one, high-speed internet can be unreliable in public places, and even if the Wi-Fi is good, you’re never guaranteed a seat at the local cafe. Add on the secure connection required at countless companies as well as current social distancing restrictions, and it’s easy to see why someone would choose structured office life over a remote working arrangement.

Besides, remote work isn’t exactly an emerging workplace trend. Salespeople, consultants, executives, and other professionals have traveled and worked remotely for years. With this, companies have long offered space in multiple markets to accommodate traveling workers. Sure, younger generations now expect employers to react to their personal work preferences — but corporate giants continue to lease massive spaces. Although the shift from “bricks to clicks” will inevitably affect the future of commercial real estate, the need for physical work options will remain intact.

Exploring Commercial Real Estate Trends

As far as commercial real estate trends go, demand for commercial leasing has always been largely dependent on the health of the general economy. Corporate expansion generally gives rise to real estate demand, which is why a wait-and-see approach is most prevalent these days. Companies are still in the midst of redefining their workplace strategies and are more apt to sign a short-term lease rather than get into a long-term agreement.

Adding even greater complexity to the future of commercial real estate is the mass adoption of remote work. Many employees enjoy the newfound flexibility to work from home, and for good reason: It improves work-life balance, reduces personal costs associated with travel, and cuts commute times — thus increasing productivity. Employers also benefit by cutting back on typical business costs (such as overhead, real estate, daily operations, and so on). If given a choice, many would continue to work from home or adapt to a hybrid office model, alternating between the home and the workplace. In fact, 70% of workers prefer such a blend.

What’s more, consumer spending just isn’t what it used to be — nor are consumer shopping habits — and both have a direct impact on commercial real estate trends. Businesses must first be profitable to successfully expand operations. And retailers reliant on foot traffic, particularly in shopping centers, now find it somewhat difficult to use current sales metrics to make lease determinations. With the rise of online shopping, many retailers must question exactly how much space they’ll need going forward. With time, however, retail space leases will likely improve as uncertainties dwindle and property owners make improvements to facilities to provide more experiential retail shopping.

Preparing for the Office of the Future

Although it’s difficult to predict the future — and especially a future without COVID-19 — there are a few real estate strategies businesses can enact today to better respond to current commercial real estate trends. The following are often the best places to start:

  1. Gather input from employees. Perhaps the biggest question circulating within the business community involves more than just determining how to prepare for the future of work. Instead, it revolves around this question: What isthe future of work?
    On the one hand, research has shown some serious trepidation among many employees about returning to the office — with one study finding that nearly one in three would rather seek out new employment opportunities than return to a workplace they deem unsafe. However, other studies paint a different picture, with issues ranging from new types of work-related stress to burnout as a result of working from home. Many employees are simply dealing with work-from-home fatigue, which is only exacerbated by the lack of regular social interaction with colleagues. All in all, arriving at a decision for the future of the office will be a complex proposition rife with inconsistencies surrounding employee preferences.
    Needless to say, a one-size-fits-all approach won’t do, making it even more important to gather input before rushing into a return-to-work strategy. How many employees want to be in the office each day? How many are interested in a hybrid work schedule? Beyond that, what makes sense operations-wise? You can’t keep all customer-facing team members working remotely, for instance. Business will need to return to some semblance of normal — but what that looks like will be different for every organization.
    As you get a read on overall employee sentiment, solicit feedback from leadership to assist in your office space needs assessment. IT will have recommendations on technical requirements for offices, stores, or warehouses. The people team should also be consulted on what employees need, space-wise. “Everydayers,” for example, will want their own office or cubicle, while those coming in only periodically will simply require space (but a more flexible work environment could also serve this purpose).
  2. Implement proper back-to-work safety protocols. With employee safety being a top priority, any return-to-work strategy should include safety protocols to protect staff members and encourage their return to the workplace.
    Naturally, social distancing measures will make up the bulk of new trends in workplace safety, such as greater spacing in workstation arrangements, limited seating in common areas, “distancing” signage, and so on. Any measure to do more with less space will need to take a back seat (at least for the very near future). And depending on the size of staff and scope of operations, you might even need additional space for the time being — unless, of course, it’s possible to stagger the timing of employee shifts to adhere to social distancing recommendations.
    Other trends in workplace safety might also include mask mandates, hand sanitizing stations, temperature screenings, automatic doors, voice control devices, and additional cleaning and disinfectant guidelines (namely routine cleaning of high-touch surfaces, such as doorknobs, tables, desks, countertops, light switches, phones, elevator buttons, and sinks). Coordinate with janitorial services to ensure the team has the resources and capacity to handle the workload.
    Implementing back-to-work safety protocols is only the first step in how to prepare for the future of work in regard to safety. You’ll also need to communicate these efforts to staff to quell uncertainty, demystify safety guidelines, and provide the information necessary to maintain adherence.
  3. Move from a large central location to multiple smaller offices. One commercial real estate trend that’s growing in popularity is a switch from larger central offices to smaller satellite locations. Part of this is due to cost, as companies can save money on real estate in major cities by making such a move. But satellite locations can also be of great benefit to employees.
    Smaller offices are often located in buildings other than the traditional high-rise. This can make it easier to practice social distancing within the facility. And if located on the outskirts of downtown, employees aren’t left to worry about the safety of their commute. Transit also won’t likely be as crowded (that, or parking won’t be as much of an issue). Besides, satellite locations offer a great deal of convenience. You’re able to give staff a choice in how and where they work. Maybe a number of employees live in a nearby suburb; opening a satellite location in the area could be a great incentive to bring people back into the office, all while saving money.

The future of the office might still be a bit of a question mark with social distancing guidelines, mask mandates, and other safety protocols potentially reaching into next year. But rest assured, the office isn’t going anywhere — it just might look different over the next few years. That’s why it’s important to rethink your real estate strategies to respond to both today and tomorrow.

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CEOWORLD magazine - Latest - CEO Advisory - The Office of the Future: Why It’s Time for Businesses to Adjust Their Real Estate Strategy

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Matt Giffune
Matt Giffune, is a co-founder at Occupier, a transaction and portfolio management software helping commercial tenants and brokers manage their real estate footprint.

Matt Giffune is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn.