While much of the discussion around COVID-19 and the workplace is focused on the return to work, many organizations are also considering the long-term implications of the changing workplace and shifting corporate perspectives on remote work.
Some of the world’s largest technology companies, including Facebook and Google, are allowing employees to work from home for the remainder of 2020. Others, such as Twitter, are giving employees the option to work from home indefinitely. Even with Facebook employees expected to eventually return to work, CEO Mark Zuckerberg predicts that 50 percent of the company’s employees could be working remotely within the next five to 10 years. In addition, Larry Fink, chairman and CEO of BlackRock, recently said he doesn’t ever foresee all of the company’s employees returning to the office.
With shifts in thinking leading to changing space needs, these scenarios provide a window into the many ways Covid-19 will present increasingly complex real estate scenarios to organizations worldwide. This major shift is evidenced already with nearly one-fourth of the corporate real estate in Manhattan up for sublet.
These are not the kind of trends that will reverse overnight. Businesses around the world are grappling with how to balance dynamic and decreasing space needs with their current real estate portfolios. Even when a vaccine is widely available, the genie is already out of the bottle on working remotely. Working outside of the office has now become a way of life and, for many, a preference.
A Supply and Demand Mindset
In the wake of Covid-19 especially, managing the real estate portfolio, the needs of its occupants and the need for maximum optimization, is a matter of shifting supply and demand. Access to accurate and actionable data will be the key for real estate and finance teams as they make critical decisions both for today and for the future. While getting a handle on the supply, or existing real estate assets, is relatively easy, understanding demand is hard to do in today’s climate. With workspace needs drastically changing, organizations must consider the types of space employees needed by employees, as well as their occupancy.
Luckily, we have more access to data than ever before. We also have the technology to dive deeper into that data to uncover insights that drive smarter, more strategic decision making. Technology, such as Integrated Workplace Management Systems (IWMS), will play a critical role in helping businesses adapt to this new “elastic” workplace and better understand “demand” by way of workspace utilization data. The resulting insights will inform, guide and validate strategy and long-term decision making.
As an example, many organizations are starting to understand and combine the occupancy of their space with strategic management of the wider property portfolio. Access control, space usage sensors and reservation systems are valuable data streams that can further tighten control over the allocation of space and identify spare capacity that could be recycled for improved returns. Space usage data can also be used to make significant changes through consolidating or terminating leases on unrequired buildings, as well as redesigning space to meet changing needs.
By looking at data on how space is being utilized alongside financial data across the portfolio, organizations can discover ways to derive more value from the space, reduce global real estate costs in times of contraction or expand during times of growth. Taking a broad look at space utilization and financial data can provide insight into which leases have the highest exposure on financial statements and help evaluate the business units occupying them, how densely those spaces are populated and how they’re being utilized.
Capturing and analyzing occupancy data can also help lower costs and reduce an organization’s carbon footprint. For example, if a business occupies multiple floors of a building and sensor data shows that consistently the number of people working on those floors on Fridays decreases by half, those floors could be closed on Fridays. Not only would this reduce maintenance costs and the need for cleaning, it would also reduce electricity usage and consumption which in turn, will impact an organization’s sustainability goals. Imagine what could be achieved if this was applied across the entire global portfolio.
The Road Ahead
It’s no doubt that the pandemic is forcing every organization to view and plan office space more strategically. Moving forward, real-time data will play a critical role in establishing benchmarks, uncovering patterns and yielding deep insights into changes that will deliver long-term benefits to businesses, as well as their employees and real estate portfolios. Gathering and analyzing this data will require a centralized place to store and analyze it, and collaboration between facility management, corporate real estate, human resources and information technology teams to act on it.
Rather than seeing it as an obstacle, organizations should view the pandemic as a unique opportunity to reframe the way they think about real estate, the workplace, people and how technology and data can support the journey ahead.