Drop it, keep it or optimize it.
Those are your options if your goal is to make sure your corporate real estate portfolio is the right size.
The answer for most businesses is murky, because most don’t actually know what the “right size” for their real estate really is, and don’t have the information they need to figure it out.
The end result of this uncertainty is making the wrong real estate decisions, or holding back from making decisions at all.
Whether you’re stuck in a long lease on multiple buildings, or need to choose which ones to scrap and which to renew, your objectives are to cut costs and max out ROI – without sacrificing employee experience.
This is a tough balance to strike without the right approach. And the right approach is a workplace strategy that ensures your work environment matches up with employee work patterns – which are in a constant state of flux.
It’s predicted that 54% of workers in NYC will be back in an office setting by 2023. But 60% of US workers say they’d rather quit than be forced back five days a week, and 26% are actively ignoring back to office mandates.
There’s no one-size-fits-all way for companies to get their real estate resizing right. And that’s because the purpose of real estate within the workplace as a broader function could well be completely different for every business.
That’s where a workplace strategy comes in – it’s the framework you can use to make the decisions and investments that are right for your company.
In this post, we’ll be taking a deeper look at why a workplace strategy is essential for managing corporate real estate, and how to use one to get your real estate resize right.
Why a workplace strategy helps you get real estate right
For maximum ROI, employees need to be using your real estate in the intended way.
And to ensure employees are making full use of your real estate, businesses need to understand how employees are using office space, how they want to use office space, and then align this with overall business objectives.
That’s a workplace strategy in a nutshell; the alignment of how employees use the working environment (both physical and virtual) with the overarching goals of maximizing performance while keeping costs low.
Without knowing exactly where real estate fits within that alignment, any decisions made about keeping, getting rid of or repurposing real estate are going to be a guesstimate at best.
When the stakes are as high as they are now, basing real estate decisions on guesstimates has profound consequences.
The impact of getting real estate resizing wrong
Without a workplace strategy, real estate resize decisions are likely to fall into one of two categories: getting rid of office space too quickly, or not getting rid of office space quickly enough.
The estimated employee occupancy is lower than the reality. Based on the estimate, the business gets rid of office space permanently, whether that be entire buildings or floors. As a result, the reduced office space is overcrowded, which creates a poor employee experience, health and safety risks, and warrants costly real estate expansion down the line when there’s not sufficient space for growing teams.
In the second scenario, estimated employee occupancy is higher than the reality. Based on the estimate, the business decides to hold onto office space. The result is empty office space, which also creates a poor employee experience (no one wants to be imagining tumbleweeds rolling through the office), and sunk costs on rent, utilities, maintenance – all of which sap revenue that could be used for innovation, hiring, development and more.
The common denominator and root cause in both of these scenarios is a lack of actual data about workplace occupancy.
How to get your real estate resizing right with a workplace strategy
Step 1: Measure how employees are using your real estate right now.
The usual methods like eyeballing who’s in the office, estimating through surveys and badge data doesn’t give you a realistic indication of how your office spaces are being used. Rather, data from these sources only tells you whether or not people have been in the office.
What you need is data that indicates how employees are occupying the space in real-time.
Where does this data actually come from?
Wifi signals can pinpoint occupancy to specific regions of the office.
Occupancy sensors can pinpoint location to specific rooms and even desks.
Step 2: Understand the when, what, why and how of the ways employees are using your corporate real estate.
Using data from wifi, sensors or both gives you the framework to make a data-driven decision about what to do with your real estate – keep, drop or optimize.
When looking at the data, ask yourself:
- When are people coming in?
- What areas of buildings and floors are the most and least heavily occupied?
- Why do people come into the office? In-person meetings, easier communication or quiet workspaces away from family and pets are some of the most common reasons.
- How are people using the workspace? Do they prefer individual workspaces or collaborative spaces?
Looking at actual occupancy data over time tells you how employees have used physical workspaces in the past, how they’re using them now, and even how they’ll be using them in the future.
No one can ever predict the future of corporate real estate, but understanding the patterns and trends of occupancy can get you pretty close to accurately predicting what your business’ portfolio should look like.
Step 3: Right size and optimize.
Buildings and floors that are prime territory for a rightsize will fall into one of two categories – either they’re not being used at all, or they’re being used, but not in the most efficient or optimal way.
Here’s a couple of examples:
After looking at the data, you discover that an office building has an average total occupancy of 25% across four floors. That’s a lot of unused space on each floor, and a lot of utility costs going towards heating and lighting spaces that aren’t even being used. By closing off three floors, the result is a total occupancy of 25% across one floor. That’s a pretty big cost reduction, along with a more social workplace without the sacrific of space for individual employees.
After looking at the data, you discover three office buildings have a total occupancy of 25% each. By merging the three buildings into one, the result is an occupancy of 75%, massive cost reductions in rent and utilities, and a better employee experience with room to scale.
Step 4: Monitor occupancy on right-sized real estate, then rinse and repeat.
Getting real estate right isn’t a one time decision – that’s why continuously iterating your workplace strategy is so crucial. Monitoring space utilization is the backbone of a workplace strategy that evolves with your business and employees.
Whether it’s opening up more floors in a controlled way as your team scales or revamping your office design to include more collaboration spaces, keeping tabs on space utilization through wifi and sensors keeps your workplace strategy up to date, and your facilities team one step ahead of the curve on important real estate portfolio decisions. And because monitoring occupancy data results in agility, you can make more of the right decisions, faster, which means each one is less costly.
The payoffs of getting your real estate right are cost reductions from leases, utilities and facilities management, as well as a better employee experience and an easier path towards meeting environmental goals.
A workplace strategy guides each company towards the real estate decisions that deliver these payoffs. But without actual occupancy data, you won’t have the tools or information necessary to make these decisions.
Want to find out more about rightsize your real estate and guarantee ROI? Check out this webinar on demand to see how the right data and tools can fast-track your real estate resize.