It used to be less important to be perfectly efficient with one’s real estate footprint.
Planning a company’s real estate needs over the course of a lease and beyond was based loosely and simply on the number of FTEs required to support a company’s strategic plan. A growth strategy likely meant more space would be needed. A pivot in strategy suggested less space.
When the office was assumed, and a space for every employee was a must-have, this level of detail was good enough—even in a recession.
The days of traditional office spaces are gone
Post-pandemic workforces are different. Their expectations of what they need and want from the office have changed. The very purpose of the office has changed.
It’s difficult to know whether companies should add to their footprint, radically change the office space they have, or ditch their office holdings altogether.
Coupled with the unknown future impact of hybrid and remote work, rising inflation, and the possibility of an economic recession, the old approach to planning is no longer good enough.
Now companies are interested in the ROI of their office space. They seek efficiency. They are prepared to spend money on the right things—but how can they know what those right things are?
At a time when a plethora of data would make decision-making about office spaces so much easier, we are discovering that truly little such information exists. Until now, companies had little need for an ongoing study or measurement of office space performance.
A delicate balance
A Harvard Business School survey found that 81% of employees don’t want to go back to the office full-time. The office has less influence and less importance now that productivity is not solely tied to time on-site. Culture has become less about where you physically work, than how it feels to work.
Savvy leaders are solving current talent acquisition and retention issues by demonstrating genuine concern for employees’ health and well-being.
According to McKinsey, this approach should be intentional, thoughtful, and well-communicated. This includes offering flexible work arrangements and rethinking how the office serves a remote or hybrid workforce.
For facilities executives, it is a delicate balance. On the one side is the need to support a desirable workplace and enable productivity to ensure financial targets are met. On the other side is the need to improve efficiency and manage costs to ensure a company remains viable and healthy.
The question is now much broader than, “How much square footage do we need?” When it comes to where to allocate budget, companies need to be asking, “What space types make the most sense for the way we work now?” Is it hotel desks? Open collaboration spaces? Focus rooms?
This is uncharted territory
Without complete data, any strategy is just guesswork. And as anyone with responsibility for a real estate portfolio can attest, mistakes are expensive. Without a complete picture of how employees are using the space or how the purpose of the space has evolved in the current context, uninformed decisions may lead to greater costs and headaches in the future.
Space utilization studies conducted pre-pandemic were often limited to qualitative data through surveys or interviews, or they relied upon rudimentary people-counting sensors.
Much has changed in the way of available technology since then. Newer data collection methods are faster to deploy, more accurate, and can aggregate multiple inputs. This all leads to deeper, more meaningful insights that can inform better decisions resulting in fewer costly errors.
Yet, the current temptation is to simply guess the right course of action.
For example, companies seeking to cut their overall footprint often turn directly to features occupying the most space, such as meeting rooms. They may conduct occupancy studies to see whether there are underutilized spaces that can be removed. But simply counting ‘how many’ does not consider the full employee experience.
What’s the best way for companies to get ahead of what’s coming?
It is to find that balance. Here’s how:
· Consider the impact on culture when examining ways to right-size real estate portfolios.
· Prioritize productivity, efficiency, comfort, and safety of employees as much as savings to the bottom line.
· Diminish acquisition, allocation, or divestment mistakes by bringing more data to the decision-making process.
· Commit to a longitudinal study to understand what purpose the office is serving now, and to inform more educated predictions about how it may evolve.
· Expand quantitative data inputs from simply, “How many?” to include “From where?” “To where?” “How often?” and “For how long?”
· Cross-reference subjective information from qualitative surveys, polls, or interviews with quantitative data from technological sources.
In short, apply scientific rigor to the space planning process to ensure cost-saving measures do not negatively impact revenue-producing activity. In this way, facilities executives seeking to ride out a potential recession can have more confidence in their decisions to cut their real estate footprint—or not.
James Wu is the CEO and co-founder of InnerSpace. He has dedicated the last 20 years to building award-winning products for notable technology startups including Platform Computing, Rypple, Kobo, and now InnerSpace. Playing a pivotal role at each company, James built and led product development while honing his understanding of what it takes to develop a team, product, and company from early days to global success.