Corporate real estate has been turned on its head over the last 18 months due to COVID.
More than 4.7 million people now work remotely at least half the time in the United States. This unprecedented shift to remote work has meant many corporations have seen their offices empty and come to the realization that they could make do without them.
While corporate real estate has changed and many companies may need less square footage than before the pandemic, a large number of the US workforce will continue to come into the office – either full-time or on a flexible schedule.
The corporate workplace may never be the same again but that doesn’t mean that a corporate real estate and workspace strategy has become any less important to your company’s success.
How Corporate Real Estate Is Changing in The U.S
To understand the changes in the corporate workplace, let’s take a look at a real-world example.
Does your commercial real estate work as intended? Maybe it doesn’t anymore because your employees’ needs have changed and they are looking for flexible work, with some remote hours and some hours in the office.
Every indicator is there, telling companies to reassess their corporate office space but this raises many difficult questions about the amount of space needed, where the right location is, and the market price point.
Office vacancies are not forecast to return to their pre-pandemic levels until 2025. This has left commercial landlords ready to negotiate lower prices on their office real estate, presenting your company with an unparalleled opportunity to find a great deal.
Whether your company is thinking of upsizing, downsizing, switching locations, commercial real estate will be of vital importance for the next year.
With that in mind, here are three corporate real estate strategies to keep in mind for the coming year that take into consideration the changes in the market we have seen over the last 18 months.
When Is The Right Time For A New Corporate Real Estate Strategy?
In pre-pandemic times, the obvious sign that it was time to search for new corporate real estate was having more employees than spaces to seat them.
However, the COVID-19 pandemic has brought other concerns to the top of the pile and now there are different signs to look for to warn you when a change is needed.
You may need to upsize to allow space for social distancing to either comply with local regulations in your area or to make your employees feel comfortable and safe in the workplace.
COVID may have meant that your organization needed to pivot, changing its services or products. As such you may be targeting new markets which means that you want to relocate your office to a more suitable location.
If COVID had severe negative impacts on your revenue and you downsized staff and operations, you will want to look for a smaller space or a lower cost unit than what you have. Or perhaps much of your staff will continue to work from home some of the time in the post-pandemic world and you no longer need such a large space to accommodate everyone.
All of the reasons above (and more) mean there will be a lot of relocations and portfolio rebalancing through the coming year and beyond.
How To Establish What Type Of Property You Need
When on the hunt for a new property, the key figures in your company’s corporate real estate planning should be thinking about:
- What’s the main goal of our corporate leasing strategy?
- Does our current corporate real estate portfolio serve that strategy?
The questions might be simple, but your answers probably won’t be. Take the time to gather input from all areas of your company to ensure when you lease your next corporate property, it is the right choice and optimal for every department.
Areas of your company to consult with corporate real estate decisions:
- C-Suite: What image do they want to project of your company through the real estate you chose. What budget is there for corporate real estate?
- HR: What are staff needs? How much space is required for all of your employees to be safe and comfortable? What are your workforce’s personal work preferences?
- IT: What technical requirements does your office, warehouse or store need? What future needs might you have the property need to be able to adapt to?
By consulting all of your company before hunting for a new property you can make sure no needs are overlooked and that you will only consider properties that are the right fit for your operations and staff.
Establishing How Much Space Your Company Needs
The next step in leasing the best corporate property for your business is asking yourself “What’s the minimum square footage we need for office space?”
To answer this you need to closely examine what your on-site team looks like right now, and how you predict that to change in the future. Ask yourself:
- How many staff are regularly coming into the workplace?
- Do these staff members have cubicles, offices or another type of workspace?
- Are meetings taking place either between departments, within departments or with clients?
From these questions, you should have a general idea of how much space you need. A general rule of thumb with commercial real estate planning is to allocate 150 square feet of space for every on-site employee.
For example, if you are a company with 70 on-site employees, you will need 10,500 square feet of office space.
If you have switched to flexible working and half of your employees work from home at any given time, you could allocate 5,000-square-foot of office space for your employees which would provide enough space at a significantly lower cost.
Asking The Right Questions
Fine-tuning your corporate real estate strategy to adapt to the needs of your company and in a rapidly-changing economy is all about asking the right questions and putting enough time into exploring the answers. Here are some example questions to consider when building your corporate real estate strategy:
- Where are your employees commuting from?
- Where are your clients located?
- What type of building do you need?
- What features or amenities does that building need to have?
- What are the current market rents?
- How long does the lease need to be?
- What location will help you attract top new talent when recruiting?
- How do your staff travel to work? (do you need to be centrally located, near to public transport?)
- Are there flexible space operators (such as WeWork) in your area that may offer an alternative to leasing an office space?
- What ratio of remote-to-in-office working time do employees prefer?
- What technology is required to support a mobile workforce, and what investment is necessary?
Why Your Business Success Depends On A Great Corporate Real Estate Strategy
Corporate real estate strategy has never been more important to business success.
The two have always been connected but now more than ever your company’s fortune depends on its footprint. You need to ensure that you have the right corporate real estate and that it is managed effectively in these unprecedented times.
Great corporate real estate allows you to retain current employees as their work needs change. Allowing them to work remotely and accommodating this can be a major factor in retention. In addition, a great space, in an ideal location that helps employees feel safe and comfortable at work will be instrumental in attracting new talent that you may need as you expand, or pivot your business and require new skills.
Real estate is also a strategic asset in business growth. Now is a great time to negotiate leases and purchases due to high vacancy rates that are not predicted to lower to pre-pandemic levels for several years.
To Sum Up
The past 18 months have delivered unprecedented change for most companies. This in turn means that for many, now is the time to reevaluate your corporate real estate strategy to see if it is still working for your business. Changes in employee behaviour and needs, as well as business operations, may mean that your real estate is no longer serving the purpose it needs to and if that is the case, now is the time to look for a new lease.
Are you in the market to buy, sell or lease commercial real estate in Denver or elsewhere? Contact the U-Collective team today to start the process.