With the COVID-19 pandemic hopefully shifting toward the rear-view mirror, how are companies adjusting their office footprints to match new work models?
Rob Raymond of FTI Consulting recently discussed this hot topic with Laura Calugar, Senior Editor of Commercial Property Executive. Raymond joined FTI in January 2021 to build the firm's capabilities in corporate real estate advisory, but he has been focused on the space since 2012.
You can listen to the full interview here, but if you don't have 17 minutes, below are some highlights:
Raymond kicks off with the classic rule of good corporate real estate planning: he advises clients to do both a top-down and bottom-up demand assessment, looking out at least 2-3 years for a baseline, and then build in flexibility from there.
He mentions a recent oil & gas client (not known for innovative workplace strategies) that conducted both a manager-centered inventory of expected workplace needs for their teams, and a broader survey of all employees regarding their individual long-term workplace desires. Only 15% of those surveyed indicated a willingness to commit to return full time (5 days/week), and only 35% would commit to full-time remote; 50% wanted long-term flexibility between the two extremes. Applying those results to a new space strategy could result in a 20-30% reduction of corporate office footprint.
He notes that it's not wise to implement work location flexibility without the right support ecosystem - spanning technology, culture, policy, and governance. Location flexibility requires not just room/desk booking software and individual mobility technology, but also considerable people training and coaching, guardrails to avoid unintentional tax or legal consequences, and more.
Calugar asks about mixed signals between the desire for flexibility versus Zoom fatigue, and Raymond points out this is exactly why a one-size-fits-all workplace model will not work.
Raymond mentions that tech companies were some of the pioneers in workplace agility and mobility, so they appear to require less from external advisors. He doesn't love the term "new normal" because there has been a "steady progression" toward more flexible workplace strategies for decades, catalyzed by both technology and culture. Rather than creating something new, the pandemic is accelerating this progression and forcing adoption from the hold-outs.
They discuss the related long-term trend toward corporate/enterprise use of co-working spaces to build flexibility in a corporate real estate portfolio, and the related emergence of "cor-coworking", or corporate coworking, which is the concept of companies offering a (variable) portion of their own office space to 3rd parties for coworking purposes. Early experiments on this emerged around 2014-2017, led by Verizon, Amazon, Deloitte, and others. Some would recognize cor-coworking as the intentional and strategic version of a very old concept - subletting excess space. Except, it's precisely the intentional and strategic implementation that creates extra value: cor-coworking goes way beyond mere flexibility and monetization of surplus real estate; designed and executed correctly, cor-coworking provides a new forum for interacting with clients, supporting and incubating related small businesses (vendors, partners, potential tuck-in acquisitions, etc.), and bolstering good community and government relations - while not causing the capital and operating expense pains typically associated with a sublease.
Overall, Rob Raymond creates a solid impression of himself and FTI - with depth and breath on the subject matter, relevant and recent case studies, and a solid grasp of even the newest concepts in corporate real estate and workplace strategy. As he indicates, many aspects of future workplaces will build on the best examples and pioneers from the pre-COVID period. With that in mind, you may want to engage an expert with experience delivering innovative corporate real estate & workplace strategies. :)
SEE ALSO
Amazon has a WeWork-like 'pop up' space.... Eugene Kim; Business Insider; June 13, 2016.
Why Verizon Wants to be a Landlord for Startups. Aaron Gregg; Washington Post; June 11, 2017.
US telecoms giant Verizon is launching a coworking space in London. Sam Shead; Business Insider; January 17, 2017.
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