Before COVID-19, real estate was typically the second or third-highest expense for any organization. This landscape is projected to change with the post-coronavirus shift to a more diverse real estate portfolio, particularly as most businesses are moving toward offering a combination of owned space, standard leases, flexible leases, flex space, co-working space and remote work.
This fundamental shift will likely come with increased efficiencies and increased real estate ROI. This will be important to keep in mind—and take advantage of—as you return to work.
Understanding the Old Real Estate Landscape
Pre-pandemic, office real estate was costly and inefficient. Globally, organizations were estimated to spend an average of $463 per square meter on operations costs, and rent made up a massive 65% of that total. When you take into account additional costs – including capital costs, facilities, operations, maintenance and management – it often amounted to 10-20% of total personnel-driven expenditure.
And this space wasn’t even being used efficiently:
- On average, 30-40% of space is being underutilized each day
- 73% of meetings have just 2 to 4 people in them, yet 53% of meeting room space is built for meetings of more than 7 people
In short, unused or misused space was costing companies money and efficiency, and it was seen as an unwelcome and inescapable “given.” This is all beginning to change.
Business Real Estate After COVID-19
Lower Real Estate Costs
In the wake of the COVID-19 pandemic, companies are beginning to experience a shift in the way they view real estate investments, with downsized activity-based spaces and supporting technology taking center stage while unnecessary, empty office space falls by the wayside. This will likely not only improve productivity and encourage collaboration, but also lead to major savings.
Such savings can appear in the form of renegotiated, flexible market-comparable lease rates as companies gain the ability to negotiate lower rates and shorter contracts. More importantly, though, many businesses will overhaul their real estate footprint entirely to utilize purpose-driven spaces and consolidate real estate investments, as we discussed in the second blog of this series.
This kind of change could ultimately:
Increased Value of Real Estate Investment
In this new context, real estate can be a way to drive value, as companies can make the best possible use of their real estate footprints through multi-use spaces, hoteling, and bookable, socially distant neighborhood seating.
Facilities management and space planning solutions like EMS can increase effective capacity, optimize and automate assignments, and uncover additional square footage that can justify increased budgets and billings. This can lead to a more connected environment with:
- Improved and streamlined workplace scheduling
- Higher efficiency through integrated software and calendar systems
- More productive, coordinated meetings
- Time saving
- Full realization of the value of workplace investments.
How to Get It Right
Integrate Your Office-Related Functions
If you consolidate office-related functions like facilities management, real estate management and energy management, you can drive greater value through the organization. This approach generates three key benefits:
- Efficiency from simplified management
- Cost savings via streamlined operations
- Better decision-making through a holistic approach
Make Strategic Decisions with Bottom-Line Impact
Gaining money-saving visibility and insight into your workplace starts with gathering the right data. As you increase things like office hoteling, bookable spaces, and office hoteling, you’re able to easily collect data relating to day-to-day activities around the office. This can help you identify opportunities to reduce costs, your real estate and your environmental footprint. This can help you:
- Make informed business decisions with space utilization and optimization reporting
- Improve your environmental footprint with HVAC integrations
- Enhance the office experience for employees and visitors
- Make informed business decisions regarding your space utilization and optimization reporting
Focus on Creating a “Healthy Building”
The “smart building” is already here. For an effective return to work, you now have to create a “healthy building” as you reconsider your real estate.
Explore our corporate real estate solutions.
Gearing Up for the Great Return to Work
As you navigate the complex processes and changes that need to be made in the workplace in preparation for the “great return to work,” be sure to focus on these four key areas. With a strong focus on the human experience and the tools and technology you need for efficient management, you can ensure a smooth transition back to this new daily workplace experience.
We hope that this blog series has been helpful and provided you with insight and direction as you navigate this ever-evolving process. To learn more, you can reach out to our workplace experts by contacting us here.
Explore the Series:
- Introduction
- Key 1: Effectively Managing Your Space
- Key 2: Using Technology to Increase Visibility
- Key 3: Keep Your People at the Forefront
- Key 4: Rethink Your Real Estate
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