1: Will COVID-19 result in more or less office space in the future?
If we had to pick one, this would be THE question everyone involved in Corporate Real Estate Management would like to answer. There are many diverging opinions on the amount of office space needed post-COVID-19. Some are predicting full remote-work setups with a potential reduction of the office space down the line: Twitter, Morgan Stanley, and Salesforce count amongst the most prominent vocalists on this side of the spectrum. Others predict an expansion of the office space to comply with social distancing, with Ex-Google CEO Eric Schmidt and UBS real estate and lodging analyst Jonathan Woloshin as notable defendants.
From the conversations we’ve had with our network, the overall consensus is that social distancing measures and policies will remain (at least, for a while), and with it, the need for more space surrounding each workstation. However, the changes in working patterns, including the offset effect stemming from more lenient work-from-home policies, will balance the demand for additional space.
With the prospect of an available vaccine within 18 to 24 months, it’s also more likely that companies will work with what they have asset-wise in the short-term and will neither add nor reduce a massive amount of space. Instead, the focus lies in developing strategies to maintain low space density and use existing and new technologies to optimise office occupancy across the building portfolio.
An additional factor which doesn’t speak in favour of a major increase in office space is the cost associated with it. At a time of economic downturn, companies cannot afford additional risks and most likely won’t sign long-term leases due to the unpredictable nature of the current situation. They will try everything possible to avoid taking on additional space at the moment.
Similarly, a major cut won’t happen overnight either. This is due to the inflexibility and often multi-year commitment of large space leases. In the near-term, companies are much more likely to keep their space but transform it with focus on attracting more talent, increasing productivity, or even turning some areas into co-working spaces (more on this later).
The effect on rent
Mass activity, whether increase or decrease, of the office space will no doubt leave noticeable effects on the price per square meter of spaces. As always, rent space will ultimately depend on many different market variables, but here are some scenarios of what to expect:
- The ratio of square meter to desk will be greater than before due to social distancing, which could lead to an overall increase in office space demand, ultimately driving the price of rent up, but…
- The ratio of square meter to employee ratio may go down as a result of more locational flexibility (ie. working from home), which could counterbalance the new supply-and-demand with little to no impact on overall if…
- The majority of people are able to keep their jobs. If not, then companies will seek to reduce their office space, bringing the price of rent down.
With all that said, it wouldn’t be surprising if in the long-term, corporations establish more satellite offices in more rural areas or downsize to smaller buildings, ultimately reducing the commute for its employees. However, this will take time and we’ll unlikely see large moves to decentralise within the next year or two. Overall, corporate real estate managers need to begin reconsidering the value proposition of having their offices located in city centres: why continue paying a high rent and expect employees to commute for hours every day now that the world has seen the capabilities of remote-work?
2: Beyond office space, what will the office of the future look like?
“I don’t believe home working translates to less space, it translates to different space.” Ken Raisbeck from CBRE on ITV News – May 5, 2020
Not more, not less, but different is probably what will happen. The office will transition from the workplace to a work point amongst a constellation of work points. Mobility and flexibility offered by companies to their employees will give an opportunity to each individual to decide where they want to work: it can be from home, it can be at the office, a coffee shop, a co-working space, or wherever else they feel the most productive.
In that new configuration, the office will have to reinvent itself to become a place where people love to work.
Even before the COVID-19 crisis, employees at small companies and large corporations worked with a relative amount of locational and temporal flexibility. This is why the estimated utilisation of a single desk was already below 50%. Simply put, it meant that half of all office buildings were empty at any given time. On paper, this would be a reason to optimise. But rather than “less”, most companies are going for “different” and higher quality. Why?
Employees need a place not only from where they can work; they also need a space to exchange creative ideas, collaborate and innovate. The evolution of the office from a place for focused activities into a place for teamwork and project work is taking hold. Think common spaces, meeting points, and technology-oriented rooms such as presentation studios or activity-based rooms featuring digital boards. Offices are becoming more playful and fulfilling more employee needs. Some parts even are beginning to look a bit more like Starbucks and less like a traditional office space. The reason for doing this is to increase the happiness—and ultimately productivity—of employees, but as well to attract and retain the best talent amongst younger generations like Millennials and Gen-Zers who have different expectations of their workspace than preceding generations.
Down the line, we can expect work patterns in the office to be much more fluid, with fewer employees anchored to their desks. As such, data about office utilisation should support C-level executives and corporate real estate managers in making the right decisions on how to adapt their spaces to more activity-based work.
3: Has the office lost its importance in people’s lives now that everyone is used to working from home?
Firstly, let’s emphasise the fact that our current reality was actually not by choice, but by force (or the forces of nature). A recent article from Forbes recaps it well with the following quote.
“You are not working from home; you are at your home during a crisis trying to work.”
There’s another reason which makes us believe that the office is not going away any time soon: it is a cornerstone of community—a place to meet, socialise, and foster new ideas and discussions. On top of this community enabler role, the office helps build company culture and makes common values and missions more tangible.
If there’s one thing that 2020 has shown us, it’s that even though most people appreciate the opportunity to work from home, they crave interaction with other people. We’ve seen parties moving online, birthday celebrations did not stop, people have begun calling each other more, companies have started organising virtual coffees and after-work drinks, and so on. Humans are fundamentally social creatures technology is only but a temporary replacement for real-life encounters. The moment that governments begin to ease lockdowns, it is inevitable that people will rush outside to see their friends and families face-to-face. On top of the common values of a company, we’re really now seeing the strength of the bond that work colleagues create with one another. It really forms the social fabric of the team and the organisation; and this type of interaction is not as easy to create online as it is to create in-person. A survey of 1,100 employees in the United Kingdom by Tiger Recruitment has shown that even though 95% of employees see the benefits of work from home, 55% still miss social interactions with their colleagues.
To drive the point home that the workplace acts as a social enabler are coworking spaces. Why do people pay to be in a different workplace if they can work from home? Coworking spaces bring focus, bring atmosphere, and bring the opportunity to have exchanges with others, thereby fostering creativity and innovation. People not only enjoy the change in location, but want to be in a more office environment to do work.
A final reason why the general consensus is that offices will remain important is that it permits us to keep a stronger separation between work and private life. There have been many discussions in previous years about the blur of the work-life balance, and while it’s true that we can often be working at anytime and anyplace, offices provide an option for those who prefer to keep their private and professional lives in more distinct spheres.
4: Does the steady rise of locational flexibility mean the death of corporate real estate management?
As we know it, yes.
It will certainly mean the death of uninformed corporate real estate managers relying on old methodologies to “guesstimate” what happens to their building portfolio. Those who are not able to adapt and catch up with current trends will eventually flounder and fail. Think about the following points:
- COVID-19 has accelerated the move from the workplace as one anchored place to multiple work points: there is a rising tendency for people working more asynchronously as well as from anywhere. This all has profound impacts on calculating the among of space needed to be reserved per employee in the office.
- The office space has taken on an additional identity: we’re perceiving it now as a space to meet, create, and establish a sense of community and belonging.
- Expect post-pandemic repercussions such as social distancing guidance to stay for a while: new benchmarks that adhere with compliance rules and regulations will be set which will present new challenges.
- We’ll start to see the beginning of the economic slowdown put increased economic pressure for companies to organise one of their biggest cost centres: real estate.
The office certainly won’t go away, but it will change—becoming less about space and more about people. Parallel to that, the role of the corporate real estate manager will also morph into a workplace strategist profile, taking on three additional dimensions: industry trends, company goals, and data-supported KPIs. We may expect some functions traditionally performed by IT or HR to also be merged together.
“In 20 years, we might not see any differences between HR, IT, and corporate real estate management.”
These roles will focus on people enablement, and assets such as the physical workspace and IT tools will simply become resources they will be expected to manage. Whatever the title may be for these CREMs/workplace strategists of the future, they will need to measure, manage, and master their assets and data. This may sound like a daunting prospect, but with the right tools, it creates an incredible opportunity for them to take a seat at the C-level table.
The office won’t go away, and Corporate Real Estate Managers will morph into Workplace Strategists that juggle with three dimensions: Industry trends, company goals and, finally, data-supported KPIs. To survive, CREMs will have to measure, manage and master. It may be a daunting prospect, but with the right tools it actually creates the most incredible opportunity for them to gain a seat at the C-level table.
5: Can Corporate Real Estate Managers actively support the economic recovery of their companies?
Considering that real estate makes up the second largest expense after salaries in many service-oriented companies, there’s no doubt about that. The biggest obstacle facing corporate real estate managers right now is the limited transparency they have over their assets. Not having real-time office utilisation analytics is like flying in the fog. It results not only in difficulties in understanding what needs to be done, but also in baseless conversations due to the lack of sufficient data. With accurate, portfolio-wide insight about the office buildings and workplace analytics, decisions can be taken more objectively. Speaking from experience, we’ve seen our customers achieve some astounding economic objectives through the smart use of data, including:
- Saving 2.5 million Swiss francs per year by understanding space availability and optimising existing space instead of adding additional buildings to the CRE portfolio
- Consolidating 9 separate buildings into 1 central HQ
- Saving 300,000 euro per year just by reducing 10% of existing office space
These are just a few examples of how corporate real estate managers can support and improve the economic stance of their organisations. On top of that, smaller adjustments such as cleaning and HVAC optimisation can also make a noticeable difference in expenditures and savings. Taking all of the points into consideration, which ones do you think you can apply to your organisation and corporate real estate portfolio?
As the COVID-19 situation presents us with new developments and challenges day-by-day, office buildings around the world are steadily becoming emptier over the past weeks. While the entire Locateam is now working fully remotely, we have received great feedback from our customers on how they rely on Locatee to make critical and potentially life-saving decisions. These messages have been heartening reminders of our mission and purpose here at Locatee, and I would like to share with you two such examples:
- Pandemic task forces are using space utilisation data to plan and ensure the shift towards home office
- Facility management teams are informing canteens of how many people to expect for lunch and advising their employees when to go eat so as to avoid crowding
Despite the difficult current situation, I believe that the role of office buildings, and by extension, Corporate Real Estate Management functions, are more important than ever during this time and once we emerge from the global crisis and enter a new normalcy. I see two main reasons for this:
We gain a deeper understanding of flexible work
For many knowledge workers, the office building was the only place to get work done before all of this. Currently, we are witnessing the world’s largest remote working experiment. Companies are investing heavily in enabling their employees to work from home and keeping operations as smooth as possible. Once we are through this, every desk worker will be more experienced and adept when it comes to flexible or remote working. This will have tremendous impacts on the world of work.
Office buildings take on a new significance
Despite pushing the frontiers and boundaries of what we can achieve working from home, we will no doubt also understand its limitations. We will learn what we can and cannot achieve with our lack of physical presence. Yes, we can hold virtual coffee meetings, but this will not displace face-to-face discussions. In the absence of a physical office, we will realise and recognise its value and importance in engendering a collaborative and productive workforce.
Our good friends and the co-authors of our white paper (Navigating the Complex Smart Building Landscape) Memoori have written a great piece delving deeper into the topic. If you want to learn more on this, I recommend checking out their article here.
How do you see it? What will the impact of the current situation be on the office or the corporate real estate landscape in the mid- to long-run? I and the entire Locateam look forward to hearing your thoughts; in the meantime, please stay safe and healthy.
Today, many organisations are interested in making fact-based decisions to change their workspaces and a large number of them are already investing in utilisation studies. To identify consolidation potential, optimise workspace concepts and align workspace demands with the business needs, decisions need to be based on data that is accurate, complete, consistent, and continuous.
Why Manual Occupancy Studies Are Outdated
When choosing a measurement method (read our previous blog post to discover the different types), companies often rely on manual occupancy studies. Manual studies are conducted by individuals walking through office spaces at predefined times, to observe the attendance of employees. Beforehand, a set of characteristics to be measured are defined.
Manual occupancy studies pose the following limitations:
- The accuracy and reliability are fully dependent on the observations of the conductor(s) of the study
- The studies are conducted over a short period of time, therefore cannot provide any information on seasonality and fluctuations
- Interpretation of the data is up to the observer, hence it is not objective and prone to errors
- If requirements change, the data fails to reflect the changes
- Translation of collected data into valuable insights is time-consuming and static
- Results are not delivered in real-time
- Global scalability over a portfolio of dozens or even hundreds of buildings requires an immense number of observers and therefore a lot of investments
Organisations which conduct manual occupancy studies, base their operational and strategic decisions on a limited set of information. Basing further activities on this data may have a negative short- and long-term outcome for investments because the data is not real-time and does not represent the dynamic of the workplace and employees.
Why Digitise Your Space Utilisation Studies?
Dismissing manual occupancy studies and digitalising them, have the primary benefits of providing continuous, reliable, objective and real-time insights:
- The insights are scalable because data can be measured and benchmarked over the entire real estate portfolio
- You can continuously identify savings potential and trends in space utilisation without neglecting long-term employee satisfaction
- Corporate Real Estate Managers are able to discuss business needs with the objective data to back up the decisions
- The real-time and continuous insights allow newly introduced work concepts to be verified without the need for additional investments
- The continuous analyses of data over a long period of time facilitate predictions by means of identifying patterns, trends, and seasonality
How to Digitise Your Space Utilisation Studies
In general, organisations already have access to many data sources such as LAN ports, WiFi access points or sensors. The best solution is to leverage these already existing sources and therefore only have a marginally increased initial effort compared to manual occupancy studies. Furthermore, the return on investment is increased greatly due to the quality, versatility and global scalability of the data. Software-approaches enable you to continuously adapt your measurements depending on which use cases you have. A crucial factor is that the solution is GDPR-compliant and can be adapted to your company’s as well as employees’ dynamic needs.
So why do companies in a digital world still conduct manual studies? Manual occupancy studies are budgetable, easy to implement, and seem to be the simplest answer to a complicated question.
We at Locatee are convinced that organisations should not waste investments on time-consuming, inaccurate manual occupancy studies that yield low to now returns. By digitising space utilisation studies, organisations make use of their existing data sources while investing in a scalable and future-proof solution that reflects the modern office spaces organisations offer their employees. Deciding on a solution that actually provides meaningful data translates directly into providing the best work environment for your employees, while at the same time meeting your business’s needs.
In the past few years, smart building technology such as IoT has been evolving at lightning pace. Explained simply, smart buildings use a combination of technologies to automate building management. Sensors feed the management systems with information about changes in occupancy and temperature. The systems allow facility managers to automate and manage the different variables of a building’s operation and the collected data is stored and analysed over time so that adjustments can be made. While bringing many benefits, turning buildings into smart buildings requires investments. So, what is the business case for making investments in smart buildings?
Read the second part which focuses on the strategic and operational space management of making investments in smart buildings.
Value Proposition of Smart Buildings
In traditional belief, the greatest incentive to invest in smart buildings are asset value and energy savings. Building automation and integrated control systems can generate from 10 to 40 percent savings in energy costs alone. However, if only energy cost savings are considered, a much bigger value proposition is overlooked.
Employees spend at least 40 hours at the office each week, totalling 2080 hours every year and human capital accounts for about 90% of a company’s operating costs. The real estate firm JLL suggests applying the 3-30-300 Rule™ – $3 per sq ft per year for utilities, $30 for rent, and $300 for payroll. Using the 3-30-300 model JLL claims that the greatest financial savings from optimising a workplace do not lie in energy but in productivity. Primarily, smart buildings benefit the people who occupy them, which in turn produces significant positive impacts on the company’s bottom line. In numbers, this means 43% of the total value comes from enhanced employee productivity, 41% from increased employee retention, 7% from improved employee wellness, 7% from utility savings, and 2% from maintenance savings (The financial case for high performance buildings).
The productivity gains can be achieved by making workplaces physically comfortable, enabling fewer distractions and the ability to concentrate fully on tasks. Furthermore, it has been proven that there are direct links between human-focused, intelligent building systems and a company’s ability to recruit the brightest talent. Not to forget, active participation and signed consent of the employees are vital to a system’s success. However, if all things are considered, the promise of energy efficiency, better access control, greater comfort and environmental responsibility all come down to a high return on investment (ROI) for smart buildings.
What Locatee Offers
Locatee is the leading workplace analytics solution that transforms complex data into space utilisation insight. Developed with a strong focus and a deep understanding of the corporate real estate challenges facing the modern world of work, Locatee empowers you to make decisions about your business buildings with confidence. Locatee works by leveraging office occupancy data from multiple sources, processing them using unique patent-pending technology, and beautifully visualising them all in one place. With workplace intelligence right at your fingertips, you can easily identify optimisation potential, realise savings, and enhance your company’s workplace experience across your entire real estate portfolio. Read our case studies from Biogen and Post, to discover the different use cases. Read our case studies from Biogen and Post here, to discover the different use cases.
The development of technology has increased the importance of smart buildings and investing in them offers great opportunities. First and foremost, a dynamic, smart workspace is responsive to the needs of the people who work there, creates a better work environment and in turn, increases people’s productivity. Investing in smart buildings does require high assets, however, it also offers the opportunity for great returns.
Contact us to discuss your business cases.
As demographic, economic, and cultural shifts are taking hold worldwide, the workforce finds itself in a global transition. The workplace increasingly focuses on collaboration and interactions, and entire fields of work and work styles are changing. Leading organisations know that well-designed workspaces improve performance, speed innovation and build healthier work cultures. These changes have motivated innovative leaders all over the world to work towards a smarter future. According to forbes.com, smart city development spending is estimated to reach $41 trillion worldwide between 2016 and 2036. The development specifically shows itself in the implementation of smart buildings, which have the ability to collect and analyse traffic data and patterns to optimise and realise workspace potential. But how can smart buildings and the technologies be used best to make offices more people-oriented?
The 3 steps to create people-oriented offices
There are three steps to follow in order to turn your workplace into a smart office. Usually, real estate cost is high and employee productivity is low, which is why it is important to follow the steps listed below when it comes to analysing data if you want to change this.
1 – Identify strategic potential
In a first step it is important to understand how people behave across an entire real estate portfolio. Only then can you identify where to reduce costs, and how to increase the occupant’s productivity. Regional or global consolidation and growth potential can be identified, and the insights gained can show which areas offer the greatest saving potential. Unused or underperforming areas are thus optimised and adapted to specific needs of employees, while the savings can be reinvested into a more modern workspace concept.
2 – Realise operational potential
In the first step, the concept has been adapted and costs were decreased, while employee satisfaction was increased. Now, in a second step, the identified needs are realised. To adapt to the changes brought about by organisations and employees, the workspace too needs to be continually improved and adjusted in order to maintain cost savings. The goal is to manage workspaces and operate buildings based on data analysis, to optimise operational potential and realise savings potential. Team and meeting room analytics give valuable insights into how employees collaborate and relate to one another. Specific work patterns form the basis to planning a work environment fitted to the employees’ needs. For example, the planning of suitable equipment, allocation of desks and processes facilitate cost savings and focused investments in an optimised environment.
3 – Personalise workspace experience
In the end, the overall goal should be to improve the experience of your building’s occupants and foster a great company culture, which in turn increases productivity. This can be achieved by personalising the workspace experience. Alternative workplaces tend to lead to less time and energy devoted to typical office routines and more time devoted to customers. Furthermore, the solution allows to continuously reflect the occupants’ feedback on their office experience, and to improve it, so that employees can both locate colleagues and resources easily.
The development of smart office buildings involves the implementation of many different technologies. Strategic decisions to change the workplace will need to be drawn on data analytics for timely and broad-based findings that inform the solutions. Technological innovation such as Internet of Things (IoT) building platforms are changing the way facilities are operated and maintained. The information being able to be collected with the IoT, improves services and increases efficiencies by better understanding how employees, devices and other assets relate to one another.
In conclusion, workspaces and smart buildings have been developing in tandem and the rising importance of work culture has made it even more important to make offices more people-oriented. Following the three steps (identify, realise, personalise) by means of collecting and analysing data with IoT technologies, offers great potential to reduce costs of space and increase people productivity, while making offices more people-oriented.
We at Locatee are happy to provide support needed to implement these three steps and make your offices more people-oriented.
Find more insightful reads on our Locatee Blog
In recent years, workspace environments all over the world have changed drastically. Companies have adapted their buildings to create workspace experiences that communicate and reinforce the company’s value proposition while also accommodating to the changing needs of employees and encouraging more human interaction. Consequently, technologies have been integrated into buildings progressively, turning them into smart office buildings. This ultimately not only creates a workspace where employees are able to work productively, but also where they want to work. In order to continuously optimise the workspace environment and being able to act proactively, it is important to track any changes. This is where workspace utilisation measurements come into place. In this article we talk about 5 measurement methods of workspace utilisation.
5 ways to optimise the workspace
What technologies are currently on the market to create the ideal workspace? The following five methods are frequently used to turn office buildings into smart buildings:
Manual Occupancy Counting
Small companies often make use of manual counts and workspace surveys. With an increasingly mobile workforce, the lack of continuous data comes with many disadvantages. As well as being costly because of labour-intensity, it is highly complex when being rolled out on a large scale. However, small companies may meet their needs with this method.
Access Badge Analysis
Some organisations use their already implemented access badge or turnstile system as a reference to how many employees are present in the building. The significant limitations of such data lie in disregarding visitors entering the building or people entering at the same time, as well as failing to collect data on movements inside, and on exiting the building. Furthermore, non-standardised data formats may limit the analysis of the collected data. This method does not allow for in-depth analysis.
Sensors are mounted on various locations in the building and can measure features such as noise levels, temperature, air quality and the presence of employees. Although the sensors overcome some of the deficiencies of other methods, the deployment and maintenance of the sensors can be cost-intensive and demanding, affecting its scalability. Furthermore, sensors can fail to provide insights into workspace utilisation for shared offices at organisational units.
IT-Logins entail various inefficiencies since there is a trend leaning towards ‘bring-your-own-device’, which the IT-Login does not recognise. Furthermore, because logins vary in different buildings and locations, the method is not scalable.
Software analytics solutions evaluate and analyse data sources in real time by leveraging existing IT infrastructures (Wi-Fi and/or LAN). It provides you with detailed information on the utilisation of buildings without having to implement additional costly and high-maintenance hardware. However, because software analytics rely on the density of Wi-Fi access-points and the LAN infrastructure, the space utilisation might not be highly granular at desk level. Yet, software solutions have the big advantage of being highly scalable across a global portfolio while also being future-proof and offering the possibility of providing regular updates. With the help of the analysis, corporate real estate and facility managers can make objective, data-based decisions and maintain consistent success monitoring across their global portfolio of office buildings.
What Locatee offers
Locatee Analytics is a big data analytics platform enabling smart and occupant-oriented office buildings. Due to Locatee Analytics being a software, it can be adjusted to specific needs and use cases of customers. From right sizing office spaces, operational and strategical facilities management to finding colleagues, Locatee Analytics acts as a valuable tool. In order to guarantee accuracy, a thorough network assessment is provided prior to a rollout. All in all, Locatee Analytics provides scalable, granular and continuous insights at an affordable cost, turning office buildings into smart office buildings.