Traditional office design is static. In this episode, Thomas Glatte and Sabine Ehm discuss how office spaces of the future will be flexible, supportive spaces.
Meet the guest
Thomas Glatte is the Director of Global Real Estate at BASF, the world’s largest chemical company. His family has over 200 years of construction industry experience, so he grew up surrounded by experts. After studying civil engineering, he became a construction manager in the late 90s. After a recession in Germany’s construction industry, he moved to Southeast Asia and began working for a chemical company. He describes this time as a “full-time business trip”.
In 2005, he returned to Germany to take over the Real Estate Department at BASF. In time, this evolved into the Global Real Estate Department, caring for the entire lifecycle of the company’s assets. The company’s portfolio is now worth 6 billion euros and is made up of 1100 sites in 95 countries. The portfolio has a wide range of real estate types, from small sales offices to the largest chemical site in the world.
Thomas’ favorite part of BASF is this diversity. Each project comes with its own set of requirements, so there’s always a new challenge. Listen to the following clips to learn more about Thomas’ take on CRE.
“We need to be aware that centralization comes with a lot of benefits. But, we also have to confess that it brings a significant amount of bureaucracy.” – Thomas Glatte
Roughly 250 people make up BASF’s real estate team. It once numbered more than 1000. This is partly due to outsourcing to service providers, but also because of decentralization, or what they call, “embedding back to business units”. In this clip, Thomas and Sabine discuss the trend of centralizing operations, only to later revert to previous on-site structures. This is due to agility. Although centralization can have immediate monetary benefits, more often than not, they increase wait times and decrease flexibility.
Having operations on-site allows companies to quickly react to business needs, as well as know their customers better. Despite the higher initial costs, this will lead to more savings in the long run. “We may have to give up some of the synergy savings to regain agility, as you earn more from [being agile]. It’s a discussion of top line and bottom line.”
“We are in the process of redefining our workplaces conceptually. As in, how they should be designed, but also by the site footprint. [It’s] no surprise that after this ‘exercise’ we need significantly less office space than we used to have.” – Thomas Glatte
BASF is in the process of reducing the size of their Moscow offices by 40%. Other office spaces will soon follow suit. The corporate real estate team is moving away from assigned desks and toward a more flexible layout. To do so, they have been analyzing their assets: what do we own? What do we lease? How long do these leases last? What are our needs?
The pandemic has only accelerated this. BASF has conducted surveys of their workforce and found that most of them would like to continue to work from home a few days a week. Thomas also performed an “unofficial survey” among his real estate colleagues. He asked them to send a photo of their at-home offices. About 50% had high-quality working spaces, but the other half did not. Thomas went on to say that a huge factor was their location. In Hong Kong, for example, his colleagues live in smaller homes, which makes working from home challenging.
“Everyone thinks an agile work environment is like having a sofa, fancy chairs, and a Starbucks in the office. This is not agility. Agility relates to constant change.” – Thomas Glatte
To create an agile work environment, you need to build a system to support it. When Thomas is working on a restructuring project, he uses a “digital building twin”. This is a mockup of the building and the movement of employees. Having this information allows him to modify the layout according to the needs of the building. Additionally, there must be a team that can plan for these new reconfigurations. Thomas likened this to coworking businesses: these companies set up their spaces according to demand.
The traditional workplace setup comes from the line-management structure of businesses. According to Thomas, this is going to change. Companies are moving towards project-oriented management. Office configurations will need to change accordingly. Project teams start small, grow to large numbers, and then shrink again. Having flexible spaces that can expand and shrink with the maturity of the project will be essential.
Companies are looking to create more flexible spaces for their employees. Thomas is a firm believer in this movement and understands what agility requires. It often starts with the decentralization of operations. Next, they must create supportive environments and office spaces. Companies also need to listen to their employees, and BASF has done so through surveys. Many employees would like to continue to work from home, so the CRE team is working on managing this. BASF’s real estate strategy is in good hands. It will be interesting to see how the company progresses in the future.