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Change in the Making in Commercial Real Estate



How the New Nature of Work is Changing Office Headquarters and Commercial Real Estate

The lockdown accelerated, and in some cases enforced, the adoption of digital technologies and impacted multiple aspects of modern life : education, learning, communicating, shopping, and, most importantly, ways of working. It is now proven that many people can work from anywhere — online teams can collaborate efficiently across a range of activities, tasks, and projects. Assuming the right setup is there (technology, along with a good team culture and communication practices), actual work can be done remotely at least as effectively as with the on-premise model.

People often praise remote work for allowing them to better focus on complex tasks by avoiding the noise and “randomization” of the open-plan office space. At the same time, remote workers save commute time, which in theory, can be used for personal activities and thus improve people’s work-life balance, well being, and general quality of life. Even the most conservative business leaders have started to realize that a distributed, online workforce is both feasible and appealing. This model also allows companies to recruit talent literally from anywhere on the planet, and offer more ways for people to perform tasks. As we all know, choice is good – especially when it comes to attracting and retaining talent, having more options to leverage expertise and deliver value, etc.

The Future is Hybrid : A Distributed Workforce with Remote and In-Person Events

The remote work model at scale introduces many efficiencies. However, it comes with an important limitation regarding the human connection – People in a physical office space not only collaborate, they also develop their business relationships. They build trust and they establish stronger links at the human level — and this is difficult to replicate in an online setup. In a co-location scenario, employees can easily demonstrate empathy and connect with others — not only according to their business roles but also based on personal stories, interests, and different facets of their personality.

Consequently, companies offering the option of remote work will soon face an additional challenge : the development and reinforcement of a strong team and corporate culture. When a significant percentage of employees work remotely, the corporate headquarters as a symbol of the corporate culture loses its power. The branding and cultural elements embedded into the typical corporate office space become less effective. Additionally, developing and maintaining a mentality of a single team is harder with a remote or mixed workforce.

Companies that take the remote work perspective seriously will have to optimize their online collaboration paradigm and their communication patterns. The former is about improving the remote collaboration experience and also about finding new means of promoting corporate and team values to the workforce – through new symbols, digital tools, communication protocols, business routines, and ceremonies. It is about inheriting a new leadership style. The latter is about re-purposing existing corporate office space and buildings to encourage regular face-to-face business meetings and events. For example, remote workers and teams should be able to meet and use corporate facilities on demand. In parallel, there should be a well-designed yearly plan of physical meetings, events, and conferences, optimized to better connect the geographically distributed workforce.

Organizations in the Era of Remote Work

Companies that adopt the remote work approach will eventually end up having a scattered workforce, across geographies and time zones, which makes the “classic” corporate headquarters less important. Organizations that allow a significant percentage of employees to work in a remote/flexible mode will have to inherit a different strategy of corporate presence. They’ll need to create a network of small and flexible offices, a group of corporate “base stations” or “hubs” that offer core services and collaboration facilities to all employees, in a dynamic, adaptive way. This defines a decentralized equivalent of the corporate HQ with increased geographical coverage but only in a limited total capacity. It will be capable of hosting concurrently just a fraction of the workforce of the organization (thus dramatically reducing operating costs).

In this network, each office “hub” hosts those teams that need to be collocated (for example, functions like logistics, manufacturing, etc.). Additionally, the hub has a multi-purpose design with adjustable collaboration spaces, a “hot desk” arrangement, and specially designed features to support a number of standardized business events – the ones that benefit significantly from the physical presence of teams (e.g., brainstorming sessions, innovation contests, demos and presentations with a live audience, prototyping workshops, conferences). This allows supporting random requests from remote workers and teams – just-in-time, in the context of a project or initiative.

Following this approach, employees are empowered to self-organize and utilize the corporate space as needed. For instance, to host a physical or hybrid meeting whenever they want. A team of remote collaborators that sees value in a face-to-face brainstorming would simply book the space (using utilities integrated into the digital collaboration platform) in the nearest available hub office and leverage the latest tools, services, and all the special facilities offered. Similarly, entire teams could host their all-hands events in a physical mode at a specific corporate hub.

This network of corporate hubs can be further extended and enhanced by leveraging third party co-working spaces and business facilities. Following this approach corporations would be able to maintain a minimum of building facilities while ensuring the ability to quickly scale their capacity according to the actual demand from their workforce.

The lockdown period forced companies, the workforce, and the society to try the work-from-home — or even better, the work-from-anywhere — model. Location and strict work schedules have proven to be less relevant, and in many cases, irrelevant. The real success factor for the corporation of the future is its ability to attract and retain global talent — to inspire people to work towards a clear, bold purpose, from anywhere. In this new era of the online workforce, corporate office space is becoming a scalable, adaptive service.

With working habits changing, demand for office space is changing. This includes the ability for tenants to reduce space when many people work remotely, and additional space for in-office meetings or events. Because of this and the significant cost of office space, tenants need flexibility to accommodate varying space requirements, office services, digital capabilities, etc. With this dynamic office landscape and new tenant needs, commercial property owners and managers who can flex and deliver on these requirements will have advantage. And mitigate having a lot of unoccupied space in their buildings as tenants migrate to where their expanding needs can be accommodated.

Summary

The times are a changing – including Commercial Real Estate. With this, the need now is for property owners and managers to be much more innovative to provide more value and options with new services for tenants and greater operational efficiencies to reduce costs and address rising User expectations. Because this is happening now is why the sooner decision makers are able to Innovate for Impact and deliver new digital capabilities that deliver meaningful benefits for all stakeholders – the better positioned their organization is to increase relevance and revenue while reducing business risk. Further, it’s easy to see a paradigm shift is in the making – with those who get it and are proactive being part of the future having new opportunities, and those who struggle with change having huge issues going forward. And with 40 % of current Fortune 500 companies not expected to be on the list in 10 years, it’s obvious organizations need to adapt – if they’re serious about their future.

By  – CAIL / George Krasadakis – an Innovation Leader and Product Architect, the author of  The Innovation Mode ,  a founder of several technology startups, is head of engineering at Datamine, and has filed more than twenty patents on artificial intelligence and analytics. 

Oct 8, 2020            –            CAIL Smart Buildings commentary                info@cail.com

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