Corporate Real estate managers' insights and the COVID-19 mind trap


Corporate Real Estate managers’ insights and the COVID-19 mind trap

Eight dilemmas facing CRE managers post-COVID

Following our article on Corporate Real Estate and the COVID-19 mind trap , we interviewed CRE managers from various large end-users and service providers, varying from tech companies to consumer goods companies, and asked for their opinions on the eight dilemmas highlighted below.

As our earlier article explained, the best way to map the impact that COVID-19 and future trends will have on office portfolios is by combining expertise in corporate real estate, human capital, IT, sustainability and mobility in customized scenarios. This scenario planning will allow more deliberate decisions on transforming to a post-COVID world and avoiding the mind trap of acting impulsively. Ensuring you are  ready for the post-COVID world means constructing transformation strategies now. These strategies, in turn, require a vision, transformation plan and robust program management. 

Challenges in the ‘new normal’

With working from home now being the ‘new normal’, employee engagement, well-being and working efficiently have all become increasingly important. As well as showing that working from home can be very effective in many situations, COVID has highlighted the importance of physical encounters for effective collaboration, social cohesion and binding with the company. Getting the best performance from employees requires the right balance between working in the office and remotely. 

The extent to which this balance needs to be structured depends on the nature of work and the organizational culture. Ensuring effective collaboration and social cohesion within an organization means designing (or redesigning) offices to most effectively facilitate the type of work performed there. The CRE managers we contacted indicated that they will be reassessing their real estate strategies and workplace environments to help employees and their teams emerge stronger in the post-COVID world. On the back of new insights, they now estimate the impact on their real estate footprint will be a space reduction of approximately 10-20% rather than the 40-60% they had predicted in the media back in April last year. 

Most CRE managers consider it possible to achieve an effective return by developing an integral plan for translating their company’s goals and ambitions into a post-COVID way of working. While disposing of office space should not be the main objective in this plan, managers believe it could certainly be an important trigger in the business case. The challenge, however, will be to spread the peak of the return to the office across the week, while also maintaining flexibility and facilitating sufficient spontaneous and other interactions among employees. Incorporating this new environment into the CRE strategy will demand an integral approach combining HR, RE and IT expertise.

In summary, the CRE managers envisaged an integral plan being built on four key insights:

  1. Gaining insight into which roles or functions perform which tasks and activities, and what is required to perform those tasks and activities;
  2. Determining the most suitable work location (in the office or remotely) for the relevant activities;
  3. Determining the actual demand for types of workplaces and functions in the office;
  4. Using these insights to specify any additional tooling required to facilitate planning, booking and arranging to work in the office.

Change driver

The CRE managers unanimously stated that COVID has been a major driver in the push to accelerate certain CRE trends. COVID has shown that working from home does not reduce productivity and provides the opportunity to permanently capture the positive impact in CRE strategies. However, most CRE managers argue that successfully implementing this new way of working requires guidelines to prevent employees from returning to old patterns and behaviors.

Most organizations intend to redesign their offices, but do not yet have detailed plans for reducing the square meters in their office portfolios. Most of the CRE managers (85%) believe that reducing the square meters will require detailed guidelines for spreading employees working in the office. Instead of focusing on reducing costs, these guidelines should aim to encourage the new way of working. Companies must establish how, when and where work is best performed and identify which activities can best be done from home, the office or elsewhere. The CRE managers also stated that these guidelines must provide for a high enough probability of colleagues meeting each other randomly.

COVID is also impacting on certain macro trends affecting our ways of working, such as the Internet of Things, Artificial Intelligence (AI) and purpose-driven workforces. In the long run, however, the majority of the CRE managers (77%) see these trends as being of more significance than COVID: “COVID is accelerating the trends, but in the long term its impact will decrease.”

A total of 92% of the CRE managers argued that, when redesigning workplaces and offices, the focus should be on connecting employees to the organization and its culture and on facilitating social interaction between employees. They also stated that new workplaces should facilitate and encourage collaboration between employees, with the majority of them seeing collaboration and social interaction as key factors in the redesigned workplaces.

During the recovery phase of the COVID crisis, several companies reopened their offices – in compliance with the COVID rules – for limited numbers of employees, resulting in more square meters per employee. The majority of the CRE managers (69%) expect this trend to continue in the post-COVID world and stated that, in the redesigned offices, the number of workplaces will decrease, and more space will be allocated for facilitating collaboration and social and other interactions among employees. Some of the managers also believe that offices will be structured more flexibly in anticipation of possible future pandemics.

Supra-department solutions

The new way of working will mean changes in HR, IT, RE, mobility and sustainability. The CRE managers were divided about which department – HR, IT or RE – should lead the constructing of a robust re-entry strategy. While some see RE as the only department that understands how to prepare post-COVID plans, others believe that the business must lead and that RE should act as the enabler and facilitator of other departments. These differing views may reflect cultural differences or industry sectors, or indeed departments’ maturity level. According to one CRE manager, however, “This is not an issue of which department should be in the lead, it is about what competences do we need and how should we pull them together.”

Whatever the case, the majority of the managers believe that an integrated approach is necessary to ensure that all areas are connected. HR, IT and RE therefore need to cooperate in aligning the work, workforce and workplace. COVID provides an opportunity to examine this integral approach from all different perspectives.

Future of mobility

The majority of the CRE managers interviewed see the focus of the new office as being driven mainly by innovation and sustainability. Whether COVID will accelerate the implementation of sustainability ambitions depends on the type of organization. While some CRE managers (54%) see COVID as providing an opportunity to implement sustainability ambitions into the office accommodation strategy, others (46%) believe it will impact on ambitions such as mobility and cost savings before impacting on sustainability. Given, however, that travel accounts for a large part of companies’ carbon footprint, various sustainability ambitions are closely related to mobility issues. 

Building up insight

Determining what ‘the new office’ will look like requires insight into which roles or functions will perform which tasks and activities where and when. Only then can CRE managers determine the facilities, tooling and other resources that their employees need to perform those tasks and activities effectively and efficiently. This can be done by subdividing work processes into sub-activities (concentrated work, e-mails, phone calls, standard/framed meetings, spontaneous meetings, informal meetings, brainstorm sessions, etc.) and identifying which of these activities should be performed where and when. CRE managers can then determine the facilities and additional IT and other tooling need for each sub-activity.

The CRE managers see it as very important to clearly outline the new IT tooling required so that organizations and employees can plan when and where activities should take place. This must be combined with a detailed description of the new working space plan and guidelines for future working procedures.

Four-perspectives approach: Talent, Place, Space and Technology

Insights into which activities should be performed, by whom (roles/functions) and where are key for creating an integral plan for incorporating the new working environment into the CRE strategy.

 Deloitte’s workplace model for gaining these insights is based on the following four perspectives:

  • Talent, focusing on the human experience from a perspective of well-being, culture and connection, efficiency and performance;
  • Place, focusing on the proper distribution of work and providing insight into the most appropriate workplace for performing each type of role and activity in a hybrid work environment;
  • Space, elaborating on workspace vision and design, and on space capacity planning to indicate the quantity needed to effectively accommodate the work to be performed in each function;
  • Technology, focusing on the connected workplace (smart building) and the data and infrastructure needed to facilitate hybrid collaboration, and including insights into the additional IT tooling needed to accurately match office space and demand and to plan when and where activities should take place (i.e. booking workplaces so as to optimally manage peaks). 
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