The business atmosphere is changing, both as a result of the recent disruption and because trends that have been running in the background for years are now seeing the light of day. This convergence of factors weighs heavily on the decision-makers of the organization — particularly where to allocate financial and personnel resources to meet enterprise needs.
While opportunities for growth and transformation exist as the economy opens back up, there are pressing risks in the new environment, as information security protocols catch up to the ever-increasing use of technology, and management grapples with the ramifications of hybrid work models. The economic rebound also makes competition for skilled, technical professionals more challenging than ever. No small challenges for today’s decision makers.
As work models adapt and in-person business gatherings resume, new considerations for office space are also emerging. For example, financial leaders who are paying for office space leases in multiple markets may find they need to evaluate their work environments in a new way. This is a particularly tall order when you factor in the various renewal cycles and other market-specific factors that may be at play, making the office space conversation more difficult overall.
Reports of the demise of the office were greatly exaggerated (March office space demand measured at 9% lower than pre-COVID-19 levels according to commercial real estate software company VTS), but flexible work arrangements may be here to stay.
The embrace of a hybrid work model creates repercussions for how you use your centralized space across your different locations. Because so many businesses went all-remote in 2020, the market for office space is giving tenants more negotiating power and leverage than they have had in the past with their landlords.
You may find that even if you are looking to downsize or reconfigure your office space needs, there may be cost-efficient pathways and remain in your existing premises while doing so. We recently worked with a technology company that determined based on staffing projections, collaboration needs, support space requirements, and its remote work policies that it would need less space than it was currently using in one of its locations.
We helped the technology company devise a workplace configuration and present real estate financial data and comparable properties to its landlord, which ultimately helped the company optimize lease concessions and renegotiate its space renewal. The renewal also included a generous tenant improvement allowance that allowed the company to reorganize its physical work environment for its new needs while shaving 3,000 square feet off its office space.
When the same analysis is applied across your organization’s real estate portfolio, it can provide long-term savings, optimize rent pricing and help your organization be prepared for the new way of working.
We have created a guide that brings awareness to several of the concurrent opportunities and challenges in this environment.