The Future of Real Estate

How data helps design effective RTO strategies

October 3, 2023

Return to work mandates are happening and JLL predicts that in the fall of 2023 more than one million workers will be asked back to the office. Companies are navigating the post-COVID RTO and trying to align productivity, flexibility and their real estate portfolio. But, there have been well documented pushbacks of RTO policies from employees at Starbucks, Disney and Amazon. 

CNBC reported that 80% of leaders “regret their initial return-to-office decisions and would have approached their plans differently if they had a better understanding of employees office attendance, their usage of office amenities and other related factors”. We review what organizations are getting wrong and how data can be used to craft effective return to office policies. 

Managing flexibility and capacity

Organizations want offices to work to "rebuild and revive the energy" in addition to utilizing legacy office space and, in principle, employees aren’t against offices. Infact, the Q3 2023 Flex Report by Scoop shared that the “average company policy on days in office (2.56 days / week) sits squarely between what employers want (2.75 days) and what employees want (2.21)”

These data points signal intent and goodwill towards offices. But what they fail to take into account is the array of different use cases. For example, we see use cases between employees who use hot desks or their HQ every day of the week and others who only attend mandatory meetings. 

Data informs RTO policies by identifying patterns across the workforce and creating policies and places that support both the needs of the company and employees. There is no one size fits all policy for organizations. Our most successful customers have been clear on the intent of their policy, have applied data insights and then aligned accordingly.

A common data point we see across customers is preferred days in office:

Hot desk bookings preferred days of week

This insight has real value for re-imaging RTO policies. By understanding the days that people want to be in the office, businesses are able to adjust policies to ensure that collaboration days and meetings happen when people actually prefer to be in the office. Providing attendance visibility for these meetings, via Desana or an internal platform,  allows employees to align their office attendance.

When policies are rolled out in a transparent manner highlighting the collaborative advantages of in-office time, the employee push back is much lower.

60% think that being in the office improves their productivity

When employers have a robust workplace policy, they increase the opportunity to provide guidance and support about how workspace is best used. Elastic are a fantastic example of an organization using insight to shape behavior for the benefit of all. They issued guidance to provide clarity around meetings; what they are, when they are best used and how to use office space appropriately. This led to them being able to use space more efficiently.

Additionally, because Elastic employees can now easily see who else is in the office and when, 'collision' opportunities will be higher, leading to increased collaboration and social cohesion. This decision is increasing collaboration across the team. 

Perception of risk and reward

Occupancy rates have yet to reach the pre-pandemic levels, with 55% being the European average and the US vacancy rate is up 260 basis points year-over-year reaching 17.5% at the end of August. RTO mandates should not be implemented with the sole objective of increasing office occupancy because a lease is viewed as a sunk cost. This is a short-termist view of the workplace and as we have seen in the case of Amazon, led to employee pushback.

The focus should be on understanding how space can be converted into an asset for employee needs and leveraging it to support company culture. This mindset shift is how the new management model aligns with CRE strategy. It is impossible to separate innovative real estate strategy from the new leadership methodologies. One cannot be successful without the other. We’ve seen a similar mindset requirement  in performance measures. The Slack State of Work in 2023 Report interviewed 18,000 desk workers in nine countries and found that “27% of executives rely on visibility and activity metrics to measure productivity”, but 27% of employees want to be measured on achieving KPIs and goals. We cannot manage people using past metrics, the same is true for offices, we cannot mandate attendance as we once did.

Space, place and performance

When organizations commit to real estate square footage they are making a decision based on the best available data. Historically, when making these decisions, organizations have had limited data available to them, other than: current / projected headcount, costs, location and standard of the building. The decisions we can make about workspace have shifted radically.

Data is readily available on demand to be aggregated and identify trends. Every previous data point has shifted. Headcount projections used to be based on hires within geographic proximity of headquarters. Leading companies now hire the best talent regardless of location and adapt working practices accordingly. 

Work policies should consider the extended office blueprint; home office and coworking are part of the real estate portfolio. The majority of organizations are running a structured hybrid mandate, as shown in the graph below. The office will potentially be just one out of four places the employee works, with home, flexible workspaces or community being the other three. 

Flex Index Company Office Requirements by size

Again this is why RTO policies need to be clear on intent. If offices are to become the home of collaboration and cultural reinforcement then it means designing space to foster this. Traditionally 70% of office space would have been dedicated to individual work spaces. Our data has shown that collaboration and office occupancy increases when office space is designed to accommodate more breakout rooms and meeting spaces.

A great example of real estate planning is Dropbox who converted their leased assets to pure meeting and collaboration environments. The Desana network allows Dropbox employees to book workspace whenever most suitable for them, when they are doing work that does not require in person collaboration. Combining the booking data from central and external working environments in a single dashboard enables constant measurement and iteration. 

The link between having the right space and performance is clear: 

of desk workers say that brainstorming is more productive when done in the office
say that working the same hours as their teammates improves their productivity
think that being in the office at the same time as those outside their team improves their productivity

State of Work in 2023 Report

Using data to future proof real estate strategies

No expert can accurately predict the future. But we know flexibility is powerful in the face of uncertainty. The reduction of legacy buildings and access to coworking spaces gives organizations the opportunity to provide choice to teams and manage their real estate overheads. 

A Microsoft survey highlighted the perception gap between managers and employees on performance. 87% of employees felt their productivity was higher when working remotely, whilst only 12% of managers felt fully confident hybrid workers were productive. Data analysis is the way to answer this question. When all offices, including 3rd spaces, HQs and home, are aggregated and layered with performance data, companies will finally have visibility at a granular level of the best place for their people. 

Providing network access to employees allows companies to build a clear picture of how teams optimize work when they have access to spaces suited to their needs. Over a 6-month period organizations can gather data on the frequency and size of meeting rooms booked. Amenity search data can be used to inform RTO policies by upgrading office facilities based on the real utilization of their teams, rather than estimates. Amenities might first appear trivial but RTO policies need to fight the perception that home is more convenient and flexible.