The traditional model of corporate real estate, based on long-term office leases, is being challenged like never before. With the rise of hybrid work and increasingly distributed teams, the need for workplace flexibility has reached new heights. At the same time, businesses must adapt quickly to changing market conditions and organizational needs.
Yet most companies are locked into costly, long-term leases for more space than they need. Prior to the pandemic, on average 30-50% of leased corporate space sat empty on any given workday. Now with remote and hybrid work, utilization rates have plunged lower and RTO mandates have come into force as a counter attack.
Businesses are saddled with excessive overhead for space that often no longer matches their requirements. Office layouts can be outdated and located in less optimal areas for attracting today's talent which is now more widely distributed. Organizational shifts, as leaders grapple with the new way of work, also lead to misalignment between workspace and team structures.
The traditional corporate real estate model lacks agility and financial fitness for the modern digital age. Businesses need solutions tailored to a dynamic workforce and ever-evolving demands.
Many companies, such as Elastic, are now shifting to more flexible real estate portfolios that incorporate a mix of spaces. There are many benefits to an Agile Portfolio. Firstly, companies can respond to changing real estate demands in minutes rather than months. Secondly, the investment risk, associated with traditional real estate investments where long term leases are standard, is significantly reduced. Capacity can be judged accurately using real-time utilization data. Utlimately, this means that organizations can be more responsive to employee demands and can funnel cost savings back into the business, with many chosing to invest in improved EX.
Rather than being locked into long-term leases on large office spaces, companies can now dynamically adjust their real estate. This includes utilizing flexible space solutions like co-working offices and flex spaces on shorter terms. Co-working offices have risen in popularity, providing an on-demand way to quickly source office space in various locations. Companies can leverage co-working for temporary projects, expanding into new markets, or accommodating shifting teams.
Agile portfolios integrate blended utilization allowing companies to optimize offices based on cost, location and team needs. The mix can be adjusted over time based on business requirements. By adopting a more agile approach companies gain flexibility, scalability and financial optimization from their real estate. The rise of flexible space solutions enables firms to rapidly respond to changing business environments. COVID taught us to expect the unexpected and flexibility is the solution in the face of uncertainty.
The first step in building an agile real estate strategy is to thoroughly evaluate the functionality, utilization, and costs of your existing real estate solutions. This involves taking a data-driven approach to understand what is and isn't working across your portfolio.
To start, analyze the functionality of your current spaces. Conduct employee surveys to gather feedback on how existing spaces are meeting employees' needs and where they are falling short. Ask questions like:
Supplement survey data with utilization analytics. Leverage desk and meeting room sensors, WiFi connections, and other data sources to understand how existing spaces are actually being used. Look at:
Finally, benchmark the costs of your current portfolio. Analyze lease terms, rents, operating costs, and build-out expenses. Calculate cost per square foot, cost per employee, and other metrics to understand spending. Identify facilities and locations that are significantly underutilized or over budget.
With data on space functionality, utilization, and costs in hand, you can pinpoint the biggest opportunities to optimize your portfolio. The key is taking a data-driven approach to understand what is truly working across all of your real estate solutions before defining an agile strategy.
To successfully transition to an Agile real estate portfolio, there are three key components to implement: adjusting the portfolio composition, introducing space management technologies, and establishing a clear change management plan.
The first step is assessing the current real estate portfolio and determining how to shift to a more optimized mix of owned, leased, and flexible workspace arrangements. The goal is to move away from a "one-size-fits-all" approach to real estate and toward a portfolio that can dynamically adjust based on changing business needs. This may involve rightsizing or exiting leased spaces that are underutilized, establishing flexible workspace agreements, or looking at owned assets that can be sold or repurposed if they no longer align strategically.
Secondly, implementing space management technologies creates data-driven visibility into how all real estate assets are truly being used. This allows organizations to see detailed occupancy analytics for making informed portfolio decisions. Some of the key technologies to introduce include:
Lastly, an effective change management plan is critical when transitioning. This establishes clear communication around the "why" behind the changes and outlines how employees will be supported throughout the transition. Some best practices include:
With these three components addressed - portfolio optimization, space management technology, and change management - organizations can successfully shift to a dynamic, data-driven approach to corporate real estate.
The key to optimizing your real estate portfolio is having detailed and accurate data on how your spaces are actually being used. This allows you to make data-driven decisions on rightsizing, renewals, new leases, flex space, and more.
It's especially important to continually measure occupancy across all of your spaces - both owned and flex. Tracking granular utilization data lets you see patterns and changes over time. For example, you can identify certain days of the week or times of day that see peak demand for your flex spaces.
Benchmark your utilization rates against your own portfolio's history and market averages. This helps you determine if you are over- or under-allocated in certain markets or space types. Are your meeting rooms constantly booked up while your flex spaces sit empty? Usage analytics will reveal optimization opportunities.
Pay special attention to the concentration of on-demand flex space utilization. If certain locations see heavy and consistent use, it may make financial sense to secure dedicated space there. The key is translating real-time occupancy data into strategic insights.
By continually monitoring detailed occupancy analytics, you gain the visibility needed to rightsize your portfolio. This ensures you provide spaces that align to actual demand while avoiding unnecessary costs.
Once you have clear data and benchmarks around your real estate portfolio, the next step is iterating and optimizing based on those insights. This allows you to dynamically adjust your portfolio to meet changing business needs and optimize costs.
Key aspects of this stage include:
With a distributed hiring model and a workforce spread across EMEA, the company faced challenges in providing quality workspace access. Additionally, the central Amsterdam team was underutilizing available spaces.
Since partnering with Desana, over 3,000 employees now have access to a single solution for flexible workspaces across EMEA, increasing collaboration and decreasing commute lengths. This strategic shift has not only enhanced productivity but also generated significant cost savings by disposing of leased offices.
Desana's data-driven approach has empowered the company to optimize workspace utilization and improve employee satisfaction. With its innovative platform and game-changing data analytics, Desana offers an enterprise-grade solution in the global flexible workspace market. By emphasizing control, choice, and significant cost savings, Desana enables companies to transform their workspace models and achieve efficient and flexible solutions.
Before jumping into an agile real estate strategy, it's important to thoroughly evaluate your existing portfolio. Asking these strategic questions, watching for signals, and mining internal data can reveal transition opportunities.
Here are some ways to get started:
With the right strategy and expertise, optimizing for an agile portfolio is achievable for organizations of all sizes. The future of corporate real estate is flexible, and the time to start is now.
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