By Jeff Revoy
Chief Operations Officer
Real estate costs are typically one of the least agile parts of an organization. Every business has a fixed number of buildings or square footage and a set lease period. Company leaders need agile space planning and utilization options to maximize productivity. But how can a business balance a finite footprint with organizational nimbleness?
Workplace analytics are crucial to optimizing commercial real estate (CRE). Trends, forecasting, and projections are critical tools that help companies adapt to changing business demands. The key is understanding the constant evolution of the workplace and how analytics can optimize every square foot.
The Changing World of Real Estate
The CRE landscape is shifting almost daily. That makes it difficult for real estate professionals to project lease needs and costs even a few years into the future. Factors that complicate forecasting include:
- Lease costs are skyrocketing
- Long-term occupancy is not guaranteed (and even preferable)
- Employees no longer adhere to a standard 9-to-5 workday
- Remote working is on the rise
- Workplace square footage per employee is shrinking
Organizations are also guilty of treating their workplaces as cost centers. Facility managers feel the pain most when their department budgets and staff are cut. But it’s a mistake to treat your workplace as a sunk cost that should be minimized. Everything in your business has strategic value, including the workplace.
How to Harness Real Estate Data
Real estate is the single biggest fixed expense for any company. But signing a 15-year lease is archaic. Too much can change in three years, much less in a decade. Everything from fluctuating staff levels and shifts in work processes to product or service pivots can change real estate requirements. What you need is a way to make smarter real estate decisions that free up capital to invest elsewhere.
We like to think of this as “real estate yoga.” Yoga for our bodies keeps joints and muscles limber. Real estate yoga has a similar intent—keep your organization agile and flexible. That translates to more productive, collaborative, and satisfied teams. This elasticity also means you won’t be locked into real estate investments that don’t serve the bottom line.
Historically, workplace data has been siloed in individual platforms. That puts organizations at a disadvantage. What if HR doesn’t communicate staffing projections to Facilities Management. Not good. Forecasting real estate needs means breaking down data barriers and putting staffing trends into a usable context by:
1) Collecting Data
Data collection can be as basic as compiling lease details, badge logs, calendar entries, and meeting room reservation information. You can also tap into WiFi and sensor data to form a more detailed picture.
2) Running Projections
Data is only useful if you draw conclusions from it. What if you want to know if a 10-person conference room is the right size for the meetings held in it? You can track calendar reservations, but that won’t tell you how many people came to a meeting and how long they actually used the room. But pair that information with sensor data and you may learn that meetings typically consist of two people. That’s context.
3) Taking Action
This is where real estate yoga strengthens decision making. With trends confirmed by data, you can enact real estate strategies that drive ROI. Some will have productivity benefits, such as rearranging existing space to better suit your employees’ work habits. Others will have an impact on real estate costs, such as deferring a new lease or consolidating square footage.
Imagine a scenario where you have 100 desks on a floor and want to know if the seat-to-employee ratio is appropriate. You analyze badging data and determine that an average of 40 people sign in every day. Now you have concrete proof that the space is underutilized. You can then optimize the layout, such as moving to a 2:1 desk-to-employee ratio or planning a department move.
Workplace analytics also play a major role in evaluating future real estate investments. Companies often struggle to forecast if staffing levels will be under, at, or over capacity when a lease expires. Without good data—and robust analytics built from it using an integrated workplace management system (IWMS)—how do you decide if a lease should be renewed or cancelled?
Current headcount is one indication, but personnel forecasting is another variable. Engineering is predicted to double in size, but it makes a significant difference in on-site workspace if new hires have the option to work remotely. An IWMS will highlight the key factors that ultimately impact your square footage needs.
Workplace analytics enhance visibility into space utilization. Better real estate forecasting and planning tools enable organizations to make workplace-based decisions. They help answer the age-old question for every business: When do I need to spend money on more space?