Despite what you may have heard, the office isn’t dead. However, that doesn’t mean the industry isn’t going to see some monumental changes in the upcoming years as organizations reconsider their real estate needs for a post-COVID-19 workplace. Regardless of if your company’s workforce is embracing remote or hybrid work, your organization undoubtedly went through changes last year and the way you approach your corporate real estate portfolio for 2021 should reflect those changes.
Workplaces are a major part of overall company spend. Corporate Real Estate leaders are responsible for multi-million dollar projects and billions of dollars in their portfolio, so right-sizing their portfolios is high stakes, and needs to be done strategically.
How to Right-Size your Corporate Real Estate Portfolio
The act of right-sizing your portfolio (making decisions around which sites to expand or retract so that you have enough space to meet the needs of your employees) ) is a complex task. There are many signs that it may be time for you to take another look at your properties― if certain assets are underutilized by your employees, if you've experienced significant headcount growth, if you foresee variables in the market that will impact the cost of managing your assets, or if there are any monumental world or regional events that may affect the real estate market.
Step 1: Take inventory of your current assets.
Before moving forward, take inventory of your current assets in terms of:
Asset type (lease, sub-lease, coworking space, owned, flexible, etc.)
Usage information (who is currently occupying each asset and for what purpose)
The key here is to ensure that you are taking inventory in a standardized, data-driven way across all assets. Otherwise, as you move forward with the right-sizing process you could run into some otherwise avoidable speedbumps.
Step 2: Identify cost and square feet across your portfolio.
Once you’ve gained an overview of your assets, review the exact cost and square footage of your properties in order to begin noting discrepancies in your assets. Once you’ve got a firm handle on these two metrics you can begin the assessment process.
During this step ask yourself questions such as:
Which are high cost regions?
Where are the low cost buildings?
Which assets would be the most difficult to shed? The easiest?
Which of your assets is your company adamant about keeping?
Answering these questions will not only set yourself up for success as you move further into the right-sizing process, but they allow you to take a moment to check in with yourself. Yes, right-sizing is a numbers game. But that doesn’t mean that how you feel is irrelevant. Once you’ve gained this valuable holistic view of your assets and their worth you can move forward.
Step 3: Understand utilization trends across all properties.
In order to make the decision required to right-size your portfolio you first need to understand how your individual assets are succeeding, and identify which are struggling. To do so, approach your assets one property at a time and assess their utilization. Then, collect your insights and draw a conclusion about the utilization trends across all of your properties.
While the first step can be done by compiling the usage information you gained about each property back in Step 1, identifying your utilization trends will take some further analysis. This is another process that is best done guided by asking yourself questions about the utilization data you’ve gathered, such as:
Are there any obviously underutilized assets?
Are there any assets that are crowded and could benefit from expansion?
Are there any instances of several assets (such as multiple buildings or even specific floors across multiple buildings) in one geo-location that can be combined?
Bringing building capacity into the conversation, how does the capacity compare to the utilization of your assets? (Too big of a discrepancy here can be a good sign that it is time to consolidate.)
How does your average utilization compare to peak utilization?
How common are peaks?
What do your leadership and management teams have to say about the existing workspace options? How about your employees at large?
Once you have a firm handle on the utilization trends of your assets, you should be able to begin making some projections about the actions required to right-size your portfolio.
Step 4: Survey most common employee locations.
Now it’s time to take a look at the human element of your assets.
Comprehensive workplace analytics platforms like VergeSense provide you with a thorough and accurate view of how, when, and where your employees occupy the space of each of your assets. Without this information you’ll be unable to accurately identify consolidation opportunities and could end up in the wrong while trying to right-size your portfolio.
VergeSense provides you with the real-time space utilization data that you need to make informed decisions about your assets. Without this information, you’ll be unable to right-size your portfolio with your employees in mind. When it comes to employee wellbeing, the only way to make the right decisions is to make informed decisions. To begin gaining invaluable insights into your employee movement today, request a demo from VergeSense.
Step 5: Identify opportunities for portfolio consolidation.
Now that you have gained a thorough view of your assets and how they are utilized you can begin identifying the opportunities that are presenting themselves as points of consolidation. These points won’t always be the most obvious, so look closely.
During this step you should also take time to do a temperature check of the environments each of your assets resides in. COVID-19 was unavoidable, but there are many natural occurrences that are avoidable when you have enough foresight.
To ensure you are consolidating in a sustainable way you’ll need to be aware of any notable projections regarding the neighborhoods, cities, and regions where you have assets.
Through this process you should have been able to create a short list of possible ways to right-size your portfolio. From there, make your final decisions to right-size your portfolio.