As companies transition back to the office and set out on the road to economic recovery, business leaders are focussed on developing resilient and sustainable strategies. Faced with a new business environment, companies are looking for opportunities to contain office costs, both in the short-term and in the future. Some who have been immune from cost pressures in the past are looking to contain if not reduce costs for the first time. And, after a forced trial of remote working, many are viewing their property portfolio in a new light and questioning whether they are paying for more space than they need.
Many businesses will need to consider reducing their footprint and relocating non-essential functions from high-cost locations. Optimizing their property assets will not only drastically impact real estate costs, but reduce facilities management and running costs.
Reviewing the purpose, size, space mix, location and layout of offices, factories, distribution centers and other spaces will be vital, and lower space densities must be considered alongside the widening realization that flexible working can be ‘smart’. In a PwC pulse survey of global finance leaders, 23 percent stated that they were planning to implement reductions in real estate footprint once they began the transition back to on-site work.
The impact of the pandemic on location and space requirements will vary from business to business. Companies should factor in changes to operating models, workforce structure, supply chains and, importantly, employee attitudes to identify where they are paying for costly surplus space, and size the prize from changing their portfolio.
The future is flexible
Covid-19 has accelerated the trend towards flexible working, giving employees a taste of the improved work-life balance it offers. This may encourage many companies to adopt a smart working strategy, incorporating flexibility into their business culture.
Research results, including Avison Young’s soon to close survey on the impact of the health crisis on real estate porfolio strategy, show that the many executives are considering making remote work a permanent option where possible, and the majority believe that the flexibility they have developed in response to the crisis will benefit their company in the long run.
As businesses adjust to their changing space requirements, they may look for more flexible premises, such as co-working spaces, which offer shorter leases and can be adapted to the companies’ needs. Alternatively, with social distancing measures limiting capacity, companies may need to reassess how they can get the most out of their existing office space. This may involve repurposing conference rooms to accommodate more workers and renting out flexible work spaces for meetings where needed.