Oct 24, 2013

CRE Strategies to Reduce Costs in an Evolving Workplace

By Don Catalano



The modern workplace is in a constant state of evolution. Team structures and strategies are fluid, and the dynamics of locations can change faster than ever. In the midst of all this, a company needs to be able to maintain space that reflects its identity and helps achieve its goals, while minimizing occupancy cost. More than ever, flexibility is the watchword for corporate real estate.

The New Workplace

Two factors are driving the rapid rate of change in workplaces. The first is Generation Y. As companies hire more Gen Y workers and prepare to promote Gen Y into management positions, their working habits have become ingrained in organizations. Gen Y communicates and collaborates. They've spent their entire lives doing business in a team setting and crave workplaces that support that style of working.


While Gen Y wants to spend its time bouncing in and out of teams, the broader economy is also pushing companies in that direction. As markets shift and customer demands change, fluid operations become more necessary. The project that needs 20 people in Cleveland and 15 in Bangalore today might end up being handled by 10 designers in Austin next week, and the people in Cleveland and Bangalore will have to re-group in different teams for the next project. Corporate real estate space needs to accommodate these changing needs.


Present vs. Virtual

For about a decade now, companies have worked to brush up their virtual work capability. Allowing virtual work increases employee satisfaction and can lower occupancy cost, since business can do more with less space. For many companies, virtual employees are still an important part of their plan.


Other organizations have rediscovered a relatively old idea - having their staff show up every day. The movement towards a present workforce enables greater collaboration and an enhanced sense of corporate culture. It also requires corporate real estate that can support an all-hands-on-deck atmosphere. This requires more space and increases occupancy costs.


The solution to this problem is to create a flexible space that allows employees to come together in the workplace but not to structure it so much that it can't accommodate different working arrangements as they arise. At the same time, the company should set up a corporate real estate ownership and leasing structure that also leaves room for flexibility and controls occupancy cost.


Building, Leasing and Buying

Given the contradictory need to create a space that works when empty and when full and to have an established space that can be gone in a flash, setting up a corporate real estate strategy might seem impossible. It isn't. Here are some tips that can help build a portfolio that maximizes flexibility and minimizes occupancy cost:

  • Create corporate design specification around color, decorations and furniture, rather than building finishes and tenant improvements. This makes branding a space less expensive.

  • Build open floorplan spaces with multiple egresses, making them easier to subdivide.

  • Offer multiple sites in your space for impromptu meetings or for remote workers to hotel. This accommodates changing work teams and fluid workspaces.

  • Execute shorter leases with more options. This will give you the ability to stay or go as needed.

  • Limit wiring installations - opting for wireless telephony and networking as much as possible.

  • Locate in leased space or in owned multi-tenant buildings. The former is more flexible, the latter gives you room to expand or shrink with the ability to have third-party tenants pay the occupancy cost for your unused expansion space.


View our other great articles on CRE Strategy:

Corporate Real Estate Strategy Tips

Commercial Real Estate Portfolio Consolidation Strategies

Tenant Improvement Negotiation Strategies


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Don Catalano

Don Catalano