6 minute read 1 Dec. 2020
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Assessing your real estate requirements in the COVID-19 era

By EY Canada

Multidisciplinary professional services organization

6 minute read 1 Dec. 2020
Related topics COVID-19 Workforce

Co-authors:
Darryl Wright, Associate Partner, People Advisory Services
Jeffrey Wood, Partner, Transaction Real Estate, EY Canada

Flexible work arrangements are here to stay and fundamental changes to traditional workplaces and real estate portfolios are already underway.

In brief
  • Employers are beginning to embrace a distributed workforce and are evaluating workplace and real estate requirements.
  • Businesses should assess real estate implications on both their workplace and workforce.
  • It’s critical to engage the right people using a holistic approach when determining office space requirements. 

Smart employers are beginning to embrace a hybrid work model as millions of non-essential employees continue working remotely. The move to a distributed workforce — with one or more employees working in different physical locations depending on where they feel most productive — is pushing organizations to examine their workplaces and real estate requirements. 

A recent EY survey of more than 700 employers found that 78% are planning changes to remote work strategies. And for 74%, that’s translating into plans for moderate to extensive changes in real estate. While many (86%) are naturally focused on workplace safety, 79% are looking for better digital tools to enable productive onsite and remote work. 

The truth of the matter is that the short-term impact of COVID-19 is shifting into long-term transformation for employers. Flexible work arrangements are here to stay and fundamental, permanent changes to traditional workplaces and real estate portfolios are already underway.

Redesigning office spaces

Organizations are assessing how best to use their square footage as they define the future of work. For many, that means moving away from crowded open floorplans. An office that previously had 20 people sitting in a room may now have four, reversing the trend of the past 20 years of greater office density. It’s even possible that the days when people commuted in droves to a downtown core are behind us permanently. Increasingly, people have embraced this new way of working and are moving further out of city centres. Reversing a decade-long trend of densification is well underway.

More than half — 51% — of companies surveyed by EY said they’re redesigning and re-evaluating policies on shared workspaces and meeting rooms. Given they’re also providing more choice to employees to work from home, they’re reducing their overall footprint at workplaces, and they’re closing similar properties. Previously these discussions were led by real estate teams, but now there’s a collaborative approach among HR, IT and other senior leaders.

How can a company further tackle these real estate implications? Here are some additional matters to assess.

Top four real estate considerations to act on now

  1. Portfolio planning: Figure out your optimal footprint with the voice of the employee and tone from leadership. Will a distributed real estate portfolio work for your organization, having several “nodes” vs. a more traditional flagship model?

  2. Accommodation planning: Sit down and do some scenario planning. How many people will return to work? Who returns to work? How often? What jobs come back? And what happens in 2022, 2023? What space standard are you going to target in the future?

  3. Transaction planning: Prepare for hard decisions and opportunities that may lie ahead. Is now the time to look at locking in leases for longer (blend and extend)? It is time to sit down with landlords and creatively explore innovative options?

  4. Be mindful of community needs: Consider offering vacant space to third parties. You may not use your meeting space, but someone else can. Can you treat your real estate as a community asset?

What’s leading practice for pivoting in the workplace?

Organizations must pull the right people into the conversation for a holistic approach when contemplating office space requirements. Here are some ways to do so:

  • Listen to your team. Do people want to return to the office? Do people need to return to the office? A common mistake organizations make is involving only the C-Suite in these decisions. HR, finance and IT departments, as well as employees themselves, should have a seat at the table to discuss what the future of work will look like and how workers can be supported throughout the process.
  • Consider that you might need more office space, not less. If the majority of employees are clamouring for a return to the office, employers need more office space, not less, to adhere to social distancing and sanitization protocols. Is your company prepared for a scenario that requires a more spacious workplace?
  • Make the right decision based on your industry. Not everyone can work from home indefinitely, and some jobs are office specific. If people need to be in the office to keep the business running, then make any necessary changes to ensure that employees who come to work are safe and address their needs and concerns.
  • Fasten your seatbelts. This pandemic is enduring and changing rapidly. We don’t know where we’re headed, so it’s important to be aware of your workplace culture and listen to employees and team leaders. It’s important to consider all opinions, and to pivot along the way as things evolve.

Businesses are facing countless challenges in real time amid the COVID-19 pandemic. In terms of their real estate footprint, the flexibility to get out of lease commitments may not be immediately available. And not every business is going to be able to renegotiate with landlords. It’s nonetheless critical for companies to prepare for the rapid acceleration in the future of work by listening to their teams, consulting their real estate partners and mapping out the correct course when it comes to their workplace configurations and their real estate holdings. 

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Summary

Companies can prepare for the future of work by consulting with their teams and real estate partners to determine the right path forward when it comes to configuring office spaces and their real estate holdings.

About this article

By EY Canada

Multidisciplinary professional services organization

Related topics COVID-19 Workforce