With many U.S. organizations moving past the initial challenges of employees returning to work in the post-pandemic world, business leaders are under renewed pressure to think differently about their corporate real estate.
In our “2022 Refocus and Rationalize the Workplace” study, in partnership with independent market research firm PureSpectrum, we surveyed more than 450 U.S. business leaders in HR, finance, facilities, and real estate to learn how they’re keeping up with delivering the right spaces and experiences for the people who use them amid this new wave of change and uncertainty. In this post, you’ll also find out how business leaders really feel about hybrid work, the values of a physical office, as well as other workplace challenges and opportunities that are top of mind for them in the next 1-3 years.
Real Estate Priorities
To understand if and how organizations intend to make changes to their physical workplaces, we asked business leaders, “what are your main priorities for your real estate and workplace(s) in the next 1-3 years?” Reducing real estate expenses (43%), expanding real estate footprint (34%), and investing in a workspace that best aligns with the culture and mission of their organization (31%) were among the top three priorities.
Considering 84% of all survey respondents work for organizations with over 500 employees, and 63% have at least 1 million square feet of office space today, smart organizations know they can’t make real estate decisions purely on cost or availability any more. The best way to ensure their future workplace is successful today and in the years ahead will require the right data and quality insights. Unfortunately, 76% of business leaders say they lack data on utilization and space to make informed decisions about their workplace and real estate needs. So what’s holding them back?
Data tracking challenges
Of those who recently adopted hybrid work, we found that 37% don’t track their new work model or have been trying to do it manually – which becomes a costly, time-intensive, and error-prone exercise.
The complexities of having to manually track employee attendance, visitor traffic, and space planning might be straightforward if your business has less than 20 employees. But for those with hundreds or thousands of employees, and with office space that takes up several hundred square feet? This now becomes a logistical challenge that no organization can afford, neither for the business or for its employees.
Out of all respondents, access to accurate utilization (44%), followed by space (32%) data are considered to be most lacking to confidently inform real estate and workplace decisions in the next 1-3 years for all survey respondents; organizations with some of the largest amount of office space (8+ million square feet) reported cost (37%) as being the most limited data source, followed by space (34%).
The value of the physical workplace
People have been working remotely for the better part of two years. This has shown that it’s not the workplace that makes employees productive but the individuals themselves. Therefore, the ‘new’ office must appeal to what remote work lacks – an environment where people can come together to collaborate, ideate, and strengthen the organizational culture.
Our survey found that business leaders believe team meetings (54%), collaborative work (45%), client meetings (37%), and onboarding new hires (31%) are among some of the primary roles of the new office environment. Additionally, office real estate requires more open floor plans, access to nearby amenities that enhance the quality of life (i.e., think fitness studios, restaurants, and outdoor spaces), and health and wellness spaces.
It’s mainly the latter that is quite interesting. These health and wellness spaces, such as meditation rooms and private areas for breastfeeding, ranked high (28%) on the list of aspects business leaders want to offer their employees. This reinforces the experience the office provides instead of being only a space for work.
Basic data capture has proven to be inaccurate and challenging for many organizations, considering the need to adopt a multi-point data analysis approach is an essential component of becoming a successful future-forward organization – one that is built from understanding workplace utilization, employee mobility, and functional office usage, amongst others.
How do business leaders really feel about hybrid work?
Naturally, change isn’t going to happen overnight. A majority (61%) of business leaders said they’d still prefer employees back in the office full-time. The biggest reasons were because they think when everyone’s in-person every day it strengthens the company culture and supports the organization. They also are concerned that people are less productive when remote.
Despite many leaders struggling to embrace new ways of working, 80% agreed hybrid work will continue to dominate in the next 1-3 years that can be summarized for two main reasons:
- Hybrid work keeps the employees happy and thus, helps attract and retain talent;
- Hybrid work provides an opportunity to save on real estate costs.
They also acknowledged, among other benefits, their employees prefer hybrid work because it offers a better work-life balance (57%), saves on commuting time (48%), and gives people greater flexibility to choose when and where work gets done (44%), based on how they work best.
The potential to strike a balance between remote and in-person work is there and perhaps overtime the business leaders who’d (currently) prefer the traditional full-time in-office work model will warm up to hybrid work once they see all the advantages they’ll gain, both for the business and its employees.
Top workplace management tech investments in 2023-2025?
Across the board, workplace management solutions, like space management, assets and maintenance, and real estate planning software, continue to top the list as the #1 priority for all business leaders in 2023-2025. Our two cents? Real estate is not only the second largest expense to employers but also no one can predict what their workplace will look like next month or in the next few years. Together, this has made workplace management solutions an important investment for organizations wanting to have access to accurate workplace data to make necessary adjustments to their offices and real estate portfolios.
What was interesting to us was to learn that real estate and facilities leaders, who typically turn to good data related to space, maintenance, and occupancy to support their workplace and real estate decisions, responded they are planning to invest in other solutions that can reveal employee preferences and how visitors interact within these spaces. This can likely be attributed to the rise of hybrid work and a growing emphasis on supporting the health and well-being of employees making multiple data sources – in addition to space and facilities.