For over a year now, many office workers have been working from home to help prevent the spread of COVID-19, and this has fundamentally changed the way their company’s real estate business is managed. At this point corporate leadership, in cooperation with their real estate groups, are making plans to safely reopen workspaces.
As companies reimagine how work will be accomplished moving forward, they must address questions about who really needs to be in the office, office hours, and new work and collaboration space demands. A key lesson learned for most organizations as a result of this pandemic is that a significant percentage of their employees can successfully perform their work remotely. As a result, companies are rethinking the future use of physical offices, which may end up serving primarily as hubs for activities that can’t be accomplished virtually or activities that deliver greater value when performed on site.
In pre-COVID days, many organizations focused on deploying buildings with a strategy centered around maximum occupancy, tempered by amenities such as gyms, food courts, casual lounge areas and large dedicated meeting rooms.
In this post-COVID world, there will still be a need for office space, but the nature of space design and building features and amenities will change. In this scenario, the focus is on indoor air quality, touchless methods, and physical distancing in office spaces and collaborative meeting areas. From a business continuity planning perspective there will be significant focus on how to improve real estate portfolio resilience in the face of future health and safety challenges such as pandemics and natural disasters.
Considering this potentially momentous change in overall demand for space, many organizations will see an opportunity to reduce operating costs by reducing their footprint or shedding surplus space while investing in technology to better support remote working capabilities. They have likely concluded that they can operate efficiently with less space but determining what to do with what they have will take careful planning and execution.
An alternate solution to consider is to decentralize the use of space from larger, more concentrated urban areas to smaller, possibly more numerous suburban areas. This arrangement could contribute to employee wellbeing in the form of shorter drive times and a more comfortable atmosphere when they find it necessary to be onsite. Such a change in office space demographics will accelerate the need for modern, more flexible office space with essential services available on-demand. This strategy may not be well-aligned with the organization’s current portfolio.
From a financial perspective, this space demand demographics change will make it difficult to continue formerly common budget reduction practices such as optimizing leases by consolidating space, or simply enforcing an across the board percentage reduction of space in order to achieve an overall savings on real estate spend. In the post-COVID real estate future, each space acquisition and provisioning decision will need to consider the safety and health of the occupants, how the space can adapt and support new ways of working, and how the building will comply with guidelines and protocols while still providing a positive and compelling workplace experience. This approach has the potential to reduce overall real estate spend and footprint, but it will depend on the degree of reduction employed.
Successful adaptation to large-scale changes in real estate demand will require a solid strategy and supporting action plans that align with corporate financial goals and fully support a transition toward a more decentralized, smaller and adaptive deployment of space. The IBM TRIRIGA Portfolio Planning solution provides all the tools needed to plan, execute, and manage a proactive, time-based, and metrics-driven real estate strategy.
In TRIRIGA Real Estate Transaction Management, planners can begin the strategy definition and planning process with the creation of one or more Portfolio Plans. The Portfolio Plan enables planners to document the corporate high-level short and long-term goals and objectives, risks, resources and contacts for all child Portfolio Plans. Portfolio Plans can span multiple fiscal years, and they are hierarchical, so they support as many levels as needed to accomplish the mission. In order to standardize the planning process, goals and objects are given specific target or threshold values that enable side-by-side scenario evaluations and performance against metrics reporting.
Sub Portfolio Plans are the next step where planners create lower level Space Plans to implement and support the overall corporate level real estate strategy. The Space Plan has its own set of goals and objectives, both financial and non-financial, and contains one or more Space Scenarios identified to satisfy the real estate portfolio plan objectives. It also contains space planning supply and demand details from current and future forecast space surveys. A mobile-friendly Space Assessment app empowers planners and org unit admins to respond to space assessments and occupancy surveys with a simple intuitive interface that updates space records automatically. This is the stage where real estate action plans such as giving up a large central office in favor of a group of smaller suburban offices are developed and proposed.
Once real estate scenarios are developed, they can be evaluated in a side-by-side comparison against the defined goals and objectives. The comparison tool uses the values assigned to targets and thresholds as a basis to score and rank each real estate scenario. The results indicate a best-fit recommendation which aids planners in selecting a preferred scenario for approval and further action. This step is where planners will submit preferred action plans for corporate approval.
As Space Scenarios are approved, they can be established and managed as a TRIRIGA Real Estate Project based on their priority and schedule. The Portfolio Manager can choose from standard RE Project types including Acquisition, Disposition, Revise Current Terms, Lease Expiration/Renewal, New Lease, New Sublease, and Lease Termination. Configurable templates are available to streamline and simplify the project creation and startup process. This is the stage where leases for downtown office buildings would be terminated and new leases to acquire the suburban offices would be negotiated and signed.
Later Space Managers can utilize TRIRIGA mobile-ready perceptive apps to assess, analyze and plan space changes. Then they can leverage the TRIRIGA Capital Projects functionality to manage the consolidation and relocation projects necessary to complete the real estate action plans. Once the space strategy has been implemented, AI-driven real-time business intelligence and analysis can be provided by TRIRIGA Building Insights, which empowers planners and managers to gauge and react with informed decisions on how the enterprise is performing against the new space goals and strategies.
In summary, the world of Corporate Real Estate is changing based on new workplace challenges, new ways to work, and for at least the near-term, a reduction in overall demand for office space. IBM TRIRIGA Real Estate Portfolio Planning provides all the tools necessary to plan and execute an effective top-down real estate strategy to drive success in your post-COVID corporate real estate portfolio.
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