• 7 min read
Balancing your two most important assets – people and real estate
by Brad Burrows
Executive teams are seeing new employee expectations and behaviors in the evolving workplace—regardless of any pandemic state we may or may not be in. When, where, and how people work is a more significant discussion now, as employers examine how to drive their businesses forward. This has left leaders struggling with the issue of how to balance their employees’ desire for a hybrid work environment with the business investment in space.
The good news is that employees are returning to the office. But, the return is slower than most leaders like or thought would occur. We’re hearing from our customers that, globally, workplace utilization is between around 10-40% on average. This is validated by a Freespace Index report, which notes that the number of organizations returning to the workplace has risen to 69%. And within those organizations, the average occupancy rate is 27%, with only a 1% increase during January of 2023.
This tells only part of the story, however. When we look at data from a 10-city North American analysis completed by Kastle, a leading provider of property technology solutions, we see that occupancy rates vary widely, based on geographic location and day of the week. Here, the average usage rate is 47.6% for a particular week in October of 2022, but that is taking into account daily occupancies as low as 25.6% (in Chicago) and as high as 72.4% (in Austin). It’s also important to note that Tuesday and Wednesday have the highest occupancy rates, averaging 55.5% across the 10 cities.
With these number ranges in mind, executives are studying their own organizations’ occupancy rates and looking for ways to cut costs. Right-sizing and/or redesigning the office to accommodate a hybrid work model have become high priorities because they involve—and directly affect—a company’s two most expensive assets: 1. Their people, and 2. real estate.
Most companies are now to a point where hybrid policies are being set, and we’re seeing 3 emerging approaches in the workplace:
The Mandate: Organizational leaders dictate the number of days and the amount of time people should be in the office.
The Deferral: Leadership lets departmental leaders set the number of days and amount of time people are in and out of the office, based on business and team needs.
The Choice: There are no official policies or mandates from leadership, and employees are empowered to decide when and if they come into the office, based on business and team needs.
Regardless of your selected approach, however, giving employees the benefits of a hybrid work environment comes at a cost to the company. Freespace reports that about 69% of organizations are returning to the office, up from 44% in 2021. But for financial purposes, the office needs to achieve consistently high occupancy rates, with weekly averages still being just 1/3 occupied.
So, how do you balance workplace real estate and employee preferences for a hybrid work environment?
Organizations that have traditionally assigned one desk to one person are now considering adopting an agile or shared desking approach. This allows square footage/meters to be freed up for other uses. This newfound “opportunity space” gives leaders a couple of different options.
Option 1: Reduce – This simple solution is to give back some of the current office space to reduce real estate costs. However, the savings are often lower than initially expected, and employees do not see this as a positive response. Instead, the densification becomes just another reason to not go to the office. Therefore, this approach tends to backfire, particularly if the goal is to get people back into the workplace.
Option 2: Rethink – This starts with taking a fresh look at the floorplate and understanding how it can better support your employees’ activities now and in the future. A thoughtful redesign can add more group and collaborative areas, focus spaces for concentrative work, and retreat spaces for people to relax and recharge throughout the day. With choice, comfort, and the right spaces for the right activities, the office will help bring employees into the workplace.
Create beautiful, welcoming Social Spaces that invite people to connect, collaborate, and restore—indoors and out. In this guide, you’ll find everything you need to know—insights, applications, and design solutions that draw people in to help them feel (and do) their best.
If you’re looking to attract and retain good people in a hybrid environment, it’s clear that the benefits of rethinking your office space may outweigh those of simply reducing its size. But it’s important to understand why. When people are your number one asset, ensuring your hybrid model—and the office hub—supports their needs is a top priority. So, what do those needs include? Overall, it comes down to 3 things:
People are empowered to work fluidly in an ecosystem that includes the office, home, and third places. This flexibility lets them choose the right space for the right task, with resources and technology that support them.
People have more control and independence to self-regulate how often they need to be in the office to support their teams and the business. Reinforcing this autonomy through official policies, culture, and leadership helps employees feel empowered and respected.
Leadership vision, human resource policies, technology infrastructure, and transparency help break down barriers and silos inside organizations. Employees and leaders start to build trust with one another, as people find the balance between business needs and their own well-being.
Change can be challenging, but when hybrid plans are clearly communicated and expectations are defined, people tend to be more responsive and quicker to accept them. Knowing that the organization is trying to balance costs, real estate needs, and employees' preferences gives people a sense that leadership is evolving to provide the flexibility and adaptability required for a hybrid work environment. It also shows people that leadership has a high level of trust, which helps engage employees and support their desire to be a part of a social clan. Employees see this as a plus and want to be part of the solution, and therefore are willing to readily change and adapt behaviors. They also tend to be more accommodating about adopting new team norms with more flexible policies.
In addition, talent retention and team culture are strengthened when people know why and how to support new programs. Employees respond positively, and it builds an organizational culture based on flexibility and autonomy that will lead to trust between employees and leaders.
By looking at real estate and space utilization differently—and redesigning your office floorplate to support activities people can't do at home—you will be able to create a desirable hybrid work environment where employees feel comfortable, productive, and successful. It all starts with leadership taking a flexible approach to space utilization and a clear message of why and how the organization will support people in finding a balance between in-person and out-of-office experiences.
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