This article has been modified for publication with permission from its original author, Kay Sargent. It’s the second in a three-part series on the changing work environment.
Timing is everything. Power lies in the realization of the pivotal shift that is profoundly affecting the present and defining the future. The current global financial crisis has forced just such a moment, prompting accelerated change and promising huge opportunities for those who recognize them.
By necessity, the workplace will be re-thought, reconfigured, and rebuilt to achieve greater functionality and profitability. Smart companies and corporate real estate (CRE) decision makers who understand the implications for their portfolio, workforce, and bottom line will need to plan tactically and leverage opportunities for a bright future well ahead of the curve.
Going forward: Design, Globalization, Sustainability, Infrastructure/Security, and Planning
How will the design and use of the workspace impact CRE costs and create solutions that meet people’s needs and expectations?
Companies rebuilding or modifying their work environments with an eye on the future will continue to move away from dedicated offices and workstations. Joe Wallace, CEO of Preferred Group, says, “Workers don’t want dedicated office space at all. They just want a place where they can go.”
We’ve done a great job bringing the office into the home, but many designs will strive to bring elements of the home into the office. The office will become a collaboration center, the ‘living room’ of the company. The term office, as we know it—the primary place where employees perform their work duties–will become obsolete. The need to create attractive, energizing, and engaging spaces to foster interaction will ultimately convert the office into a hub that offers a variety of different spaces customized to meet specific needs, and an array of options to facilitate informed discussion and agile decision-making. A good example are upright, on–the-go meeting spots to complement the lounge furniture already featured in so many modern workspaces. Changeable panel heights, workspace configurations, and automated sit-to-stand work surfaces will allow workers to further customize the spaces they use.
Research shows workspace is, on average, empty between 50 and 60 percent of the time; however, a flexible workspace that allows for cost-efficient modifications, easy reconfigurations, and multi-functional capabilities can maximize real estate usage, create savings, and reduce the risks of space dependency. Flexibility also frees up space for the enhanced amenities younger workers expect, such as fitness centers, cafe’s with healthy menu options, concierge services, and quiet zones—perks that Gen Xers may have created, but all generations can appreciate. Wallace notes, “We think [the] quality of [employees’] experience in the office is resonant. These are knowledge workers…[they are] going to put a premium on energizing places to work. People respond to better quality environments.”
Tom Doherty, a principal at WB Engineers | Consultants PLLC adds, “Change is going to continue to accelerate, but peoples’ effectiveness will be measured by how they manage relationships and connectivity.”
To that end, working remotely will become fundamental to the workplace. The nature of each employee’s work and management’s skill in determining what is needed for the firm to be successful will determine the required mix of remote work and office time for each employee. Future of Work, a research program focused on enhancing both individual and organizational productivity while reducing the cost of workforce support (www.thefutureofwork.net), has identified the following potential work distribution: 40 percent in corporate environment, 30 percent at home, and 30 percent in other locations, such as community based centers.
As the role of the traditional office changes, community based centers that offer the complete services of an office in locations situated close to residential areas will expand. They will offer a solution to the issue of rising CRE costs while providing greater flexibility, a more desirable work-life balance, and reducing carbon emissions and commute times. These community based centers will also allow even small companies and independent consultants to enjoy the services, staff and facilities available to larger corporations without the prohibitive cost. Temporary office space businesses have begun cropping up, lead by individuals who have read the proverbial writing on the wall. Outfits such as Regus are creating variable office space facilities that support an organization’s needs and offer an hourly fee structure, which allows employers to have greater control over their CRE costs and deal efficiently with capacity issues.
What about globalization?
A significant number of U.S. companies have expanded their business into markets around the world. In the near term, that expansion will slow in response to reduced consumption, social and political pressures to increase domestic hiring, and an anticipated reduction in tax credits for companies who move jobs overseas. However, globalized services will increase in the long term; companies will be forced to take a more strategic approach, however, focusing on better cost value, planned guidelines, and broader based purchasing programs that prove adaptable to local needs and building standards.
How will sustainability impact real estate needs?
Legislation and a socially conscious younger generation are the primary drivers of the sustainable movement, even though the rough economy may slow its progress. The introduction of stimulus funding for energy efficiency will be key in catapulting the country forward, but employers must do their part as well. Currently, lawmakers are debating the merits of cap and trade legislation, which would require employers to report emissions from their business facilities as well as their employees’ and supplies’ commutes. Though such legislation remains in its infancy, organizational leaders made find themselves making tough business decisions based in part on reducing their carbon footprint. Consider the following: the average commute in Washington, D.C. is 30 minutes, which equates to 60 minutes of lost production time every day per worker, or 250 hours annually. More than six weeks of time that could be used for work is spent on the road.
In addition, that same commute produces car emissions for which employers may be ultimately responsible. According to figures from www.census.gov and www.ifma.com, the average commute translates into more than $6,700 spent annually, while the average annual cost of parking per car is $2,880 annually. Based on an average annual income of $50,233.00, the aforementioned figure of 250 lost production hours ends up costing approximately $6,037.62. Add to that the following:
- An average of 200 sq. ft. per person x an average rent of $30 per RSF + average operating cost of $10 per RSF = $8,000 annually;
- Plus $5,000 annually, the average cost of furniture and IT per employee
At these rates, the cost of daily face time for a single employee averages $28,640.12 per year in real estate expenses, lost production time and commuting costs. Now add the cost to offset emissions, which is typically calculated in five different categories: building energy use, data center energy use, fleet vehicles, employee travel, and employee commutes. That average for an individual employee skyrockets.
With theses considerations in mind, companies must look for ways to revamp their infrastructure to yield greater energy efficiency, and seek options to reduce commuter times, limit their CRE holdings and improve sustainability. Employing conservation and smart design practices will enable decision makers to reduce their carbon emissions and defray the cost of offsets. While the current state of the economy will temporarily slow the push toward sustainable initiatives, the economic impacts of implementing such initiatives will diminish as the design industry works to seamlessly integrate sustainable solutions into standard design practices.
To calculate an individual or organizational carbon footprint, visit www.terrapass.com.
What about infrastructure and disaster preparedness?
Going forward, companies will have to consider the needs of an aging inventory of physical properties neglected for two decades, for reasons as varied as a shift in focus to compliance with the Americans with Disabilities Act, the need for greater building security, and the current economic crisis. Even if a space is leased, rather than owned, and the responsibility for upkeep falls to the building owner, few tenants will want to occupy a space during an infrastructure upgrade, which is typically an invasive and disruptive process. Many companies may simply choose to relocate rather than take on the challenges to modernize. They might also consider third market or satellite locations, which will allow them to share their knowledge base, increase security, and reduce operating costs.
Additionally, an increasing number of company leaders now realize the need to go beyond just creating secure buildings. The hallmark events of the past decade— the September 11 attacks, Hurricane Katrina, and the current economic downturn—have shown the real threat to uninterrupted business operations is a lack of preparedness. Developing contingency plans to sustain an organization in the event of a disaster should be a leading priority, as it has a profound affect on CRE. Being prepared means not only ensuring the safety of your workforce, but assuring the continuity of business operations. Initiatives proposed by the U.S. Department of Homeland Security’s Ready Campaign offer a sobering, if realistic look at the issues employers must consider:
- Assess your company’s functions on both internal and external levels. Which staff, materials, procedures, and equipment are completely necessary to keep the business operating?
- Identify the suppliers, shippers, resources and other businesses you must interact with on a daily basis; keep a list with contact details in an emergency supply kit and at an off-site location
- Develop a continuity of operations plan should your place of business become inaccessible
- Plan for payroll continuity
- Define crisis management procedures and individual responsibilities in advance
- Review your emergency plans annually
Next up: Scalable Workplaces