The COVID-19 pandemic started a conversation about the future purpose of the office—when to go in, how to include remote colleagues, how to share desks, how to sanitize. Leaders and employees may not always agree on the answers, but everyone is asking questions about flexible work.
But as we grapple with the future of work and the workplace, we often fail even to acknowledge, let alone enable, the corporate function making it all happen. These professionals have been working tirelessly to balance tactical return-to-office plans with new strategic objectives and questions from the C-suite.
While the names and acronyms may vary—corporate real estate and services (CRES), real estate and workplace services (REWS), real estate and facilities management (REFM), or simply corporate real estate (CRE), as we will simplify it here—this function plays an essential role in making workspaces safer and more productive for all occupants, and turning real estate into a competitive advantage for companies.
In short, CRE holds the key to unlocking the significant potential of real estate.
And leading companies have highlighted three key strategies to reimagine, elevate, and invest in the CRE function to cater to the new demands on talent and experience.
Creating new roles and reporting lines
CRE responsibilities are changing to include employee experience and remote work. This, partnered with the existing duties such as portfolio strategy, transactions, design, and facility operations, makes for a much wider set of expectations for CRE employees and partners. The old model of finding a building, signing a lease, and maintaining the office space is no longer up to standard.
The expansion of the job description has resulted in a change in reporting lines. CRE heads are increasingly reporting to human resources, rather than the usual finance or operations—reflecting how their jobs have become more human-centric. Interesting new job titles are emerging from the CRE function, especially within the technology sector, such as head of people and places, head of remote, or head of workplace transformation.
Alongside the change in titles and reporting lines, CRE business partners are under more pressure to drive more dynamic and cross-functional internal client engagement in response to variable work patterns and preferences.
Investing in better data and capabilities
The data and technology architecture that CRE is dealing with—such as the Internet of Things, robotics, mixed-reality environments, and blockchain—has become significantly more complex. Shared workplaces and short-term leases for coworking spaces also make the portfolio more dynamic and elastic, which in turn requires a more nuanced set of systems, along with capable portfolio managers to track trends and meet needs.
There is also greater focus on smart buildings and a push from employees for a seamless mobile experience across workplaces. To better understand the effect of new technologies on their portfolio, a global financial services leader built a comprehensive lab environment to install and interrogate the latest smart workplace and intelligent facility offerings.
The explosion of technology in the property sector, or proptech, is a challenge for the CRE function, as new digital talent may be needed to fully harness the value of the new technology. While outsourcing may be effective in the short term, CRE teams may find it more beneficial to build in-house capabilities for these new elements of the function’s mission and objectives. Digital transformation of real estate will require significant upskilling for employees who were trained under an outdated facilities management paradigm. Real estate–focused instruction in universities is also evolving because the old ways of studying real estate are not nuanced and technologically savvy enough for the demands of the CRE function today.
Measuring success with new metrics that matter
Despite all the changes in the CRE space, cost is still king—although the nature of those costs and how organizations must manage them is changing.
The historical focus for real estate budgets has been on large, one-time capital expenditures that are depreciated on a fixed schedule. But the move to flexible work increases expectations as to hospitality, wellbeing, and employee services involving operational expenses that are far less predictable. Daily experiences like free coffee, software services, and coworking memberships create budget complexities that CRE has not had to forecast and manage in the past.
Similarly, the kinds of metrics that CRE uses to measure impact are shifting. Cost per square foot is still relevant, but progressive occupiers are exploring new space planning concepts such as “density per present employee,” and seeking to correlate design choices with human capital measures like attrition, wellness, and connectivity. With the focus now on experience, efficiency, and sustainability, measurements should be taken in real-time, which adds to the push for more complex—and more immediate—data. And with new KPIs come a new and more senior set of stakeholders seeking value and results.
The growth and transformation in the CRE function may be complex and fast-paced, but it is also exciting and offers opportunities as the world of work adapts to the new normal. The challenge is for executive teams to sufficiently elevate and support a transformed, digitally enabled CRE function to make real estate a competitive advantage for their firm.