Flexible Office Space in the post COVID-19 Environment - Part 2
Last week in our Blog, we examined the COVID-19 environment
and how it’s impacting business office space needs. This week, we explore how companies can move
forward with their office space planning in this new reality. If I can answer any of your questions or you
would like to learn more about how Cresa can help, please reach out via my
website or by calling me at 301-841-6542.
Hub and Spoke Options
A strategy incorporating flexible office options also helps
address another dilemma that the COVID crisis raises – where to locate offices.
As employees demand more flexibility, companies may realize a benefit in
following a hub-and-spoke approach. This offers access to corporate properties
closer to employees’ homes, as well as to potentially minimize exposure to
large groups of people and public transportation in heavily populated urban
settings.
“Some companies will continue to have [office locations] in
big cities, which many regard as essential to attract young talent and create a
sense of connection and energy. Others may abandon big-city headquarters for
suburban campuses,” says the McKinsey consulting group in a June 2020 article.
Flexible office solutions have always been advantageous for
companies seeking a fast entry into a market, particularly in a big-city
environment. In one case, a global advertising and marketing leader employing
over 54,000 people in 100 locations, needed to rapidly establish a New York
City office for 100 employees in response to a major new account. By tapping a
prominent flex office operator with multiple sites in the area of interest, the
company secured an 11,250-square-foot space within walking distance of their
new account’s office, occupying it within 60 days of signing the one-year (with
a one-year option) contract. The space was fully built, branded and customized
with no capital expenditures (CapEx) required.
Suburban flexible office locations are not as concentrated
as urban ones, so rather than having to analyze and select from a large number
of options and possibilities, the challenge is to know the players. Identifying
best-in-class operators in various locations involves an understanding of the
overall flex office market – who they are, where they offer properties and how
they work.
The quality of operators can differ from country to country
and city to city. Vetting these operators is extremely important to ensure the
best operational and financial outcome. Diversifying flex office providers in a
company’s real estate portfolio can also be beneficial to future expansion,
consolidation and relocation opportunities.
Finding the Right Space the Right Way
The comprehensive re-examination of real estate assets can
lead to substantially lower operating expenses, while ushering in a modern
approach to the workplace. “The value at stake is significant,” concludes
McKinsey. “Over time, some organizations could reduce their real-estate costs
by 30%...[and] also increase their organizational resilience and reduce their
level of risk by having employees work in many different locations.”
Ultimately, a company’s real estate group needs to collaborate with operations and human resources to ensure that the property portfolio is sufficiently structured to meet its evolving workplace strategies, facility priorities and corporate culture.
What companies should not do is set artificial limits on
flexible workspaces, at the risk of losing the potential benefits they can
provide to the top and bottom lines. For example, headcount – large or small –
should not be a deterrent. Whether it is to accommodate 5 people or 500,
companies across all industries are opting for flexible space solutions. And
given the explosive growth of remote work, it may become more common for flex
space to house increasingly larger numbers of employees, in total, even if the
actual number of bodies present at any given time is much lower.
The next step is to search comprehensively for the right
location with the right operator. The flexible workspace market has a wide
variety of offerings, and it is important to investigate all available options.
Proper due diligence means contacting multiple operators in a geographic
market, detailing the proposed office’s requirements, and then comparing
locations, layouts, pricing and so on. It is also critical that agreements are
struck only with fully vetted operators who can deliver as promised for a
corporate client.
Ready to Take the Next Step?
If you have
significant questions about your current real estate strategy, it may be time
for a discussion. Once we have started
our conversation, we can create a strategy to look at your business
operations and current space and then craft up a plan to find something that is
a great fit in the area. With the
current vacancies and inventory, we will work with you to get the best
deal. We represent tenants ONLY, so you
can feel comfortable that we are working for your business 100%. If we can help you by being your tenant
broker in the DC, Maryland, or Northern Virginia area, visit my website or call me at
301-841-6542. Make sure to follow all my
social efforts by clicking on the links below.
I specialize in providing comprehensive real estate services,
exclusively representing corporate tenants on all commercial real estate needs.
Commercial Tenant Broker
2 Bethesda Metro Center, Suite 900
Bethesda, MD 20814
301-842-6542
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