You’ve heard a ton of talk, including on this podcast, about WFH, returning to work or a hybrid of the two. But before you use the great reset of 2020 as the excuse to pull the trigger on shedding some overhead costs (think office space), there are 8 things you might want to consider first. Listen to Jan & Bob outline all 8 in today’s podcast.
OK, first things first, we are going back to the office, correct? For the most part, I think yes, the majority of people will go back. Will it look different? Yes, for sure. Some companies will go back in full, others will expand, others will do the hybrid thing and others will reduce or go to totally remote.
The first thing to be considered before you pull the trigger would be – what do you want to be when you grow up? What are your long term goals and objectives for your company? We always start with this because it drives every other decision. So big picture – what do you envision for your company in the future, 3, 5 or 10 years? Will you be growing or shrinking, getting into new businesses, growing through acquisition or planning to be acquired? What customers are you targeting, where are they located and how do you plan to reach them? There will need to be a lot of communication among management, ownership, customers and even employees upfront to accomplish all this.
The second thing to consider would be the workforce plan. What’s the impact of the big picture plan on headcount? What’s the change to the numbers, where will those people be located, do they need an office, a cube, where does it need to be and does it need to be dedicated to that person full-time or can it be shared? How many days a week will people come to the office? Companies will also need to take into account the collaboration space and meeting space. If they are potentially changing the way they use their office space, they need to rethink what the office is even for. There is a mind-shift that will be needed. That mind-shift changes the way the business is operated which then changes the way space is used. All that should be taken into account when determining what the office will look like and who needs what resources and accommodations.
The third item would be to generate a space program. This space plan allows you to translate the workforce plan into an office size plan. It shows you the approximate size of space needed in each location. This allows your tenant rep to determine what options are available and provide estimates of the cost.
The fourth item to consider would be lawyers and human resources. Make sure your plan can be properly and legally implemented. You may need to re-write employees handbooks and policies.
Item number five would be to create a plan for the employee experience. Now more than ever, employers want to make a strong case for why employees should come back to the office. Make their workforce want to come back to the office. This includes the office space itself, a clear hybrid plan for splitting time between home and office, amenities (in the space, the building and the area), and the safety of being in the office.
Number six is communication – stay in touch with employees, understand their thoughts, feelings, fears and goals. Their buy-in is critical to the success of a change in the way business is conducted. Sure, they’ve been used to working from home for nearly 18 months, but how are they going to feel when they are required to come to the office at least part-time? Throw in that they don’t get a dedicated desk where they can put up their own photos and decorations and things could get ugly.
Number seven is IT. You need to be sure your technology infrastructure is set up for the coming changes. If you’re going to allow people to work from home or the office, do they have the tools they need to do that? What changes do you need to make to ensure fluid transitions between home, travel and the office?
Finally, number eight – could all of this leave the company in a vulnerable position when it comes to negotiating with the landlord? This is a really good question and there isn’t a single right answer, honestly. It really depends on what the plan is and how much time is left on the current lease. If the lease expires soon, you can implement the plan fairly soon. If you have many years left on the lease, it may seem that you have to wait, but you don’t. If the plan is right for the company, start the implementation now. Engage your tenant rep to negotiate with the landlord to give back space, make improvements, and extend the lease. If they don’t agree, you may want to make some changes to the space at your own expense and put the excess space on the sublease market.
There is always the concern that a shrinking tenant is going to have less leverage with the landlord and that is generally true. But if you have a good plan and show the landlord your willingness to make a longer-term commitment to the building, they should be willing to go along with it if it makes financial sense for them. You aren’t going to get the landlord to spend $50/SF for improvements for half the space and take back the other half if they are only going to get a two-year extension. Be sure to look at the situation from their perspective as well.
Throwing in a bonus issue! Number nine is to consider what your competitors, customers and friends are doing with their employees and space. It might give you a clue as to what’s working and mistakes to avoid. Should be a couple of interesting years for sure….stay tuned!
Bob Gibbons is a Real Estate Advisor & Tenant Advocate (also known as a tenant rep) with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas and the surrounding areas and specializes in companies which lease or buy office and warehouse properties.