The Workplace Series | Changes in Corporate Real Estate Portfolios

How Corporate Real Estate Portfolios Are Changing

During an in-depth discussion with industry leaders from Motley Fool, LiveRamp, and SquareFoot, RefineRE held a “Back to Anywhere” webinar where the panel shared how they feel the pandemic has permanently changed the corporate real estate industry, and what we’ll only be grappling within the short term. We continued the discussion about post-pandemic transitions in a very targeted way. Panelists opened up about how their CRE portfolios are changing as we move out of the COVID-19 pandemic and what they’re doing to leverage new opportunities.

Rethinking Corporate Real Estate Means Reevaluating CRE Portfolios

As RefineRE’s Ryan Turner stated, we’re still not sure exactly how everything will pan out once the pandemic is well behind us. That uncertainty is exactly why portfolio managers, asset managers, and corporate occupiers are all questioning their current portfolios. Everyone is hyper-focused on how the workspace is currently being used and if spaces exist that can meet the demands of the new post-pandemic work environment.

If there’s one trend that’s come about since the pandemic, it’s corporate real estate portfolios that are fully data-driven. As everyone tries to navigate through the murky waters, there’s a renewed emphasis on the importance of CRE intelligence. Portfolio managers now need to back up their activities with data that supports their decisions. It’s the best option when no one has the applicable experience to rely on.

Although a lot is still up in the air, we do know that more employees will continue remote working after the pandemic. In the world of proptech, portfolio managers would be smart to keep an eye on apps and collaboration tools that allow the employer and occupiers to visualize the space. These types of tools can be used to map out a space that remote workers can use to get the lay of the land before going into the office. It can also help the employer better gauge productivity, how spaces are used, and if space utilization can be improved.

Another new proptech investment that has good growth potential are tools that allow employees to reserve office space. As more employees move to a hybrid work model, more space will be shared. That lowers operation costs, but it adds a logistical layer that can be overcome with the right tools. While this tool wouldn’t be something that will increase the value of the physical property, it is something to keep in mind if a CRE portfolio goes beyond real estate.

CRE experts are still hesitant to make predictions in such an uncertain time, but there’s one clear trend now that we’re at the end of the pandemic. CRE portfolios are going to be more data-driven, and portfolio managers will need the right tools to make use of all the information.

READ MORE: How Market Data Drives Value in CRE

How Changing Portfolios Are Changing Physical Office Space

What is built and how corporate properties are renovated moving forward is going to be highly influenced by buyer demand. Understanding how demand is evolving requires data – another reason analytics is becoming essential for optimizing portfolios. That need for data is leading to one distinct change in physical office spaces.

Portfolio and asset managers will see more CRE properties that are outfitted with an array of sensors and intelligent design elements that can capture data. The sensors will be vital for:

● Improving efficiency

● Analyzing space utilization

● Optimizing flex space

● General demand for different types of CRE properties

Properties that are already outfitted with this type of technology will be easier to optimize and can give investors an advantage in maximizing value. A huge amount of data collection from sensors is currently underway. What the data reveals will help direct the physical spaces that are occupied in the near future. A tool like RefineRE’s Workplace Module will help uncover the key metrics of how you occupy your commercial space.

Companies like LiveRamp are a great example of why the physical workplace is changing. When the company looks at their “site” locations, the second largest site by employee number is their remote employee group that doesn’t have an actual location. It’s gotten LiveRamp to really think about how they are able to provide an in-office type of employee experience for people that are working in a hybrid work environment and occasionally come into the office.

In an effort to create employee equity, physical spaces will need to change. Shannon McLendon of the Motley Fool noted that only 8% of employees wanted to work in-office five days a week in their latest internal survey. That’s a dramatic shift in workplace culture compared to the way business was done pre-pandemic. The company now has more than twice the number of fully remote workers.

The solution for Motley Fool was to shift to a hybrid workplace model/hotel desk office model. Instead of having a workspace for each employee that’s highly personalized the office has been streamlined. The company is maximizing its square footage while cutting down on space by setting up workstations that are very uniform and ready for any employee to use.

The systemization of the office space helps to make the space more flexible and ensures that every employee has the same resources and experience when they come into the office.

Another factor that Motley Fool took into consideration was the need for a group meeting space. They used the same hotel desk concept to create spaces that could accommodate groups of various sizes handling different tasks.

Office spaces will continue to evolve as more data is collected. As the corporate world gets back to work, data analysts are going to be there gathering as much information as possible to shed more light on how to optimize a space for the best use. And portfolio managers will be right there too, waiting to gain insights that will direct decisions in the most informed way possible.

READ MORE ABOUT THE DISCUSSION: Temporary vs Permanent Post-Pandemic Changes in Real Estate

About the Back to Anywhere Panel Discussion

The Back to Anywhere panel discussion took place in September 2021 with four CRE industry experts working in different verticals across the country. The hour-long conversation explored many of the biggest concerns and questions of corporate occupiers who are preparing themselves for a post-pandemic modern workplace.

PANEL EXPERTS

Ben Wright @ SquareFoot

Head of Flexible Office Solutions

Ryan Turner @ RefineRE

Founder and CEO of RefineRE

Shannon McLendon @Motley Fool

Director of Office Services & Real Estate

Eric Nelson @ LiveRamp

Head of Global Workplace Experience

Watch the webinar here.