Workplace Experience Archives

Key Takeaways & Discussion Points

How do you allocate people and spaces when occupancy and utilization patterns are continually in flux, and peoples’ patterns continue to change?
How much did the pandemic actually change typical weekly patterns? Is there even a weekly pattern?
What do you do when your data-driven suggestions fall flat in front of the C-suite?
How is the role of the team manager changing, and how can we train them to evolve their role?
How do quantitative and qualitative data work together to create an accurate story of what’s going on in your workplace?
What considerations go into protecting privacy when it comes to gathering and using data? How do privacy requirements affect the granularity of your data?
There aren’t necessarily correlations between being high-performing and being in the office — it’s all very individualized.
From a change management perspective, how do you communicate effectively with employees about the shifting and evolving ways of working that will affect them?
Are young people going to adapt better (or differently) to hybrid work due to their asynchronous, online education experience during the pandemic?
How can companies be smarter about where they’re spending their money to build real, lasting success and employee well-being?

Links:

Sandra Panara – Director of Workplace Insights at Relogix
Kevin Sauer – Director of Workplace at Join Digital

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript:

Sandra

Hey everyone, welcome to Let’s Get Real with Sandra and Friends, a workplace consortium podcast brought to you by Relogix. I’m excited to be sharing conversational musings about current events and how we envision the ever-changing world of work. I’m Sandra Panara, Director of Workplace Insights at Relogix. With 25 years of hands-on experience, I help value engineer global workplace portfolios and employee experiences by aligning workplace analytics with corporate real estate needs.

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

Today’s guest is Kevin Sauer, a workplace strategy and technology leader with more than 20 years of experience in building high-performing workplace strategy programs for Fortune 500 companies. Kevin is passionate about understanding the impact of emerging and innovative technologies, people strategies, and space usage on the changing nature of work.

Kevin’s expertise includes developing Amazon’s workplace intelligence program to uncover new patterns and practices and their impact on the changing workplace. He has also held Workplace Strategy roles at GE, HP, and Microsoft. Kevin’s diverse background in research design and business gives him a unique perspective and valuable insights. We’re thrilled to have Kevin on the show today to share his experiences and knowledge with our listeners.

Hey, Kevin! Very happy to have you on as a guest today. We’ve interacted in the past on many occasions. Why don’t you tell us a little bit about yourself?

Kevin

Thank you for inviting me! I’ve been in workplace strategy for 20+ years now, all with large technology companies and largely focused on global workplace and workplace experience. That’s been the area I’ve focused on, and discovery and research. As you know, things have changed dramatically in the last few years, but a lot of the things we’ve been discussing for those past 20 years are now coming to fruition. And then it’s about what happens next. How do we inform the future and how do we actually understand what we want to do next?

Sandra

Great! So, you’ve been on the inside. Even though obviously you’ve been working in workplace strategy, you’ve also been in a corporate real estate team. What are some of the challenges that you’ve faced over the last 3 years from that perspective?

Kevin

Part of the biggest challenge is trying to level set on a data-based approach. Initially the things that were gathered were badge data, utilization data, things like that. And inevitably C-suite seems to think that if you’re a high-attending company, that means people are coming in all the time. And getting that first baseline of qualifying what a high-attending company is, it means you’re getting upwards of 80, 82% of people coming in. In my case, Monday through Thursday, pre-pandemic.

But when you back away and look at it in the course of a year, there’s seasonality, there are different business cycles. So, what you find is that in reality, over the course of the year, average days in the office are really 3 to 4, not 5 days a week. There’s a very small percentage that regularly shows up 5 days a week, and when you factor in vacation and travel and all the things that happen, it makes perfect sense.

But it’s tough to elevate that to the C-suite level, so they start with the understanding that people are already to a certain degree working away from the office, and that’s continued to trend downwards over the years. That happens to be just a larger correction during the pandemic.

Sandra

That’s interesting, about being a high-attending company. Certainly, there’s been a lot of focus on occupancy, or some like to call it attendance, in the workplace. But what about when it comes to planning? You’ve got occupancy, which is just how many people are coming into the office every day versus the actual activities that are occurring in the organization. Were you leaning more towards one versus the other and how did you use the different data points?

Kevin

We really focused on the utilization side. What’s being used by how many people for how long. So, sensors are really critical in getting that fine-tuned understanding of what’s happening now, how it’s changing over time. For example, if we see meeting size, particularly in the US, getting smaller, maybe we don’t need lots of large meeting rooms, especially after the pandemic. Most people find it’s more equitable if you do those from home or elsewhere, and you all dial in and have that same kind of setting.

And when you do go to the office, you’re looking for those smaller spaces where you convene with 2 or 3 people. So we’re trying to understand how often that happens when you run out of space, and comparing that to attendance, occupancy and utilization, to triangulate when and where you need space, how often, and what degree of discomfort are you willing to accept on those peak days, particularly Tuesday through Thursday. Can you average that out so you’re not over-subscribing the space? Or under-subscribing? We’re trying to allocate people as their patterns continue to change.

Sandra

You said that people are coming in on average 2 to 3 days a week. That’s been a pattern that existed long before the pandemic. It begs the question of how much really changed during the pandemic, other than formalizing a behaviour that already existed. But when you think about the changes that are required within the office, the fluctuation that’s already happening now on a day-to-day basis because everybody’s looking at the data — how do you plan for that? How much fluctuation did you see on a day-to-day, week-to-week basis, and how do you think about planning for those fluctuations?

Kevin

I think the simple answer is it’s still in question whether fluctuation is significantly different than pre-pandemic. You could pretty much count on a weekly cycle of when people would come in. They had their typical weekly patterns. You see many more people that come in sporadically once or twice a month, so there isn’t that week-to-week consistency. So when I was tracking more recently, we were seeing 70 to 80% of the people would attend at least one day a week during the month. And when you step down to a week, you’d see that be about half.

From an experience perspective, what that means is when you come to the office, you’re not seeing the same people as you did before. You’re seeing a completely different mix and there’s no regularity or pattern to it. So that means your experience is different every day you decide to come in and that helps inform what happens and when you decide to come in next time. It’s challenging to understand what that looks like now.

The goal is to trend that over time and see whether people start to settle into more of a typical pattern, like a flat line, where you’re seeing things stabilize. It’s going to take a fair bit of time to reform new habits after we’ve all gotten comfortable in the past three years. Now we’ve got to try to think about more choice and more opportunity, and what does that look like. You pair that up with what your team is doing and what others in the office are doing.

Sandra

Yes. What about with respect to what you were saying about the fact that you’re essentially bringing new information forward to your executives? Was there an “aha!”? Were they surprised to hear people were only coming in three days a week? What was their reaction?

Kevin

I think so, but then it jumps back to, we still really need people back in the office because it’s the best place for them to be. It wasn’t backed by data and research. I mean, there have been a lot of white papers over time that talk about the amount of time you need to get together. And certainly coming out of the pandemic, it’s focused on the idea that there needs to be a purpose. I think that’s been echoed by a lot of companies that would provide a free lunch and they’d see a spike in attendance at noon hour, but that’s it. So certain amenities, and things that were kind of big-ticket items with companies pre-pandemic have gone away. It’s trying to think about it from a management perspective — what do I need to get people into the office, and how do I get them there? And then how does that become a great experience that you want to replicate?

Sandra

Yes!

Kevin

And executives struggle with that because it’s not a one-size-fits-all. It comes down to every team creating their own strategy around what works best for their team, for the product or service they’re working on. And that’s really hard to control and trust that each managing director is really going to have the company’s best interests at heart versus trying to make sure they don’t lose talent or concerns that we’re losing talent. So the default is, well, if we force a kind of standard and allow some flexibility around that, we’ll get what we want.

Sandra

It’s certainly interesting that a lot of companies are doing that, leaving it to the individual team managers to decide, within the parameters of whatever the policy is for flexible work. They’re basically trying to rally their team together. I often wonder, though, obviously if you’re directly managing a team on a day-to-day basis, then that would probably be something you’d participate in to encourage team camaraderie, whether it’s getting together or however it is that you work. But I often wonder, is that really the role that management should be playing? It almost feels like, as of late, we’ve all become autonomous beings. We know who we work with on a day-to-day basis and we make decisions ourselves with respect to what is the most productive use of our time.

And again, you have to consider the team as well. I’ve heard a lot that it’s almost like the team aspect seems to be a lot more forgiving because there’s that human element to it, versus it’s all about business. What are your thoughts in that regard?

Kevin

I agree, and that’s actually one of the areas where HR really stepped up to the plate and said, let’s not focus on individuals, because individuals change and have their own preferences and it may or may not suit the team. The focus is on thinking about how the team works, what enables them best, and the manager is in the position to determine what that really looks like. The next step is to develop some more training around how managers think about what’s really critical about their team coming together, how their work is actually spent. What portions of the day do they need to do that so they can actually think strategically about bringing people together, setting a clear agenda, who’s playing what part, how to prepare, so there’s some kind of build-up and excitement around getting together and getting some good work done. And then we’ll go back and start working on our individual pieces of the project.

Sandra

Let’s shift gears a little bit. I know from working with you in the past that there was some stuff happening about a fact-finding design, which is top of mind to a lot of organizations right now as they’re rethinking their space. How do you go about collecting the data? What are the steps you took to get at good data?

Kevin

There were a couple of different approaches. First up, just what was commonly available, which is badge data. We actually had security put up badge readers on the way out, so we could get badge in and badge out, so we could get dwell time and rule out some theories about people only coming in for free lunch or to have a meeting, then they go home. We actually found that if people made the trip into the office, they were there for the whole day, there was a fairly large curve on that.

We also saw younger employees that took the office as their social space, and would stay much longer than your average 8-, 9-hour day. Fewer people would actually show up for just a short period of time

That was the first step, getting the attendance data to figure out, of those assigned, who’s coming in, where they’re coming to? Are they coming into their assigned area or are they just coming to the closest and most convenient office building? There was a lot of shuffling around that, depending on the type of building where the team is going to be.

The next step was looking at how the space is being used when they come in. Using a mix of sensors, as well as traditional time utilization studies, walk-arounds so you know what activity is actually happening.

And then the last piece is doing a bit of surveying to actually understand what’s getting in the way of people coming into the office and about how they actually want to spend their time.

Once you blend that, there’s an opportunity to go back and have some focus groups to make sure that what we thought the data meant was actually what employees were trying to express in their surveys. It was a good way to at least start to build a story of what’s happening now, and what’s missing. I think there have been some good industry surveys that pull this apart and found that yes, there is a trend towards the most innovative companies and those people wanting to come into the office more of the time, but they’re not there today. There are still barriers, the commute, and other things are getting in the way. There’s an opportunity to start listing out things to work on and continue to measure.

Sandra

Were you looking at those data sources individually or were you integrating them together?

Kevin

It was a bit of both. The first step was to make sure the data and emotions were correct. You have to get accurate data and then you have to humanize the data. When you’re looking at badge data, did you strip out people that are on maternity leave or long-term care, or maybe just started or just finished their employment during that week, so that you’re looking at the typical employee profile? You need a clear image of what the normalized population is doing. Get that correct, go to the next bucket.

Utilization. Test, make sure you’re getting the right data, that there are no errors or gaps in what’s being assembled there, and then start putting that together. That’s really the foundational piece.

The more insightful areas are when you start rolling in some of that talent data. That’s where the People Experience team becomes really important because they can look at a lot deeper elements around DE&I. Are we addressing the needs of all the core demographic of this company? Are there things we need to separate out so it isn’t a one-size-fits-all? Can we start to think about buckets that are more manageable and focused on populations we’re getting at?

They’re also able to look at employee ZIP code analyses. There was a big shift, pre-pandemic, a lot of employees that were approximate to the campus, so they regularly attended. A lot of dispersion post-pandemic, so when you think about companies that are saying “come back”, well, we have employees that have moved far away. It’s not possible for them to come back, because they’ve gone places where they can afford a lifestyle, where housing is less expensive. Maybe it’s closer to family, and the commute is greater. Then going to work becomes a business trip, and you’re not going to take a business trip every week.

Sandra

It’s interesting, I like what you said about humanizing the data, because I think that sums it up really nicely. When you talk to people about data in general, people tend to shy away from it because it’s quantitative, not qualitative. It doesn’t really tell you much about people. But I think, as you just described, when you begin to bring in context, and you’re able to marry together different data sources to understand the attributes of the people behind the data, you learn who they are. Where they live, different things about the job they do, the teams they belong to. There are some interesting things that bubble up when you start to look at data from that point of view.

Having said that, this doesn’t replace, or it can’t be exclusive of the true qualitative data, which is understanding other things that won’t necessarily come up from looking at numbers or from a sensor or a badge swipe. And you described people moving away — you can see that in a postal code that someone lived here and now they’re 20 miles further away from the office. So the likelihood of them coming in is not that high because they’ve moved further away.

From an analytics point of view, did you do all the analytics in house with the corporate real estate team, or did you have an external team doing that for you?

Kevin

No, from a privacy and compliance perspective. We’re highly sensitive to both real and perceived issues around gathering this type of data. You have good data sources, but when you start to cleanse them and make sure you’re providing privacy, you’re stepping away from the individual and getting at team level. So, you have to take in multiple data sources to then get back to a really tight data set that makes sure you’re not identifying the people in it.

So, we did all of that in house. We did some external consultation, but we wouldn’t send anything out that even had e-mail aliases attached to it, just to maintain that privacy. So it’s more a consultation about how others are thinking about blending data and looking for different patterns that emerge out of that. That was mostly done with real estate facilities organizations. There was some good partnership with People Experience, and they would start to look at different ways people are using video collaboration and instant messaging and tie that back to talent analytics.

We found that high-performing employees connect with more people more often. Common sense, but then you start to say ok, is there a correlation between high-performers and more time spent in the office vs home? It falls apart. It’s all over the map, the situations are all different, they’re going to choose the environment that suits them best. But it doesn’t really take away from whether they’re high performing or not.

Sandra

That reminds me of an example in previous years. There were people saying that being in the office makes you more productive, so there was a theory going around that if your manager or your team was in the same city, somehow those people were more productive. And it was to the company’s disadvantage if your manager was in one province and the employee was in another. I wondered if that was true, so sure enough, I went in and found that that’s not at all true. It’s all over the place. It’s a very, very personal thing. There’s no correlation to that. You have both instances occur.

Kevin

I think the key is trying to find the right attributes to filter on. Different job functions, different teams, and we’re just talking about certain teams. I can think about a marketing advertising team, they often want to be in the office more so they can put things on the board and critique it in real time and move very quickly. We’re finding a lot of software developers want that perfect ergonomic setup. They can do that better at home. They can also control privacy.

So, once you have a few leaders that say, gee, I really need to know how my people are coming in, and they want a more personal approach — we went above and beyond GDPR rules and said we won’t show you a population of less than 10 because we want the data to be used for good, and not for negative purposes.

Also, tech companies are growing quickly. Your team dynamics change radically over weeks, months, years. We’re trying to stay above a consistent level of detail so that we can plan and trend. Whereas if you get too granular around different teams or individuals, that’s going to change dramatically. So you’re telling a story that can’t be replicated, potentially.

Sandra

I think that’s true. The granularity certainly shows you fluctuations and just how volatile the use of space is, and how it changes. I’m in the process of finalizing our next benchmarking report, which is coming out later this week. Looking back, that was one of the “aha”s for me in particular. If you’re trending data on a weekly, monthly, quarterly, or even annual basis, it sort of shows you directionally where it’s going, but then you don’t plan on weekly or monthly values, because there are missed insights that you won’t get at that level. You actually have to go down to the lowest level to understand what’s happening. How often is that kind of activity occurring? So that allows you to quantify how big of a problem certain aspects of what’s occurring in the office actually are. You have that ability to zoom in and zoom out, as we say in our organization, to fully understand the whole spectrum of behaviours within the organization.

Once you understand that, you can start planning in either direction. But then how do we deal with these instances or these things that are a part of our business? Because as you mentioned earlier, you’re trending data over time, so you can see and quantify just how often these become issues. But from a business unit perspective, or even just from a general business point of view, when you’re looking to transition to a more flexible, more modern sort of workplace — I don’t know if you were already in a shared environment before the pandemic?

Kevin

It was a mix. The European teams were about 80% agile shared seating. Asia Pacific was ramping up pretty rapidly around that. US always kind of lags behind. It’s typically only the sales organizations that are gaining more of a shared environment, and have expressed the need and interest for a variety of spaces. But one of the things we were able to find going into the pandemic, we started doing a lot of focus groups where employees could get their concerns or needs met. And we actually brought in an architect to lay out a floor plan with 3D objects, and asked each team, what do you need? They started adding more white boards and more spaces, each time chipping away at the number of desks. The footprint doesn’t change, but you’ve reduced your desks. What can we do about that at that point? It was actually the teams that said, I think we can share, because if we have the flexibility of having our own desk at home, all we really need is to make sure there’s an individual space.

But our focus is on convenient collaboration, for technical teams we wouldn’t typically have focused on in the past. We’re now saying, yes, they could actually share.

Sandra

That’s pretty cool. I like that concept too. You give the teams the ability to basically create their workspace, where they come to the conclusion themselves that they don’t really need individual workspaces that they sort of fought for before. So they come to the understanding that they don’t really need that kind of space, and it becomes easier for them to give it up.

But that leads to the next question: when you’re going through change management, because this is a huge change, and I don’t know if there’s ever going to be an end to it, how do you manage that change from a workforce perspective? I think about a company where I worked where they tracked workstyles in an SAP. You were designated a workstyle based on the frequency with which you came to the office. It didn’t mean that if you were considered remote, you weren’t allowed in the office. But it allowed for different considerations and being able to track it in a system like SAP.

Did your company do the same thing, or what were some of the things you did to track or manage it from a workforce perspective?

Kevin

I’ll touch on employee profiles first. Back many years ago, when I first went out and did a full world view of a company and tried to break it down into work styles, worked with HR to get all the different job families broken down into seven different job families and profiles. We thought we were really making great progress, but when we started sharing with teams, arguments would break out, like I’m not really an A6, I’m kind of an A7 depending on which phase of the project I’m in, etc. All of the conversation was whether they are in the right profile, and I quickly realized that it’s difficult to describe that to employees. So we just moved to XY coordinates and did a four square and said OK, it’s a scatter plot, you’re going to fall more into one quadrant than another. It doesn’t mean that you’re that profile, but your tendency is more towards that. Much easier to describe and talk them through that.

We can pick on sales and marketing. You’re highly externally mobile when you come in to the office. You’re also internally mobile. They’re much more suited to having a variety of spaces, having mobile technology, and we can help with the process of transitioning to that kind of environment.

And then how do you relay this information, and prepare spoon-sized pieces of info? We could create a wiki, do some fun animated videos so they can consume it all in bites over time. And if there are things that aren’t working well, you can reinforce those in a fun, playful way and get feedback as to what’s working, and what gaps there are. So, each person has to kind of follow their own journey in a new way of working.

Sandra

I like the idea of the scatterplot matrix. It takes me back to my early days of workplace strategy. I remember a matrix where you have the low and high collaborator. It’s a spectrum. And then on the other spectrum, it was dependency on the office. So based on the frequency that you came into the office, and the percentage of time that you were actually collaborating when you were in the office. Those were the two factors for many organizations back in 2000, which really dictated what your work style was. You could be in the office every day, not collaborating. You are considered what we’d call an anchor, and you basically get assigned a desk. Those would be your administrative assistants, people that aren’t really participating in meetings like other people.

Then on the other end you’ve got people who are 100% remote. They never come into the office, and they’re high or low collaborators. Those would often be offshore, and that doesn’t mean that they never collaborate, but the likelihood of them collaborating is slim to nil. There were decisions around the technology required to support those types of workers.

I love the point you made about people struggling with categorization. They get hung-up or fixated on the grouping that you give them, whereas it’s really just a generalization from a planning perspective so we know how to allocate space to support the needs of various people. It was always interesting that the middle ground between mobile and out of the office, who came in from time to time, rarely sat at their desk. They were constantly moving around and working with different teams. That usually accounted for 50 to 60% of the workforce. You rarely had people coming in and sitting at their desks 5 days a week, 8 hours a day, and then you had remotes that came in maybe once a quarter, once a year. We don’t really have to worry about those people a lot.

But the middle group or category of mobile workers, that’s where you get all the variation. You’ve got people that are highly mobile internally vs externally, and their needs are very different in terms of how they interact with each other. Add the fact that now you’ve got hybrid on top of that, because now there are people that would have come in to the office every day but are now working from home and relying more on technology. It just complicates things that much more.

Sandra

For the matrix or quadrants idea, what should be the comparatives in your opinion? Should it still be based on the frequency of attendance or the level of collaboration? That’s what organizations are saying is the reason why people need to come back to the office, to collaborate. Do you think that’s still relevant, or do you think there’s something else that might be more fitting based on what’s happening right now?

Kevin

I think it’s more complicated that you’ve got a wider range of teams. From the pandemic, we’re getting more remote teams. You’ll find that there’s certain talent elsewhere in the world or you need to have fast sprints even for some of our data analytics. All the data went through Europe first, so they can transform it according to GDRP. They ship it to us, we start to work on it. We could ship it to APAC, and within 24 hours, we can come up with some fantastic results relying on this. Suddenly teams are now virtual by nature of either time zone or just hiring talent where they’re at.

So, it gets much more challenging to think about what it means to be in the office. Are you really going to get everyone in the office, even pre-pandemic? If you think about your big team summits? Not everyone could come. There’s always someone with a wedding or got sick last minute. You get 80% of the group that would come together, with a few virtual participants. Now that virtual participation has grown. It’s almost a default that you have to assume that at least 1/3 of your team is probably going to be virtual. So how do you include them?

I think at least during the pandemic, we’ve all had the opportunity to be the person on the end of the call that didn’t have a great experience. I worked for 10 years from home, and was always trying to figure out ways I could insert myself into the conference room and actually get a word in through the phone when everyone else is in person. It was incredibly hard to do, and people didn’t have the etiquette to stop and say, did we get input from everyone in the meeting, including those who are virtual? Now, I think, there’s much more ability and thought around that. And of course, now we’re using video, so you can see your raised hand and signify that you’re participating and want to comment. So it releases some of that pressure on trying to get everyone to be in person.

Sandra

I think that’s a really good point. That’s one of the things I struggle with, when organizations are pushing for people to come back to the office because of collaboration and innovation. It feels like it’s very narrow-minded, because you’ve got globalization of work. You’ve got teams literally scattered, especially if you’re a global company, you’re going to have teams scattered all over the globe.

I’ve worked in a similar situation where work goes around the globe. There’s a cool factor to that where something would have taken 2 weeks to do, but you can literally do it in 24 hours or 36 hours just by going through different time zones. The velocity of work getting done is actually pretty cool, when you basically just pass the baton on to the next team and they continue the work. And then it comes back to you next morning, ready to go. We can move a lot faster.

The old process of everyone being in office, meaning just the local people, because there’s always going to be that virtual element — it’s really interesting as we talk about the fact that the world of work has changed long before the pandemic. I think with the advent of technology, just how much work has changed has come in to focus. And for us to say, why am I going in to the office every day, because I can do this from home. I don’t need to physically be in the office, but there’s a push and nudge to go back to the office because of collaboration, innovation and team camaraderie.

Kevin

I think one other point is that I have three children that were between high school and college during the pandemic, so they all had to shift to different learning styles. A lot of asynchronous learning. When that population starts into the workforce, they’ve had to grow up in that environment where you get team projects done without getting together. You have to be asynchronous. I think education is trying to go through a lot of that pollution as well, which means the future workforce is going to come in with a different approach. How do we absorb that? Part of that is a bit of push and pull — a bit like a marriage. When you have a good marriage, everyone gives and takes and you find the best middle ground for each party.

So thinking about young employees coming in, they want to have mentorship and engagement, and the best people to do that are tenured and most likely to be working from home.

I saw that over the internship season, where we had all these interns come together looking for their managers who weren’t there. They found the one fully agile building and said, we’ll all congregate here. They started coming together and fully activating the space. Then as intern season moved away and some came on as full-time employees, they continue those relationships. They continue to sit together even though they came from different teams. Because they’re forming their own community.

I think that’s really fascinating, and the question is, is that a new community, a new culture, or is that culture aligned to the existing company culture? Or is it divergent, and potentially going to create some rift? Are they creating a culture that didn’t exist before and may not align with that of their mentors?

Sandra

Just last night I came across a quote on Facebook that made me pause for thought, as we’ve been talking about CEOs mandating people back. The quote said, “I’m so happy, I had a childhood before technology took over”. It made me think about how different the childhood experience is today. And it has been different for a number of years, since technology came to the forefront. Kids are born with technology in their hands. Yet, when you think about work, or even education, it’s kind of like taking a step back. For your early years, is it good or bad is a whole separate discussion. But in my day, we didn’t even have access to television. We had one, but nobody watched it. Kids were outside playing until midnight. And it wasn’t a big deal. You don’t see that much anymore. Kids are playing video games, and the whole childhood experience of being outside is not the same as it was when we were growing up. They’re so absorbed in the technology that they now have access to.

It made me wonder when you were talking about internships, is that community of culture-building to fill that void that was created by the lack of enablers within the organization? Because organizations are still pushing for old traditional ways of work. I don’t know if you’ve experienced this, where you come into an office and it has all the newest gadgets, so you’re running on the latest version of everything, you’ve got all the fancy tools. And then you go to another company who’s 20 years behind in their technology enablement. That’s a huge drain on productivity.

It makes you wonder, is that the same sort of thing that’s happening, where people are saying you need to be in the office for mentorship? It’s kind of like, but that’s why that technology is there. Kids are going to school and handing in papers digitally. There’s a lot of digital interaction going on already where they’re from, right through to university. And then in the working world, it’s 100% face to face. Because that’s how you build relationships, that’s how you collaborate, and so on and so forth. But it feels like there’s a bit of a disconnect there.

Kevin

There is, but I think there’s value in bringing those two worlds together. As much as technology changes, it’s typical that the kids are going to be most involved in what’s new and trending. So as a kind of more tenured employee, if you come in, you’re going to be getting that mentorship on how to use that new technology. Or getting tips and tricks on how to be more efficient or catch up with the latest products. And then in turn, you can talk through things like work etiquette, what does it mean to work, how do you balance that, how do you engage with people?

I think there’s been a bit of a shift in the tech side of what they focus on. For a long time, you looked at all the top schools, like MIT, to get your top-tier talent. But when you dig into the education behind that, we find it’s often highly competitive, you’re looking to be the best individual, but then you step into the office, you can’t be the best individual. You have to be the best team player if you’re going to succeed.

And that’s a really tough transition. So even some of our organizations are starting to not look at those schools as much, because there’s too much competition driving up the price. And we spend a lot of time trying to attract that talent, whereas ultimately, a lot of the younger employees actually didn’t come from those schools, had much stronger skillsets, and were likely to stick around longer. You had better employees if you stepped down a tier. So they started focusing on the traits and skills that provide the most value to the company, forgetting about where they came from, and figured out how to attract and train that type of person. A lot of shifting in thought and shifting in what that transition is like.

Sandra

That’s really fascinating! Another thing I’m thinking of as we’ve been talking through this, is about past experiences and bringing information forward when you suddenly have data at your fingertips. I’m a data nerd, I’ll be the first to admit. It’s exciting! You get to understand things you could never have imagined before. You get to be super excited about it. And you think, what could we do with this data, whether you’re trying to solve a problem or add some context to helping the organization with respect to the directions they might want to take. What’s fascinating to me though is how a lot of the times, it’s a huge let down. You bring that information forward and they’re like, yeah, that’s nice. And it falls flat. Have you experienced that, and why do you think it happens?

Kevin

It definitely happens. Certainly, early in the pandemic we were getting ready for that first policy announcement on what the strategy would be, from a corporate perspective. Preparing for that it’s like OK, let’s take a look at 2019. I had the team run through and crunch a full year of 2019 data, and look at by region, by leader, by day of the week, that sort of thing. As we talked about, 3 to 4 days pre-pandemic was the regular attendance, and it was Monday through Thursday, and didn’t evolve. The original quote was hey, we’re a high-attendance culture, so we’re going back full time.

But that’s not going to land, and it didn’t. So we came back and said, can we do 2 days a week from home? To replicate what people are already doing, but just put some structure on it? But things have changed, so we had to go through a learning process, and think about where there’s starting to be traction now that the pendulum is swinging back, there are slowdowns, there are layoffs. Therefore, people will do what we say, missing the fact that with this dispersion, there are significant numbers that have either a significant commute, or are too far to physically commute, so they can’t return, or that return is going to make or break the situation.

And is it worth it to go that route, to disrupt morale? You’re going to ultimately take away from productivity, because now you’re getting people in a car in stressful traffic. So they show up, not ready to work, but ready to decompress from the commute. Then they’ve got to work and focus on when they need to leave so they can get home to be home for dinner or for evening activities. It puts a lot more strain on the workforce.

Sandra

Yes, those are all valid points, especially when it comes to change management. It comes down to yes, the executive team might want the organization to do a certain thing, whether it’s supported by data or not. This is what they want to do, and then you wait around and see if people comply, which we’ve seen is not actually happening.

And there’s still all kinds of speculation about the economy continuing to go south. And the idea is it’s going to put companies in a position where they believe people are going to come back to the office because they can mandate that even more so, but I wonder about that.

Having gone through the pandemic, and this is my own personal opinion, I think that people came to the realization that the lifestyle they live is dependent on their employability. Or the fact that the company they work for determines that for them. And it’s a scary thing. When you have no control over that, like we all experienced during the pandemic, you start to get creative, start to think about doing something that won’t put you in that predicament going forward. So, I don’t think the control that organizations had before is the same now. I think people will just say OK, I’m an experienced person, I’ll just go at it on my own. I’ve got friends, and friends of friends who have done that — they’ve lost their jobs and just gone on to work as a consultant, they pick and choose their customers, work the hours they want to work, and make enough to pay the bills. It’s no longer about climbing the corporate ladder or striving for success, however you define that.

It’s interesting when you think about the idea of making work human — it’s comical to me, because what was it before? Why was there this dissociation with being human in the workplace? It’s the idea that work isn’t in the business of caring about peoples’ lifestyles or well-being or whatever, and then now it is? You’d be foolish not to think about all of the elements that impact peoples’ lives day-to-day, even though you spend a tonne of time working. There’s still an element of why do we even exist in the first place? To work?

Kevin

I think that’s it. People had a chance to realize that one, life can be short, and it’s worth taking risks. And what are we doing this for, are we living to work or working to live? We’re also seeing family dynamics change and shift. I live in the Seattle market, and prices are going up. It’s getting more crowded, and for a while I had people say, I’m going to quit, move to Nashville, or other places in the country that sound great to be in right now. Very quickly, they settled in. Cost of living was better, it’s a smaller location, they were able to find work and are happy with the shift. So think about that movement, there is more of a focus on trying to find that work-life balance, or really, work-life integration, and what that means at an individual level.

The other thing that I think comes out of it, which unfortunately is a qualitative data piece that often gets missed, is the opportunities that show up through some of these employees’ stories. The best one I came across as we were surveying to find out how it worked was about a young mother in South Africa. She and many other young mothers had moved away from villages into the city so they could get higher paying jobs and send money back to support their families. When the pandemic hit, they were able to move back with family, continue their jobs, and see their families full-time. They said wow, if we could continue doing this, I now have money to pay for a house to put this family in, they’re with their family, much happier, and now have a better bond with the company because they allowed me to have this more fulfilling life. If those are the few mothers that made that shift, there’s probably a great talent pool that wasn’t able to or wasn’t willing to make the sacrifice. Why wouldn’t you want to enable that?

And particularly with me, we’re launching satellites every day. Internet will soon be ubiquitous, so people can truly get access to the Internet everywhere. You can tap amazing talent wherever they are.

Sandra

That’s probably the best comment in all of this. As you think about the role real estate has played, and take a step back and look at the money that’s been spent to support a way of working — people have voted with their feet every day. It becomes a question of forcing the issue. I don’t know, you have to take a step back and think, how can we improve the lives of our employees and basically be more selective about how we spend the money that you would have spent on real estate to keep your workforce happy. Because if your employees are happy, they’re going to be more productive, you’re more productive, you generate more revenue, and everybody wins in the end.

I think that’s really key here, it’s not about whether the office is dead or not, it’s about there being a smarter way for companies to think about the role that real estate plays. That’s not to say to eliminate all your real estate, there’s still a need for it to some degree, but we don’t need to be gluttons like we have been, where we never even looked at it because it was just a necessary evil. Now there are so many issues in society, where companies can be smarter about how they choose to spend their money to serve some of these programs, like you mentioned EI, sustainability, community-building. There are all kinds of things that companies can do where they can still elevate their brand, but just do it in a different kind of way. It’s not about slapping a logo on a building, it’s by actually participating in society and doing it in a way that your employees become ambassadors or your brand. I don’t think there’s any better way for companies to be successful going forward.

Kevin

Probably the best example of that is my first workplace project in the Netherlands. It took a while to get off the ground, but it really changed the sales office, so leadership rethought how they engage with customers, went through a full transformation, started listening, and actually realized they had a much better partnership and higher sales in a down economy. And then because it was such a successful transformation, the government said hey, can you help us around change management at a country level?

So you’re starting to re-think how this all comes together. The company starts to create that purpose within a company because most people aren’t going for a paycheck. They’re going for a meaningful role that gives them purpose and meaning and has a paycheck. If you can blend it all together, you’re building a strong tie with your employee base.

Sandra

Totally agree, Kevin. I can’t believe the hour is already up! This has been a lot of fun, thank you for your time today and for being a guest on our show.

Kevin

Thank you so much Sandra, great to see you again!

Sandra

Thank you!

About the Author

Sandra Panara, Director of Workspace Insights

Sandra has both a deep and wide understanding of Corporate Real Estate and Technology. With over 25 years hands-on experience she is able to apply non-traditional approaches to extract deep learning from the most unsuspecting places in order to drive strategy. She has developed an appreciation for always challenging the status quo to provoke and encourage new ways of thinking that drive continuous improvement and innovation. Sandra believes square pegs can fit into round holes and that the real ‘misfits’ are those environments that fail to adapt. Her expertise ranges broadly from CRE Portfolio Research, Analytics & Insights, Workforce Planning, Space & Occupancy Planning & Workplace Strategy.

Key Takeaways & Discussion Points

Is employee satisfaction bad for the bottom line? Will workforce quality of life always be at odds with cost reduction?
Why are some companies hesitant to downsize their real estate portfolios?
What should companies consider when it comes to office redesigns that might come along with reductions in space?
Should smaller companies and start-ups forego office space altogether and stick with flexible co-working spaces?
Is it on companies, or the corporate real estate industry to solve for these new challenges?
Should workplace professionals be planning to ‘utilization data’ as opposed to planning to ‘occupancy data’?
Can every company benefit in some way from leveraging Space-as-a-Service?
Are flex spaces and co-working spaces inherently zero waste for companies? Or does the gap between people’s intentions and behaviors create some waste?
Why are we focusing so much on where we work and ignoring when we work?
Many CRE leaders are frozen in time because they’re scared of making costly mistakes, or they’re struggling to get buy-in from the C-Suite
How can access to good data help to acquire that buy-in from the C-Suite?

Guests

Host: Sandra Panara – Director of Workplace Insights at Relogix
Andrew Millar – Founder & CEO of Relogix
Dave Cairns – Senior VP of Office Leasing at CBRE
Mark Gilbreath – Founder & CEO at LiquidSpace
Gabe Burke – Portfolio Strategies Lead at Accenture
Kay Sargent – Director of WorkPlace at HOK

Show Notes

Optimizing Office Space in 2023 & Beyond by Relogix
Navigating the World of Hybrid Work: A Benchmark Study in the Global Workspace Usage by Relogix
Entrepreneurship during the COVID-19 Pandemic: Evidence from the Business Formation Statistics – John Haltiwanger
Corporate Real Estate Has Become a Black Hole that Devours Money – Blog post by Gabe Burke

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript:

Sandra Panara (Relogix)

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

Hello everyone, we’re just about to go live in a couple of minutes. Welcome to our second LinkedIn Live, hosted by Relogix. I’m excited to have a great lineup of panelists for everyone today.

Let’s get started! Thank you for joining us for this next hour, my name is Sandra Panara and I’ll be facilitating our live panel discussion today with our amazing panelists, who I’ll introduce in the next couple of minutes.

A few administration points to take note of: you’re encouraged to ask questions during this session. We’ll try our best to answer them all, but in case we run out of time or we missed a few, be sure to check the comments on LinkedIn for this event. We’ll be answering any missed questions there.

We’re going to be talking a little bit about our most recent benchmark report that went out last month. If you haven’t downloaded our benchmarking report, be sure to do so. A link will be posted in the chat where you can access the report. Before we begin, I want to share a few takeaways from the report.

First, a little bit about the data. We collected the data from many of our global customers. We had about 45,000 and then some spaces that we measured. Spaces includes desks, offices, meeting rooms, collaboration spaces, basically any space that someone would use in a workplace. We compared 2019 data to 2022 data.

Looking at pre-COVID information and post-COVID information, the great thing about our data is that our customers had sensors installed in their space prior to COVID, so we were able to actually do a proper comparison to look at what’s actually changed in the organization. So, the results of this data are actually based off of 4.4 billion data points that we collected over the two-year period.

What did we learn? The first takeaway is, looking at the two graphs, on the left side you see the 2019 data, on the right side you see the 2022 data. The first thing that you notice obviously is the pattern in the graph. The left side you see more of a consistent sort of pattern, people are coming in. This is actually based on a daily utilization or daily occupancy, so you see more consistency in the data where people were expected to be in the office every day versus on the right side.

With the advent of hybrid and every company having different policies on the number of days in, you can kind of see a little bit of a wave happening. Also in 2022, that’s been dubbed as the year of reconnection. I think a lot of companies were more lenient about the mandates. Even though mandates were coming out about returning to the office, there was more leniency just because people were emerging from lockdown.

The other thing that you can see is the white lines in between. This actually represents the Mondays and Fridays being the least preferred days in the office. As you can see, it was problematic pre-pandemic just as much as it is now post-pandemic. So, it’s not anything new when you’re looking at the data year over year.

But then potentially what is most impressive is the fact that peak occupancy in 2019 never exceeded 79%. So that was the absolute maximum that we saw in the 2019 year. That’s across all industries, over multiple countries in North America and Europe as well.

And then comparatively, in 2022, peak occupancy never exceeded 34%. So that is a 57% reduction from pre-pandemic times. That’s a pretty huge drop-off rate in terms of the number of people that are coming back.

The magenta lines down below represent utilization, which measures time, versus occupancy, which is just determining whether somebody is present or not. If we just look at occupancy alone, we can tell that there’s already a pretty seismic opportunity from a reduction point of view in terms of how companies need to be thinking about space.

So going on to 2023, we sort of alluded to this just prior to the Easter weekend because 2022 came and went. We had nine months of data. We were curious to see, well, what does 2023 look like in Q1? This is the first quarter we can actually compare to 2022 data to look at how the return is looking as we enter into 2023 and are going to continue to look at that data going forward.

The first thing that we see is that at the end of March 31, occupancy was up at 51% in 2023 versus 37% in 2022. So, there’s definitely an increase in the return rate. We also saw that peak occupancy was up, at 53%, which is up from 34% in 2022.

But perhaps the biggest surprise is when we look at the pattern with respect to the percent of change month over month. Mind you, in Q1 we were still plagued with Omicron, so not everybody was returning to the office. Mandates were kind of hit and miss, but there were still instances where people were coming back to the office. We expected that we would see a continuous increase in the percent change month over month. But in fact, what we’re seeing is it actually declining. This is interesting because when we’re looking at how the rate of return is comparing to last year, the fact that it’s declining is indicating that the return isn’t actually changing much from where it was last year, and that’s pretty meaningful.

That being said, we’re obviously going to continue to track this data going forward. Q2 will probably be the most meaningful to date, just because mandates kind of started in April of last year.

So being able to see how we’re comparing when people were actually returning to the office or were expected to return to the office, and what does that actually mean? In a nutshell, when we think about 2023, really, the demand for office space may actually be on the verge of leveling out. It’s still a little bit too soon to say. And as I said, the data for the coming months will bring more clarity, given the fact that we were still dealing with Omicron in Q1 of last year. And while more people are returning compared to last year, the rate of return is declining. And this is an important insight as companies consider the ROI of keeping an office.

So, with that in mind, let us now bring our panelists online. Hello, everyone, and welcome. I’d like to introduce Gabe Burke, who is the Portfolio Strategies Lead at Accenture. We have Kay Sargent, Senior Principal Director of WorkPlace at HOK. We have Mark Gilbreath, Founder and CEO of LiquidSpace. Dave Cairns is the SVP of Office Leasing at CBRE. And our very own Andrew Millar, Founder and CEO of Relogix.

Welcome, everyone! It’s been an interesting couple of weeks, just getting into the data for 2023 and I’m really excited about what this year is going to bring as it relates to what we’ve been all talking about. And what’s all near and dear to all of us on this panel is the question, what is the future of office? While much of the popular debates these days seems to be more around the impact on the human condition, really the focus of this panel discussion is really to define what the new value proposition for the office is for organizations considering their next steps. The key to success in organizations is really to reach a consensus on next steps, and that requires a set of key business objectives and goals first.

With that, I wanted to start with you, Gabe. You wrote a blog post not too long ago, and you raised a valid point in your blog that cost reduction and employee satisfaction have always conflicted, and that workforce quality of life was not good for the bottom line. You even went on to say that the value proposition for the office has changed for employees, and as such, it will need to change for employers, too, if they want to remain competitive.

So, thinking about the fact that companies are making risky business decisions, do you think that the ROI is changing?

Gabe Burke (Accenture)

Yes, I think there’s no question it has changed. Pre-pandemic, when people talked about providing a working environment or improving the quality of life for an office worker, it typically meant additional investment in the real estate, for example, a larger space, nicer amenities, high end furniture. That was how quality of life for an office worker was defined. And it was never an easy sell. The reason being that people in the C-Suite have spent their careers focused on measurable results, particularly those that impact the income statement. The payback of a happier, more productive employee is difficult to measure empirically, but the expense of a larger or upgraded space comes right off the bottom line. So, in a cost benefit analysis, the deck has always been stacked against real estate.

When the pandemic began, everything was turned upside down. Employees didn’t want a bigger, nicer office. They wanted freedom. They wanted the option to not come in. And that’s what most of us did. We stayed home. As things progressed, we started to realize that we were missing something. We loved our newfound flexibility, but we wanted the in-office interaction that used to be an everyday occurrence. Most people only went in two or three days a week, and when they did, it was a ghost town. And I think for many companies, that’s still true.

All of that has led us down an unfamiliar path, and we’re now caught trying to figure out how we keep our flexibility, but also restore the vibrant, energetic office that we used to enjoy.

The solution to that, I believe, is a smaller footprint with a much higher desk-sharing ratio. We need to use less space to accommodate more people. That will allow a hybrid work model, but also create a well-occupied office.

So back to your question, Sandra. Has ROI changed? It’s changed dramatically for employers who are seeking to improve quality of life for their people. Part of the solution is actually to save money by downsizing their space. And I think that’s something many people are still trying to comprehend. But the further we go into this, the more clear that becomes.

Sandra Panara (Relogix)

I think what’s interesting about that is, having been in a workplace for pretty much my entire career and working with organizations in workplace strategy initiatives, it’s always been said you don’t lead with the cost savings because it’s really an outcome. But ultimately, it’s what you do with the cost savings. It’s the give-back to the employees.

And it’s interesting how you mentioned quality of life, because quality of life, as you said, was never really part of the equation way back when. It was really focused on the headquarters. In fact, even all the data that we’ve presented in our benchmark report is based off 99% headquarters space, there’s not really visibility into other types of spaces beyond the headquarters.

And so as more and more individuals want flexibility, there’s a cost that’s associated with doing that. What is your advice to companies for dealing with some of the savings opportunities that are coming forward as a result? If the reality is that return to office never exceeds, let’s say we level out at 50%, is it a matter of just cutting the real estate and pocketing the savings? Or what should companies be thinking about?

Gabe Burke (Accenture)

Well, there are a few challenges. I think it’s inevitable that it will be done, I think most companies have started. You can talk to any company and they’re letting leases expire. They’re not renewing things. Most of them are doing piecemeal. But I think there’s an inevitability that most portfolios will be downsized significantly.

I think the hesitancy is around three things. Two are manageable, one, I think is misguided. But the first one is there’s concern over the brand. People don’t want headlines. They think headlines about downsizing or moving headquarters is a negative thing. I tend to not agree with that. But even so, you can treat sensitive sites differently. But that is one thing I think that’s holding leaders back, a concern over market perception.

The other one is CapEx. When we talk about the future of work, it usually involves a grand redesign of an office, which is wonderful and interesting, and I love those conversations. But I know in the CFO’s office they’re thinking, how much is all this going to cost us? You want to take us to this new portfolio? We’re going to spend tens of millions to get there.

So companies need to be smart by figuring out ways to downsize without making drastic changes in the design of their space or even the furniture system. I think those things are done on an experimental basis and you roll them out slowly, but you can do significant downsizing based on the existing layout and furniture.

And then the third one, and this is where I think many leaders are just missing the mark, is that they have this fear that somehow, they’re harming employee experience or that people won’t want to come in if they can’t find space. And there are many studies available now, and Accenture has done its own, that show unequivocally: people are more likely to come in, and they’re happier, if they think they’re going to see their colleagues.

This goes back to the earlier part of my question: you are improving employee experience if you densify your office if you downsize your footprint and become more efficient.

Sandra Panara (Relogix)

Right, because you’re experiencing other people. Through the reduction, people come closer together, and it doesn’t feel so much like a ghost town.

Kay, that’s a good segue into the question I was going to ask you, which is, as Gabe was talking about the cost of change, whether it’s CapEx looking at furniture solutions, it seems that companies are still frozen in time, maybe waiting for signals that change is imminent before forging ahead. Spending in the next while will be very intentional and very strategic. When we think about the ROI of design, specifically around redesigning the office, it seems as though it’s a high risk for organizations these days. You also said in a prior conversation that we had that everyone is waiting to see what everyone else is doing. If we think about the reduction activity that’s happening, or that will potentially happen in the next couple of months, how should companies be thinking about the redesign of their current office space?

Kay Sargent (HOK)

Thank you, Sandra. I want to pick up on something that Gabe said, and I want to pick up on something that you said. Companies are frozen in time because they don’t want to make a mistake. And in the North American model, we have the longest lease times, and we spend more money per square foot on space because we build it out more extensively than anywhere else in the world. The mantra has always been, we’re going to do this once every 10 years, so you damn well better get it right.

So, people have always erred on the conservative side rather than being a little bit bolder or testing, because if you don’t get it right, you’re stuck with that for ten years.

And so I think, fundamentally, we have to change the way that we approach how we deal with real estate. It’s not a one and done for ten years and you’re stuck with it. Things are evolving way too fast for that model to stick. And when Gabe talked about the value proposition, people are still focused on the value or the cost of space. They’re not thinking that 90% of a company’s money goes to their people. Only 10% goes to space. If we do anything to negatively impact people’s ability to function or be successful or happy or to thrive, then we could actually cost a company more money than we’ve saved them.

So when it comes to redesigning space, I’m going to give you five things that I think are really important today. Number one, one size misfits all. Everybody is looking for the solution, and there is no “the solution”. For far too long, we’ve tried to oversimplify things, create guidelines and standards that we can easily roll out across a large portfolio. But by doing that, we’re not accommodating the variety of people that we have in the workforce today and the variety of tasks that are happening. We need to stop trying to oversimplify it.

Number two, we need to realize that solutions vary from one company to another, one region to another, one industry to another, and that just because somebody else is doing something doesn’t necessarily mean it’s going to work for you. You need to know yourself and understand what it is that my company needs. So that’s number three, know thyself.

Number four, we need to stop guessing. There really is a science to what we do. And if we really, truly understand how space is impacting people, an organization’s DNA, the primary things they’re trying to achieve, then we have a much higher chance of getting the right solution for you.

Finally, we need to stop assuming that the workplace is going to solve everybody’s problems. Hybrid is more of an operational model than anything else and it is actually the hardest model to pull off. And if people aren’t doing the hard work of really understanding policies and procedures and all the things that this is going to impact, then we run the risk of making hybrid the worst of both, where people are commuting to sit on Zoom calls all day. So, we really need to rethink not just the workplace, but work in general.

Sandra Panara (Relogix)

It’s interesting Kay, hybrid to me is a mindset first and foremost. You think about all the policies around hybrid today and it’s still revolving around the traditional workplace, right? As you think about how many days you need to be in the office, structured teaming days, it’s always still revolving around the traditional office.

It’s interesting though, when you think about the diversity of people and all of the things that people have experienced over the last couple of years, that it’s more than just what a specific office can offer an employee.

With that, I’d like to ask Dave a question, thinking about leases. For example, as you start to see the numbers, as it relates to the fact that companies are adopting hybrid policies, you’ve got lower occupancy numbers. People are watching the occupancy numbers week by week, day by day, and the numbers aren’t coming up at the rate of return that people are anticipating or expecting. We still are seeing a bit of a hold in the sense of well, maybe something magical is going to happen by the fall that’s going to bring us back to what pre-pandemic times were.

How do companies approach leases, especially if they’ve got leases that are coming due? What are some of the things that they should be thinking about and what should they be asking?

Dave Cairns (CBRE)

So, I first want to say a few things. One, I really agree with Gabe that we need to downsize and obviously we need to share desks. But I also feel that we need to be reimagining the HQ as a venue and accept the fact that in respect to your data, there’s occupancy and there’s utilization. Utilization is more around how much time people are spending in a given environment. And we’re noticing that people are choosing to spend less time on average during a day that they go to the office. They’re sort of dropping in for whatever the use case is.

I think that the ultimate goal a company should have is to be managing the outcome toward utilization. That is what makes the most sense, and try to create some vibrancy around that. WeWork did a really great job of that with their HQ. Phil Kirschner talks a lot about that, where you almost had FOMO, like you couldn’t get in there. A great restaurant that you go to ends up having the same thing.

No matter the size of an organization, I think the objective needs to be managing towards what the data suggests utilization is likely to shake out to be. There’s obviously a spectrum to that and you can look at the average, you can look at the peak, and you can look at the trough, but that’s the data point that matters to me the most.

So then the question is, what do you do depending on the size of your organization and where you are in your lease cycle? If you’re a small company, my advice would be ditch the traditional office model completely. Go to a completely on-demand approach, whether that’s booking a space on a regular cadence of, say, once every two weeks on a Wednesday to keep consistency, book that out six months in advance through a coworking operator. There’s tons of them out there. That’s a great strategy to deploy as a small company and start to actually measure how that works and then add on as needed.

If you’re a large company, you’re going to be needing to look at it from the exact opposite vantage point. The reality is that a lot of companies that are big are going to be renewing their leases still because risk mitigation is the way that they look at business, rather than optimization or being “risky to innovate”. So a lot of the big firms are still going to kick the can at this point. And I think that makes sense, broadly speaking.

But what I think a lot of them are not doing, and this is a plug for Mark and his whole sector, is that they should be adding on in the short term the ability for those employees to be able to choose third-party workspaces to engage with.

There are so many inherent benefits to that. It’s going to hopefully upgrade the quality of life of employees who can actually meet in more convenient locations. It’s going to help an employer be able to meet ESG objectives by reducing the impact that they have on the environment through commuting and through powering office space. And it’s going to inform future real estate strategy around what long lease spaces do you need and why? Because you’re going to be able to have a much clearer picture around where people are choosing to actually go when they’re doing various working activities. Whether that’s remote working from a coworking space to get away from distractions at home, or whether that’s collaborating at the HQ venue in preparation for some sort of big project, or it’s an informal meeting that happens in a third-party coworking space that’s equidistant to four people who live in a greater city area.

This is the thing that I think not enough large employers are doing. In my mind, we’ve basically inverted the paradigm. Home is now the primary place that people prefer to reside in. I think then it’s going to be a wide variety of third-party spaces, whether those are commercial spaces or retail spaces, whatever we want to call it.

And then the HQ is frankly the least desirable one because it’s hardest to get to and it’s often sort of confusing why you’re there to perform a lot of your activities, but that can be reimagined into a venue over time that becomes incredible to go to. It’s just that you end up going with a lot less frequency.

I think that a lot of the change is going to happen from the start-up up going forward. Nick Bloom has put out some great research that has highlighted that start-up formation dropped in the middle of the pandemic, but it’s now eclipsed pre-pandemic levels. And the rationale behind that is that it’s actually easier to start a business — and a lot of people will contest this — but the data is showing that more start-ups are being formed distributed, and you can hire global talent, you can mitigate some of the cost. Peoples’ quality of life in many cases are actually improved. So we’re seeing larger start-up formations and then the younger the organization, we’re also seeing more days with which they’re working from home.

What that tells me is that younger companies are starting to develop a more distributed and digital by default mindset. They’re going to look at real estate in a completely different way. I think that the long-term office lease is basically swimming upstream. It’s not gone, but the use case for that long-term office lease is moving up the chain.

Other than that, the only two macro things that I would highlight is that the biggest problems are actually not real estate problems. It’s changing the way a business operates. Hybrid, I agree with Kay, is the most fucked up one. I think that you should be doing it digital by default. I actually completely agree with what Tobias from Shopify said at the beginning of the pandemic, that the business was now digital by default. That didn’t mean that they weren’t going to use real estate, although they’re dumping a ton of real estate. That being said, it didn’t mean they weren’t going to use it, it just meant that it didn’t make sense to run a business in 2023 off the back of a physical infrastructure and a physical way of needing to train, mentor, etc. It’s risky in the current environment that we’re in. So, I think that we need to be reorienting the way we work away from proximity-based hierarchy and more to distributed flat hierarchy ways of working. That’s a huge problem that really has very little to do with real estate.

And then the other one is that this shouldn’t really be all on the backs of companies to solve. The real estate industry needs to switch its operating model as well towards Space-as-a-Service. And we’re starting to see that that is taking shape. The predictions were already there pre-pandemic around 30% of supply getting flipped. I still see a ton of friction there. A lot of landlords don’t want to migrate their supply and right now they don’t necessarily have to because a lot of direct vacancy rates, meaning vacancy that landlords are holding today, and especially AAA class buildings, are still sub 10%.

But eventually, I believe that regardless of where occupancy goes, vacancy is still going to go up regardless of how much time people are starting to spend in the office. The industry itself needs to flip its operating model and if it doesn’t proactively do it, it’s going to be a Blockbuster moment. That’s my general take.

Sandra Panara (Relogix)

It’s interesting, what you said at the beginning, that companies should be planning to utilization because obviously utilization is considerably lower than occupancy. We were talking backstage before we went live about how the amount of time that people spend in offices is lower. It’s no longer the case that you go in, you spend the entire day there. Some people do, but some people just go in, do whatever they need to do and then they leave. I know that in the past, utilization basically was the metric that enabled you to say, okay, if you were to scale back your real estate based on occupancy, because as I said today, again, assuming that we’re at 50%, that’s already a considerable decline in real estate needs.

But then knowing that if your business is growing, at some point you potentially need to take on additional real estate, which is probably why companies are holding on to real estate. Because in the past you had to think about what your future needs are and then pay for that upfront. Even though you’re getting maybe a discounted rate, you’re still paying for unnecessary space right from day one.

So the whole concept of sharing ratios and reducing the portfolio and then looking at utilization, which really then the proper optimization of workspace enables you to figure out, well, how can you dial up your space in order to essentially align more and more with how people are actually using the space, where you can still contain it within the real estate footprint that you currently have?

But what I think what’s interesting, and this is actually where Mark, I’m going to bring you into the conversation, is the whole discussion around, well, what is the office? I think it was said earlier in the conversation as we think about the office or working from home or working from the headquarters, there’s a whole slew of other things that happen in between around where people actually work. So, once you’ve decided to reduce your space, it’s no longer a decision around keeping headquarters or not. It opens up the discussion to, well, what kind of space do we want to offer our employees? So, how do you think of the ROI when it comes to Space-as-a-Service?

Mark Gilbreath (LiquidSpace)

So much to agree with from the folks that have already shared. I think, a first comment I’d make, Sandra, is there’s a needed definition or a clarification of a definition. I think most folks on your audience today probably would respond to the title of hybrid as one of the banners on top of this general discussion around workplace over the last two years post-pandemic, but I think a lot of folks have the wrong definition or at least a partial definition of hybrid.

So, if I may be so bold, and to echo some of the comments from Gabe and Kay and Dave, the definition that I believe is warranted for hybrid is it’s the continuum of workplaces where professionals today get their work done. And to Dave’s point, it begins at home, where he’s sitting right now on Prince Edward Island. And it emanates from home for the most progressive companies to include, yes, the headquarters, which to Gabe’s comments, for most companies are becoming smaller and less numerous. But it also includes the near infinite ecosystem of flexible spaces that can be available as efficiently as on-demand, meaning zero waste, but also as dedicated hubs.

It’s the continuum of all three of those categories. It’s home. It’s flex spaces near colleagues and near home. And yes, it’s the continuation of traditional leased offices, albeit for most companies, that’s going to be less than they had in the past. That’s hybrid. Hybrid is not just, what days do I go to the headquarters? Hybrid is, where are the places that I work?

With regards to the ROI equation around that, a lot of folks will posit the question, will there be a tipping point when it makes sense to consider flexible spaces? The short answer is absolutely.

The more nuanced answer would be if you want to say, when did that tipping point happen? Or when might it happen? You could say it started in 1989 when Mark Dixon started Regis and co-invented the serviced office industry to give companies the optionality to rent fully move-in ready offices on flexible terms. You could say if you’re a little bit more conservative, that it was 2006 when the Hat Factory opened arguably the first coworking space in the world in San Francisco and added another rich example of flexible space. I might argue it was 2011, when the first on-demand office marketplace was launched that let you book space online with a click, wink wink!

And if you wanted to take a revisionist and hyper conservative outlook on when the tipping point occurred, you’d have to at least begrudgingly acknowledge that it certainly tipped in the first weeks of March 2020, when the world changed, when the paradigm flipped, as Dave said, or to Gabe’s comment, when it became evident immediately and ever since, and Sandra, your Relogix data corroborates this, when the numbers flipped, when the level of presenteeism at traditional lease offices roughly halved.

To punctuate that with one last comment, about most companies’ dirty little secret. Sandra, you’ve talked about this, Kay has too. For most companies, the tipping point preceded the transformational effects of the pandemic for most companies in 2019. And the Relogix data talks about average occupancies of 63% in 2019. The planned economics of corporate campuses at 63% average occupancy don’t work. I guarantee the planned ROI was, oh, we’re going to have 70, 80, 90, 100 percent utilization. No, it doesn’t work. You have that further still, and it’s staggeringly inefficient.

One quick story of a Fortune 50 company operating at scale with a blend of flexible office as well as corporate portfolio for their hybrid workplace, their at-scale stabilized average cost per served day at their headquarters portfolio is approximately $375 a day.

Had they achieved the theoretical minimum cost or maximal efficiency of their leased portfolio, if every planned seat was filled every day of the work week, Monday through Friday, that cost would have been $48. Their actual observed cost of a global at-scale, on-demand flex component of their workplace is $21.65. It’s less than half of the observed cost of their traditional portfolio. In real dollars, it’s one 17th the cost, probably it’s half the cost of their theoretical minimum cost, and it’s one 17th the actual cost that they’re observing, given their average occupancy, which is about 13%.

So, bottom line, the tipping point has happened. It exists for every company today to leverage some degree of Space-as-a-Service, whether you go as extreme as a fully remote distributed company or whether you apply a more conservative line and use flex just to augment your portfolio. But I firmly believe it’s going to be a component of every workplace portfolio that wants to be viable and cost efficient in this new modern age.

Sandra Panara (Relogix)

So, just a question, when you think about flex on-demand — it seems like everything that we do these days is all on-demand, and it often comes at a cost.

I like the math that you just did, but I think we still perceive when you have an idea of what your needs are, it’s a fixed cost. Yeah, you might pay a little bit, not necessarily more, but in the long run, it ends up being less expensive. Like, if you think about cable, you’ve got every subscription possible to the channels to watch stuff, and it ends up costing you more than cable did. But your experience is better, right?

Mark Gilbreath (LiquidSpace)

The dirty little secret on cable or streaming media is that they really try to make it behave more like that, like a long-term lease. Yes, you could cancel on a month’s notice, but what do you do? You sign up for Netflix and Disney+ and Hulu and you just keep paying and paying, and they do a great job of sort of obfuscating how to disengage.

So the glory, the enormous economic leverage of flex as a component of your hybrid workplace strategy is, it is implicitly zero waste. You don’t book it if you don’t need it. If your plans change and you’re not going to use it, you cancel it. There’s no such thing as a ten-year lease. It’s zero waste. Your utilization can approach 100%, something that was never possible and never nearly achieved in the traditional lease model. Now, is that a condemnation of having a lease portfolio? No, absolutely not.

Kay Sargent (HOK)

But Mark, I think what’s happening is the middle is disappearing. You either have younger companies, start-ups that want in and out of space really quickly, or you’ve got companies that are super well established, they have lots of people they want that bespoke space that really kind of is the embodiment of their culture and they’re going to continue to thrive. But the middle, I think, is disappearing.

Mark Gilbreath (LiquidSpace)

Middle being what?

Kay Sargent (HOK)

Companies in the middle that are beyond start-ups. And they just kind of have average “icky” space. You either want quick, easy, fast space that you can get in and out of easily, or you want that bespoke.

Mark Gilbreath (LiquidSpace)

So you might say there’s a flight to better.

Kay Sargent (HOK)

Absolutely. Better, or quicker.

Mark Gilbreath (LiquidSpace)

On demand, zero waste. Where I need it when I want it, approximate to my colleagues. Better, higher quality, Class A, green, healthy, well-designed, better. Get rid of the shitty stuff in the middle. Yes.

Sandra Panara (Relogix)

Just a comment, Mark, you mentioned that people don’t book space if they don’t intend to use it. It’s basically zero waste. From a Relogix perspective, and I’m going to bring Andrew into this conversation, we actually see the behavior firsthand, right. Through integrations of booking data and all of that other stuff, we can see what people’s intentions are, we can see what design intentions are, and then we come in and we validate. Are people actually using the space as intended or as they intended? And we see a huge disconnect between people’s intentions and people’s behaviors.

So I wanted to ask Andrew the question, with respect to the data, and being a veteran in the real estate technology space, how do you see this disruption in terms of how it’s impacting CRE leaders’ abilities to make informed decisions about their real estate? Keeping real estate as that broad definition as Mark just described.

Andrew Millar (Relogix)

Zero waste, I think, Mark, you’re poking at me there. Nirvana, the dream of zero waste. I’ve been in this game so for so long and standing on my soapbox trying to convince the world that the world’s real estate and offices have been half empty for all this time and it’s been just a massive waste. And how do we correct that and how do we make more efficient use of the space that we already have in the built world?

And so, to answer the question, I think it’s going to be harder than ever for CRE leaders in our industry to make informed decisions. I think the reality is there’s a blind spot now, and this blind spot has been widening. We start with the notion of the world’s empty real estate. It’s been very inefficient, and the waste has been there, but our model traditionally has been, let’s oversupply has been the name of the game for most organizations for fear of not having enough space. But oversupply has been the game. That’s where we found ourselves.

But guess what? The chickens have come home to roost, and we find ourselves now with the big blind spot. And here’s why I would say that what we need to do is we need to widen the aperture, of course, now, because we’re not just looking at what Sandra always calls the box, the office. We’ve got to widen the aperture because we’ve got to try to figure out the model with respect to what’s happening with work from home and work from flex or work from third spaces. The aperture has to widen so we can build a model that understands those three legs on the stool, not just the office.

And we’re trying to understand the new patterns of work. I think that’s the biggest challenge, because what we’re trying to understand is people’s intent to use space versus their actual behavior. And I think that is data that’s very difficult to get our hands on. It’s difficult to understand what that model is going to look like into the future and predict it, hence the blind spot. I think the blind spot will continue and it’ll continue to expand.

The reality is it’s going to be a lot more difficult for CRE leaders to make informed decisions about the demand and the forecast for space. Because reality is, folks, in our industry, we have never been all that good at data. And that problem is now a bigger problem than it used to be, and it’s more challenging for folks in our industry.

Dave Cairns (CBRE)

May I add something? I go back to my issue of how businesses are operated because most, I forget the figures, but it’s at minimum 50% of knowledge workers’ tasks are done in a heads-down capacity, and it can actually get up to 80%. So, if you’re trapped in synchronous meetings, 30-minute, hour-long interval synchronous meetings, whether you’re in an office or you’re remote, you’re not really going to have much optionality around where you work. You’re going to pick one or the other. Like, I’m going to pick home, or I’m going to pick the office.

So, if you can actually flip to more asynchronous ways of working, which is a really complicated problem to solve, you unlock the ability to basically liberate people to work where they want to work. And I’m part of the fortunate few who already have that opportunity. I work from a myriad of places, whether it’s on a walk, whether it’s a coffee shop, whether it’s a coworking space office. How many times have I conducted business from a grocery store?

But I’m not the average worker. And so, I think that that is a huge, huge conundrum, far more important for organizations to solve than where the place is. It’s the how. How do you work, how do you evolve how you work? Then you can start to shift where you do it.

Andrew Millar (Relogix)

Let me lean in on that really quickly: for me, what I hear there is we’re trying to understand the patterns of work at the individual level rather than the holistic real estate challenge that we’ve had in the past. If we can pattern an individual as a persona and understand their pattern of work, we build a model from the bottom up instead of the top down like we’ve been trying to do in the industry and not doing it very well for a very long time.

Sandra Panara (Relogix)

That’s where you get pushback from companies in terms of privacy. Well, is it corporate pushback or is it employee pushback? Because again, it comes down to what the value is that you’re delivering to the end user. If ultimately, it’s about delivering a better experience, maybe employees are more willing to share their data.

But in the past, all of us here that have worked in corporate real estate know when the data gets into the wrong hands, that things can go sideways very quickly. Which is why you get the slap on the hand and you’re like, no, you can’t use the data that way, or we can’t provide certain pieces of information. I’m hoping that that’s going to change in the near future because I think there’s a huge benefit to the end user and to organizations to understand the real personas of their organization that make up their corporate culture. And that’s a living, breathing thing. It’s not, “this is our culture, it’s fixed, this is who we are”. That culture changes as the people in your organization change. And you need to keep up with that. Kay, you were going to say something?

Kay Sargent (HOK)

Yes, I think everybody is ignoring the elephant in the room, too. Everybody’s talking about where we work, but 94% of the workforce actually cares about when they work more than where they work. 80% care about where they work, so we can’t ignore that. But I think a big push, a reason why people don’t necessarily want to go back to the office is number one, the commute, and number two is that eight-hour block. People have gotten used to either going to the gym a little bit later or walking their dog at lunch or doing things like that. We’re not necessarily addressing that certain people are night owls and we work better at night or other people are morning people. And if I get up first thing in the morning and I have this great idea that I’ve thought about over the night and I want to get to it, but I’ve got to commute and I’m not even at my desk for two or three hours, that idea is gone. Versus if I could just sit there and get it done. And nobody is really addressing that issue of how we’re working.

And I think it’s interesting because when we sent people home, I don’t know a single company that said, and by the way, while you’re at it, make up your own hours. But basically, in a sense, that’s what a lot of people ended up doing. They found their natural patterns and rhythms about when they actually worked better.

Mark Gilbreath (LiquidSpace)

So well said, Kay. The reality of how work is happening today, the when and the where of it, is vastly different than it was pre-pandemic. The other elephant in the room, or a second elephant in the room (there’s probably multiple) that I humbly suggest is the CRE leaders who, to your point Kay, are frozen in time because they don’t want to make a mistake. Let’s remember they were all trained and throughout their careers they were conditioned to make the smart decision and to Dave’s comments or Gabe’s comments, to be top down in the design and the prescription of what workplace is and where it is, where that HQ venue is, where that employee is assigned within that thoughtfully designed static workplace.

You’ve got to throw all that out. I’d say to the audience, which I presume is mostly CRE and workplace leaders, hey, you don’t have to solve the where and when of the new workplace because you can’t, because it’s infinitely personal. But that doesn’t mean you don’t need to learn what the new rhythms and rituals are. It’s vitally important that you do because your people policies need to map to and support the effective “where and when” of all of your employees.

But you’re never going to solve it by trying to figure out the answer and prescribe it. Rather you’ve got to let go. You’ve got to give choice within boundaries to your employees and you’ve got to have the mechanisms in place to be able to learn from what those individual employees’ decisions are, to see what the new emerging patterns are. It’s an inverted approach to the craft of workplace.

Dave Cairns (CBRE)

I think a lot of CRE leaders want to do all that and they want to take risks and they want to make mistakes, but a lot of them are having a hard time getting the buy in from the C-Suite. So, I actually think the ones I talked to are like, let’s go, let’s do some cool shit, and they get squashed. But I agree with everything you just said. I just wanted to highlight that.

Sandra Panara (Relogix)

So on that point, going back to Andrew, thinking about the importance of visibility — you can’t manage what you can’t see — so that’s really key, regardless of whether it’s leased space, whether it’s Space-as-a-Service or maybe even in the future, working from home: what advice would you give to CRE technology leaders today around capturing data so that they can start to get a sense of how their employees are working and not necessarily how employees are working from a negative point of view, but really to enable them to start thinking about the direction that their real estate portfolio needs to take?

Andrew Millar (Relogix)

I don’t think my view on that has changed. I certainly have always believed it’s a difficult nut to crack and it’s a journey. And I try to help and encourage CRE leaders to try to not rush out and look for an immediate solution to try to solve for this. Like what Mark is saying, it’s not a solvable puzzle. I think technology today has made our lives a lot easier because it’s less rigid, it’s more like Lego in my mind. And we can work on individual challenges to find data to solve and answer for questions that need answering and we can solve for it piece by piece and then put the puzzle together. Not going to get a holistic solution that’s going to solve the entire challenge.

It’s a journey. Start down the journey. It’s a big investment in resources. Get the right team, the right tools in the toolbox, and then we’re going to invest in it over time and start solving for problems piece by piece and then puzzle it together. That’s the only way to go about it today.

Sandra Panara (Relogix)

To add to that, I think the other thing that is maybe not as critical right now, but will be in the not too distant future is the need for continuous reporting. You probably can attest to in the past, data fact finding was always one and done. You basically did it, it was a moment in time. You used it to make decisions, and then you didn’t look at it for another three to five years, and you sort of then look back and say, okay, well, what’s changed in the last five years?

It seems that now that the whole behavior related to work is so much more dynamic. That if you want to stay in sync with how people are working so that you aren’t, as Mark put so eloquently, you’re not wasting money, and you’re really running a tight ship, you need information to be able to do that effectively.

Kay Sargent (HOK)

I’m going to argue that I think a lot of companies actually have a lot of information, they just don’t know what to do with it, and they’re not using it appropriately. And everybody keeps thinking about how do we measure or monitor? I want to take that information and put it in people’s hands. I want to get to IoT 2.0 where those sensors are not just monitoring what I’m doing and the conditions. Those sensors are feeding an app that is telling me, where is it quieter, where is it cooler? Where is my colleague sitting? What’s happening, is the line at the barista one or ten people? It’s giving me information that empowers me to be able to make better decisions and choices and gives me more control options. “Choices and control” is the mantra that we should all be talking about when, where, how you work, all of those things. We need to empower people and stop assuming that everybody has to go sit in one spot like a potted plant and then you’re done.

Sandra Panara (Relogix)

In the last four minutes of this discussion, one of the things that I wanted to highlight is how interesting everyone’s different perspectives are. It’s reminding me of the kinds of conversations are that are happening or need to happen in organizations. Because you’ve got different people with different viewpoints. There’s sometimes conflicting arguments around why solution needs to go one way or another. But ultimately, the objective in the organization is really to reach consensus on what the best way forward is and what are the action items that organizations can take or teams can start to take together to move the company forward.

Any final thoughts or comments from the panel?

Mark Gilbreath (LiquidSpace)

If I may, I’d like to just reiterate a comment that Dave made because I think it’s critically important. The discussion about these topics is no longer a real estate discussion. Or rather, we can’t relax into letting it be just a real estate discussion. It’s a C-Suite discussion. We as the practitioners of and the providers of services historically to the real estate industry need to be so bold as to get our game on and get into the C-Suite. We need to be talking to the Chief People Officers, we need to be talking to the CFOs, we need to be talking to the CEOs of the largest companies because it’s no longer about where I’ll put my HQ. It’s about corporate profitability, it’s about corporate productivity, it’s about ESG, it’s about hiring, retention. Those aren’t real estate discussions, but we are the linchpin as workplace practitioners of those discussions. We’ve got to sell to a broader and higher audience to realize the real benefits.

Kay Sargent (HOK)

I agree with you 1000%, Mark. And we’ve got to push back, because everybody just says, oh, go do something in the workplace and that’ll solve all of our problems. We have a fundamental opportunity right now to rethink how we work. And in my 38-year career, we have never had such a unique opportunity. And if we blow this, this could be our “Kodak moment” where we all know that disruption is here. What we’re doing now isn’t working and we need to fundamentally shift that. And if we don’t stand up and make some bold opportunities to really change the way we are working, then shame on us.

Dave Cairns (CBRE)

There was a post that went viral yesterday about remote working. And it doesn’t matter to articulate what that post was, but what I feel is going on right now is that the definition of remote work equals freedom to an employee. But I think that the problem that we have is that the context around the definition of remote work is where I’m sitting right now, which is in my basement, right? I actually love sitting in this basement. I have a sauna right behind me. My dog’s right over here. I was stretching my neck out before this call. I love it. It’s not for everybody and I don’t do it all the time.

But the point is that I think that remote work equals freedom. So, if we can start to actually offer more optionality to people to case point around where, when and how we’re doing things, rather than there’s just a definitive binary option we have right now, which is home or HQ, and it’s like get back to the HQ — that’s super divisive. That’s not inspiring. That’s going to make people favor remote work because remote work to them equals freedom.

So, it’s a continuum of where we’re going to do this and how we’re going to do it. And I think we need to just literally stop this divisive binary home/office thing. People are going to pick home if that is the way we structure this conversation.

Gabe Burke (Accenture)

Well, that’s a key point because as I’m watching closely right now, there’s a battle going on still between employers and employees. Many employers are still pushing for people back in the office. They’re pushing for what is familiar to them and how you create productivity. But employees will not accept that. We’ve seen many, many RTO mandates rolled out and then repealed and we’re watching this battle play out.

I think everyone in this meeting right now is very forward thinking, but many in leadership aren’t there yet. And I think that this will continue until it really dawns on the C-Suite and leadership that the flexibility, the cultural change required, is inevitable. But it isn’t there yet. It’s happening very slowly. And I think that voices like ours are important. And I also think bringing data to the conversation, which is exactly what Relogix is doing, is instrumental in influencing people at the top.

Andrew Millar (Relogix)

That’s an awesome close, Gabe. I love that.

Sandra Panara (Relogix)

Well, thanks, everyone. We’re at the top of the hour. I appreciate your participation. Again, thanks to everyone for participating and to our audience for spending the last hour with us.

Guests

Thanks, Sandra!

Sandra Panara (Relogix)

Take care, everybody.

About the Author

Sandra Panara, Director of Workspace Insights

Key Takeaways & Discussion Points

How can we get organizations to bring their workspaces into 2023, let alone think about the future?
We’ve been asking employees what they want — but what about what they need (or don’t know they need) to be happy, healthy, and thrive at work?
Our cars know whether we like our seats warmed or not — so why haven’t we started personalizing the office? How can we adjust the workplace experience to how different people want to work or even simple things like the temperature they prefer?
What is an “intuitive workspace”, and what are the limitations of creating a perfect workplace for every employee?
How do you encourage companies to invest in a better workplace when there’s no guarantee it will attract employees?
We recognize that remote learning was a disaster for our kids — is it any different with young people entering the workforce?
We tend to focus on the commute when talking about the environmental sustainability of hybrid or remote work, but is that focus misplaced?
Be scientific when testing new procedures, policies, workplace ideas — if you test everything at once, you test nothing.

Links:

Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
Kay Sargent on LinkedIn – Senior Principal – Director of WorkPlace at HOK
IFMA’s World Workplace – the largest and most highly acclaimed facility management conference in the world
International WELL Building Institute (IWBI) – organization that provides certifications recognizing buildings designed and constructed to support the health and well-being of their occupants

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript:

Sandra

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

Today, I’m thrilled to have as our guest Kay Sargent, a highly regarded expert on workplace design and strategy issues. Kay’s impressive credentials include being the Global Co-Director of HOK’s WorkPlace team, and serving on HOK’s Board of Directors. In 2020, she was recognized as ASID’s Designer of Distinction, and she is currently actively serving on several advisory boards. Kay is also an active member of IFMA, and the co-founder of the IFMA Workplace Evolutionaries, known to many as the WE Community.

In addition to her professional achievements, Kay’s impact goes beyond the workplace. In 2021, she was selected to provide congressional subject matter expert testimony to the US House of Representatives on federal real estate post-COVID, a view from the private sector. Kay’s wealth of experience and knowledge make her an invaluable resource in today’s rapidly changing world of work, and I’m excited to dive into the conversation with her. So without further ado, let’s get started.

Hi, Kay! Welcome, I’m really glad to have you on as a guest today.

Kay

Happy to be here.

Sandra

Can you tell us a little bit about yourself? I know you and I go back several years. We recently met in person at World Workplace in Nashville back in September, but we’ve been connected on LinkedIn, and I know we’ve exchanged many messages over the years.

Kay

Yes, so I’m a practicing interior design professional. I’ve been practising for 38 years before we had the Internet, before we had cell phones, before we even had fax machines, just to put that in context. I’m the Director of WorkPlace at HOK, which means that I work with our clients that have multiple projects in multiple locations all over the world. Just to give you a little sampling, in 2019, our team delivered 55 million sq ft of space in 44 countries around the world. So that’s how I spend my days, and usually my nights, too.

Sandra

In 38 years, I’m sure you’ve seen a number of changes and the emergence of the future of work from 38 years ago until now.

Kay

Yes, there are some things that are shockingly different, and some things that are shockingly the same. So again, 38 years ago there was no internet, fax machines. We were drafting and couriers had just started coming into play. People didn’t even have beepers yet. That’s a very different time. We still got a lot of stuff done, but in a very different way.

But if I think about the fundamental setup of a lot of offices, in many cases, they haven’t necessarily changed as radically as everything else in our world has.

Sandra

You know what’s interesting about that? I’ve worked very closely with the design community over the years in the various roles that I’ve had, and I often hear this even just in social discussions that I’m having with friends, that the office hasn’t changed that much. It’s always interesting when design organisations come into a company and do their studies. They talk about activity-based working, and this and that, but it’s always interesting how you come away from that and the office still looks the same.

The first realization of that for me was when I worked at CBRE and had the opportunity to go to multiple offices around the globe. I walked into different offices, and different brands obviously had different experiences. But after the fifth or sixth one, you realize all these offices are all kind of designed the same way. It’s kind of a cookie cutter design.

Kay

There are certain things that haven’t changed, because we’re still fundamentally working and sitting at a desk, whether it’s with papers or computers. If you think about it, houses haven’t radically changed that much either. They also slowly evolve. So I don’t think there’s a need to totally throw everything away.

But I do believe there’s a huge opportunity now to do things better. And there are some great precedents of what you could walk into and say wow, this is radically different than what we saw 30 or 40 years ago, even 10 years ago, perhaps. But in a lot of offices, we still had rows and rows of assigned work points where people are supposed to go. We didn’t even design zoos for animals like that. Even animals are allowed free range and free room. But for office workers, it’s this thing companies haven’t really been able to get over.

And I think part of that is that since forever, we’re rewarded people with more space. You might have spent your whole career trying to get that corner office. And now you have it, so you don’t want to relinquish that. There are certain aspects that people have gotten stuck in, and quite frankly, one of the problems that you and I have, Sandra, and probably a lot of people listening to this, is the curse of knowledge.

Sandra

That’s true.

Kay

We know what’s out there. We’ve seen really amazing spaces. But for a lot of our clients, they’ve never seen anything like that before. They’ve never seen anything but what they sit in every day, so what we’re proposing to them might seem radical. I always say to my clients, I’m not trying to get you to 2030. I would love to get you to 2030, but I’m just trying to get you into this century. I’m trying to get you out of 1990. I’m not talking the bleeding cutting edge for a lot of you — let’s just play catch up a little bit.

Sandra

Baby steps! That’s an interesting point that you made about the fact that most companies haven’t seen some of the stuff we have, or as you say, the curse of knowledge. What’s interesting to me is, how do you think the pandemic has played into that? Because I think back on the resistance to change that was seen in employees — like, what do you mean you’re going to get rid of my desk? You’re taking me out of the office? We’re going to go to open office space, drop the panels, and all those discussions. But now, at least in the knowledge worker community, people have been working at home for the last almost 3 years. So, you’ve experienced what it’s like to be able to work outside of the office. Are you finding that employees are still struggling with what happens in the physical office?

Kay

I think there are multiple things at play here. Number one, there are a whole lot of offices that are not designed well, which we just need to be honest about. They really aren’t. They’re not great spaces to be in, but we suffer through it because we don’t know anything else, or we don’t have an alternative.

Number two, we have an amazingly empowered workforce. Quite frankly, early on in the pandemic, a lot of companies asked the wrong question, which was, what do you want? And it’s not that I don’t care about what you want, but their thinking is self-centric, it’s about what do I want right now. Do I want to drive to the office? Probably not.

But they’re not thinking about what’s right for the business, what’s right for their coworkers. They’re not even really thinking about what’s right for their own professional development or themselves down the line. Their mental health, physical health, you know, all these things.

And I think the third thing that’s happening here — if you asked me what I wanted for dinner, if I answered that question honestly, I’d say I want chocolate for dinner. But I don’t eat chocolate for dinner, because I know the consequences of it. The workforce is being asked a similar question, but they don’t necessarily understand or haven’t experienced the consequences of what it is they’re asking for. And what we started to see after 3 years of that, is there are certain people that are feeling lonely and isolated. The quality of what is being produced is starting to be impacted. Peoples’ mental and physical health is being impacted. Churn has gone up because people aren’t as connected to what they don’t see.

So, we’re just trying to understand the ramifications of that. You and I have been working with clients for 30 years that have been working remotely, and we know what worked and what didn’t. And we’ve been working for 10 years with clients that have adopted hybrid working. And again, we know what works and what doesn’t.

But a vast majority of individuals don’t, and they were asked the wrong question. When we’re asked, “what do you want”, we’re always going to default to what’s easiest in that moment.

Sandra

I think you make some great points. The other thing to think about is the aspect of what’s good for business, what’s good for the team, for the employees — I’ve had some conversations in the past 2 or 3 weeks where some people referenced some studies that had been done. And my comment was, well, that goes back to pre-pandemic times. I think I made that comment in a podcast episode that I did with David Gray not too long ago. It was about how the conversation around what’s good for us is based on an experience from before the pandemic. So, is it even still relevant or valid? Because that’s all we knew. That was all we knew, this is how we work, and this is how we benefit from collaboration and innovation. This is how we do it.

So in 3 years, everything changed. It was sink or swim, figure it out, and people figured it out. This is where the debate is, for me. Some people feel that it doesn’t have to be the way that it was, and teams can benefit from this new way of working where you don’t necessarily have to be reliant on an office setting as we used to think of it. And that’s not to say you don’t need an office, because like you said, I think the whole benefit or value of hybrid is having access to an office. It’s just that the way you interact with it is different than how you interacted with it before.

Kay

Yes, it’s interesting, we did a survey before COVID, and we did the same one after COVID, to see who are the most engaged or disengaged. And the most disengaged employees tended to be the ones that were always working remotely. They didn’t feel as connected to their coworkers or to the mission of the organization. They often felt left out.

We did it again after COVID, and we got the same result. The second group that feels the most disengaged are the ones that are always in the office, because they don’t feel empowered. They don’t feel like they’re trusted. You start to take your coworkers for granted. The people that are the most engaged are the ones that have a little bit of control or freedom, and find that balance between appreciating when I’m in the office, and appreciating the things I can do when I’m there, but also have space and time that I can work remotely and do other things.

That really drives us to another conversation about, what is the purpose of ‘place’? Are we designing for the right purpose? I want to be really careful, because what we’re finding right now is that some people are totally on one side of this argument. Others are totally on the other. Most people are basing their opinion on their personal situation.

But I now live in the grey. Just because something’s right for you doesn’t mean it’s right for everybody else. If you had asked me during the pandemic if I was functioning alright working from home, I would have said, yes. I have a great house in the suburbs with an office setup, great Wi-Fi, great infrastructure, limited distractions. I don’t have little kids running around.

If you had asked the KIPPERS, (Kids in Parents’ Pockets Eroding Retirement Savings), who were sitting in their bedrooms in the basement working the first year of the pandemic, they would have said it was horrible. It wasn’t the same situation for them. They didn’t have a network, they didn’t know what the expectations were. They didn’t have coworkers or understand the protocols. They were sitting in a small bedroom trying to look professional.

I think what we need to understand is that just because it works for you does not mean it works for everyone else. There’s a whole variety of scenarios. We have to create this ecosystem that really addresses the diversity and complexity of the workforce that we’re dealing with today.

Sandra

I think that’s a great point, because that’s one of the things that hybrid enables, is to support that kind of diversity and inclusion. I think, if anything, it’s really lifted back the covers of some of the challenges. So if you talk about the fact that not everybody has access to the same space at home — not everyone was thriving during the pandemic because they didn’t have the space to continue on their work day as if they were in the office. Some struggled and I think that being able to have access to an office space where people can feel like they can do their best is really important.

You also made a comment about the whole personal experience — what’s fascinating to me is that, when you think about life in general and the advancement of technology, virtually everything we do now is personalized. You get in your car and your seat adjusts and your mirrors adjust, all based on what you prefer. You go to the mall and start getting bombarded with marketing, because they know you’re there and how you like to shop. So you get a discount here and a discount there.

But it’s kind of creepy at the same time. Cool, but creepy. But what’s most important to people is not wasting time. So if you have an objective, it gets it done for you. You’re off getting what you need to get done.

And that’s a question that’s been asked over and over again over the years — why is personalization such a taboo thing in the workplace? The same level of personalization where you’re collecting information and you’re basically adjusting the workplace experience to how people want to work. We try, but we can never get there because it keeps changing, because it’s so different for each person.

Kay

You know the answer to this one — have you ever walked through a space and come across that one workstation where somebody took it to the extreme and they’ve got 20, 25 Beanie Babies like it’s a kid’s room. This makes me think of a few things. First of all, we all have a space we can do whatever we want with. It’s called our house. Go do whatever you want in your house. It doesn’t mean you shouldn’t personalize it, but I’m going to change the word personalization to stylization.

And I think, if we’re returning to workplaces that are stagnant, that are sterile, that have been wiped clean of everything, it’s not going to feel comfortable. We as humans want these elements of hospitality or comfort around us, and the more high tech we go, the more high touch. That’s what we see our clients wanting when it comes to personalizing things.

Most people right now have pictures here or there or on their laptops. And if you’re moving around, you don’t necessarily always want to be in highly customized or personalized spaces. What you find comforting, your neighbour could find distressing or uncomfortable, quite frankly.

We know that visual clutter is one of those things that is grossly understudied or ignored. But 62% of women have a real issue with visual clutter, with chaos. It impacts us in our ability to function at a high level. So, what we need to do is find areas where we can celebrate without just dumping tonnes of stuff in the workplace. In most designs that we’re doing, we’ve created neighborhoods based on zones. It’s kind of a space where everyone can go and feel grounded and connected. But then there are opportunities for them to celebrate the team. It’s going from a ‘me’ mentality to a ‘we’ mentality.

Just think about a locker in a locker room. You can personalize your locker, but the area is more about the team identity and your group identity. I think it’s important to have a balance of both. But we’re coming in to the office to be part of a team. So you have to create spaces that celebrate that, whether it’s a wall where we can put our pictures, and then there’s a wall with team awards, so we know what we’re working on, and moments of pride from an organizational standpoint.

I think it’s that balance that we’re trying to find, and it’s not either/or, it’s not no personality whatsoever. But I think we need to do it more strategically and more intentionally.

Sandra

On the note of personalization, I totally agree. I’ve seen many of those stations that just look like junk on top of the desk, completely. You can’t see the desk, you can barely see the computer. And I feel sorry for people working around that, because, wow.

But what I’m referring to is the here and now. So, thinking about the technology that’s available to us — comfort sensors, for example, that deal with temperature, lighting, noise, that kind of a thing. Imagine being an employee walking into a space and it knows what type of environment you like to work in, so it directs you to a specific space. When I think about design, as you mentioned, there’s a team area, you’re creating an area where the team knows that’s where they go. But if you were to use more of an intuitive space approach — I’m coming into the office for a specific reason. Yes, I belong to the finance or marketing team, but the people I actually work with might not be on either of those teams. So based on your behaviour and who you’re actually working with, why not have it so that the data helps you? Maybe you like a lot of buzz in the office, or maybe you prefer a quieter space. What if it could direct you based on your mood, or your preference for that day?

Kay

We’re going to call that intuitive workspaces, or Internet of Things 2.0. Right now we have a tonne of clients that are rushing to put sensors everywhere. We always say, what is the problem you’re trying to solve, and what are you trying to do? Because there are multiple ways you could do it. But sensors are collecting information from the environment and the surroundings and sometimes from the individual.

One thing we know about people is that they don’t really like to be monitored. They’ll find ways around that. But if we can take that information and empower people with that to give them the opportunity to have more control, that can be really beneficial.

There are certain things that everyone complains about in the workspace. You know what they are. It’s too loud, it’s too bright or too dark, I have no access to natural daylight, or I’m cold or I’m hot.

I’m just going to acknowledge something that our industry has skirted around for a long time. I’m just going to be brutally honest. Nobody in our industry can create a space that is the perfect temperature for every individual at a given time. That is an impossible task. You are always going to have some people that are a little cold or maybe a little hot. Part of it is our physical bodies. Part of it is our layering. But part of it is where we sit and how the sun moves. So if you have the Internet of Things that’s collecting information, it can feed into an app that says, where you’re sitting its 68 degrees, but on the other side of the building it’s 72 degrees because the sun is over there and is coming through the windows. Or there’s more people over there, so there’s a rise in temperature. Or it’s brighter over there. Or there’s a person who’s annoying you because they’re talking so loudly — well there’s a spot over there where the sound level is much quieter. Or maybe all your coworkers are sitting over there. Would you like to book a spot by them?

What I think we haven’t necessarily done is take this technology to the next level. Some companies are starting to do that, which is fabulous. I know Relogix is one that’s starting to do that. But we’re not doing it enough, and I think our clients need to adapt to that and to think about how we can leverage technology to improve the overall human experience and the human condition.

Sandra

That’s interesting, because it’s definitely something we’ve been exploring. We’ve been toying around with comfort sensors for a while. We actually met with the Well organization to look at how all of that plays into certification and their process. And then could you potentially automate that where the score is based on how that information comes through, where it’s more legitimate because the number of points that you get are capture points of those variables. That’s much better than if someone comes in with a clipboard and says OK, the temperature is this. OK, you’re certified. That’s one day.

Kay

Sandra, I’m going to go back to something you alluded to earlier and I’ve said for years — the auto industry is kicking our asses. Let’s just be honest. I can start my car from inside my house, get it nice and warm, I can get in without touching a key. It automatically unlocks because it knows it’s me because of the fob inside my pocket. It automatically pre-sets or adjusts everything in the car to my preferences, even syncs my phone with my dashboard or the light or the temperature. Or the music. Any of those things.

In the workplace, people are still crawling around under their desk trying to find a power outlet! We have not even begun to tap into that in many cases. And yes, it’s a little bit of a different scale. And people can choose that level of sophistication, but it doesn’t mean that we can’t do that in workplaces.

I think we have an opportunity to do so much more, but our clients are terrified about technology. They’re afraid they’re going to buy something that is going to become obsolete, or people aren’t going to know how to use it. And part of that is the fault of the AV IT industry. I’m going to share the blame here. Interior designers are not incorporating technology as part of the solutions early enough in the process to make them as successful as they could be. If I design a conference room and do the wrong proportions, no technology is going to be able to solve that because I made choices in the beginning that absolutely hammered that. So we need to work together. But the IT community does not understand digital fitness. I cannot tell you how many times I’ve walked into a conference room with a $50,000 TV on the wall that’s basically a piece of art because nobody knows how to use it, because they were sold something that was above the ability or desire of the individuals to use it. They didn’t align the solution with the digital fitness or ability of those users, so it was all for nought.

Sandra

I completely agree, I’ve seen that many, many times as well. And I think it’s absolutely true. People go into these rooms and go, how do I turn on the TV, or how do I get an image up on the screen? And they’re like, oh, I forget, so they go back to tried and true processes.

But it’s interesting to hear you speak of how in 30, 35 years, we’ve seen all of this company advancement, and yet quite frankly, it feels like it’s almost too late. That’s been my feeling since the start of the pandemic. Maybe in pre-pandemic times there would have been a much greater appetite, maybe not. We’ve seen that there wasn’t much appetite for change. We’re like, it works the way it is. Let’s keep the workstations, the cubicle farms. Surprisingly, people are shocked when they hear that this still exists, but it does, because companies don’t spend that much capital on renovating their offices. If it’s not broke, don’t fix it. Just keep it as it is. But things have moved ahead quite substantially.

Kay

I’m going to pause you for a minute. It is broken. You’re just suffering through it.

Sandra

That’s a good point! It’s broken.

Kay

You’re just hobbling along.

Sandra

So, is it too late? Are companies willing to spend the money to make the improvements? When we were at IFMA’s World Workplace, a lot of the comments were about how there’s only about 30% of people back in the office, so we’re not going to spend money changing the workplace.

Kay

Let me just take exactly what you said and put it in another context. Nobody is coming to the restaurant because the food is just OK. So why does it matter?

Make the food better, then you might get people coming to your restaurant. Part of the reason why people aren’t coming back is that we aren’t creating spaces that are commute-worthy. We’re not creating amazing experiences for people in places where they want to be.

There are some companies in the world that are doing that, and they’re getting a much higher percentage of return. I think that goes to show that depending on what your business models are, some people can function just fine while working remotely. And other ones are really going to struggle. It’s against their culture or the organizational culture and they need to be together. So, it’s about creating a compelling environment that can really do that.

But I think our industry right now is being set up for failure. There are so many people that are coming and saying, Sandra, I need you to create the workplace of the future so that everybody will want to come in and it will solve my hybrid problem.

Hybrid is the most complex model out there. It’s the hardest to pull off, frankly, and that is much more of an operational issue than a workplace solutions issue. That’s part of it, but not all of it. I can create an amazing workplace, but if you don’t have policies or procedures or culture, or it doesn’t align with your DNA or the work styles and what people need to be doing, it’s all for nought.

You need to understand who you are. You need to understand what your workers really need. Not just what they want, but could they and should they? And then create different scenarios. Ok, if we want them coming in for this, then let’s design a space around that. If we want them to be doing this at home or remotely, let’s ensure we have the ability to focus on that as well.

Because what’s going to happen here? I’m willing to bet that 80% of companies are not going to put in the work that’s required to make this really successful. And they’re going to struggle because hybrid also has the risk not only of being the best of everything, but it could also be the worst of everything. If I’m commuting to the office to sit on a Zoom call all day…

Sandra

That’s very much true. If you design a better space, you may entice people to it. And I don’t like to use the word entice, because we hear it quite a bit, but that’s essentially what you’re trying to do, is make the space more attractive so that people want to come to the space. But my thinking is always that other spaces can serve different purposes. For example, you don’t go to a restaurant to just hang out, or you don’t go to a hotel to just hang out. You’re there for a specific purpose. If you’re in a hotel, you’re travelling, or you might be there for a conference or business meeting of some kind. You’re using the facility and their amenities.

Work is a little bit different, because like I said, you can work from home, you can collaborate with people virtually. So, for me, the challenge is yes, we could potentially spend the capital on upgrading the office, making it a better place, but will that guarantee that people come in? I think that’s where the hesitation is, because that’s a lot of capital you could potentially sink into your real estate, and maybe that capital could be used in your learning and development, or could be used for training or other programs you haven’t been able to fund.

Kay

There’s something we all say that we need to be a little more honest and transparent about: “we could all work remotely.” But can we? 42% of the US workforce does not have the option to work remotely. They’re service industry, they use specialty equipment like labs, they’re clinical workers, they’re hospital workers. 42%. And we, by the way, have the highest percentage at 58% of knowledge workers that could work remotely. That is the highest percentage almost anywhere in the world of people that have the ability to do it. So this whole conversation is only about half the population. And how do you think all those people that don’t have a choice feel about us dedicating all this attention and time so that we don’t all have to commute?

Like, wow. Sorry for you! The rest of us don’t have a choice. And we run the risk of becoming siloed and creating tiers. So now let’s take that 58%. Of that 58% that could, there are many that don’t have the infrastructure, or their house isn’t set up for it. Or they have multiple roommates, distractions at home. No privacy. Or they need direction.

So, let’s take that big chunk out. And then there are people that are doing things like going to meetings with clients all the time. They’re coming in to have great sessions. So there’s a whole group of individuals, there’s a big chunk of what they do that can’t necessarily be done remotely or at home.

And there’s the whole thing about culture. I find it fascinating that as a society we have so quickly decided that remote learning was a disaster for our children. Most of those kids have lost two years of education and academic advancement. It’s taken a mental health toll and a socialization toll on them, and yet we haven’t equated those things to emerging young professionals who are trying to navigate the professional world. How do I model my behaviour, how do I build my network, what should I be doing, how do I learn? All of those things. We haven’t understood that those negatives are also negatively being impacted by this. I think that’s part of the reason why that group tends to be the Gen Zs and the younger Millennials who are most excited about coming back. They see more value in shared spaces because they see there are things there that they can’t quite get at home.

Frankly, it’s people like myself who have a network set up. I know what I’m supposed to do. I travel a lot. I don’t necessarily report to just one office. My expectations are clear. I can work very independently. I’m a self-starter. I’m perfect for remote work. But I come in, because I feel like I have an obligation to the younger generation, to not only be there for them, but we need them to figure all this stuff out.

This morning, I went into the studio, and I had received something on my phone and I didn’t understand the social media platform, and they were like, oh, it means this! It’s very helpful. Or, can you get this technology to work for me? I think we’re better together.

We can say we can all work remotely. That is true. For a portion of the population. But there’s massive group of individuals that don’t have the choice, and we need to be honest about that.

Sandra

I think that’s true. I don’t think I’ve heard anyone say that everybody gets to work from home?

Kay

Oh, there are people who say that. Absolutely. And by the way, the majority of the people that say that are independent, and have always worked from home and do their own kind of independent research or analysis or whatever. They say that.

Sandra

Interesting. I’m thinking more along the lines of your typical knowledge worker, office worker. You know, we’re not looking at retail or health care. They’re very specialized in what they do because of the need for equipment, and obviously you can’t do that from home. But when you think about being able to work remotely, I don’t think it’s an all or nothing thing. I think we’ve finally come to the conclusion that the reality of hybrid is that you still have to have some level of physical space to go to as an option. Whether that’s a vanity space or the office or a coworking space, or whatever.

I think the other part about learning and mentoring for the younger population is interesting. One thing that’s been brought up many times is you look at the way Gen Z and Millennials function, they have their faces in their phones all day. All their relationships, their friendships, their communication and the things they do, the planning, it’s all done via technology. Even dating.

Kay

And maybe that’s why we have the highest rate of teen depression, and more teens feel isolated and alone. They’ve never been more connected and yet never felt more alone and isolated in their lives. And that isn’t a positive thing in all regards. They network in a different way. But when push comes to shove, are your 1000 LinkedIn connections or Facebook friends going to be there for you when you need something? It’s a very superficial world that they’re living in. Facebook depression is a real thing. Nobody posts about what a crappy day they’re having. Everybody posts their top hits, not their B sides. But then you’re looking at everyone’s glorious moments and comparing what you’re going through, and it creates this false reality that everybody is living this amazing life, and that we’re the only ones that feel isolated or alone.

Yes, they connect in a different way, they’re not antisocial. That doesn’t mean that they don’t need to come together. There’s a guy called Scott Galloway, he and Michael Smerconish were having a great conversation recently about what this is doing from a societal standpoint. It’s creating silos and isolating young people. Where do you meet people today? How do you connect?

And then you look at what’s going on in the United States in the last few years during COVID, the amount of rabbit holes that popped up that people have been able to go down. Because they’re more isolated, and they have more time to go down these silos. I don’t think it’s a good thing in any way, shape, or form. I think we’re going to look back at this and say it was a perfect storm that created a societal rift that could take us a long time to come out of.

Sandra

Here’s a different perspective. Do you think that what we’re experiencing is that the whole online world is opening up to us, because if you have the will to connect and engage in conversations — I can honestly say I’ve learned more in the last 3 years than I have interacting with people throughout my entire career, because of geography or connections with people from different parts of the world and learning what their experience has been like. I never would have had that experience if I was at work and just doing what was expected of me every day.

Kay

I’ll give you the counterpoint to that — I travelled all the time, and when I travelled, I got to see things and experience things in a way that being on a phone call with somebody in Finland wasn’t the same as meeting somebody in Finland and seeing the culture and being there. So, I feel like, from an exposure standpoint, it’s diminished.

But to your point, we have learned a lot in the last 3 years, and I don’t think it’s because we’re remote. I think it’s because the status quo was challenged. Everything was thrown up in the air. And we were all forced to re-think what was on cruise control before. And I don’t think that just because you’re coming into the office, everyone is a conformist. I think that what you’re doing is you’re seeing what the expectation is and you’re seeing different examples of a variety of different people. And you get help to find that sweet spot. You get to understand what is expected of you. You get to see how people interact with each other. Socialization.

The last 3 years of people being very isolated has had some real consequences on peoples’ mental health, their emotional health, their social health. Do we need to always be together? No, having a balance between being physical and engaging, and also getting exposure to different things virtually could be a great blend, but if they’re out of sync with each other, it gets dangerous.

Sandra

Here’s the other part of the argument that I hear quite often too — it’s about social relationships at work and the value of those social relationships versus personal ones. Again, people could be speaking from personal experience, because your point is, there’s a lot of loneliness, there’s a lot of people who don’t have friends. Sometimes you’re just in a circumstance where it’s very hard. You know, there are people who are very introverted and suffer through that. Some people enjoy it.

Kay

Believe it or not, I am introverted. People are shocked when I say that.

Sandra

I’m one that happens to be on the fence. I’m introverted, but I can be extroverted depending on my mood. But I like being by myself. But what’s interesting is when I first started working 100% remote, between three and six months, I did feel the loneliness. It surprised me, because I loved recharging. But once I got past that, I would still feel every once in a while like I need to be around people. I used to go to the Starbucks and just sit there, even if I didn’t know anyone, just to be around people.

Kay

I’m not going to lie, two years in, I did not feel lonely. Two years in, if someone had said, you’ve got to stay in lockdown for another year, I would have been fine with it. I’m good. People are shocked when I say that, because I was never home before. But maybe that’s part of it. I regenerate myself.

When I first started going back into the office, I thought it was going to suck. I have to get dressed, I have to commute. But I look forward to those days, and I actually enjoy it. The commute gives me time to listen. I listen to the radio, which I don’t do at home. At home, I just go from the bedroom, to exercise, to breakfast, to work. There is no time to just enjoy sitting in the car and listening to music or a podcast and catching up on things. It’s a mental break. It forces me to stop.

The problem is that during the pandemic, I think it took a mental and physical toll on us that we’re not aware of. First of all, most people sat stagnantly for hours on end in one place. And the number of steps we took per day plummeted for most individuals. Secondly, being on Zoom calls is more draining than in person, because you can’t move, you’re constantly on, you’ve got all these people staring at you.

There’s a great study that has said that people have spent 252% more time on Zoom calls. So, here’s a question for you, what percentage of time that people are on Zoom calls are they multitasking?

Sandra

Probably 70%.

Kay

Most people say 90 to 100%. And what happens when you multitask? You’re taxing your brain, trying to do both the things you’re trying to do. So, we’re in a diminished capacity, quality is being reduced, you’re making more mistakes, you’re not really paying attention, you’re not processing it the same way you would if you listened to something.

We’re not giving ourselves any mental or physical breaks like coming into the office where you can have that water cooler moment, or have that exchange with somebody that you may not have made time for. It’s building back that social capital. Connecting us in ways so that when we go back and work remotely, we’re recharging and can focus, but we have those connections now that we can pull back in and rely on. I think it’s a balance, I really do.

Sandra

Yes, and I think it’s interesting, I actually wrote a blog piece back in April or May of 2020 where I predicted the future of the office based on my personal experience. I said it would be the social day out. Work from home 4 days a week, 5 days a week, but you say, on Monday I’m going to go to the office and it won’t be a work day because I’m not sitting at a desk. I’d be there to meet with colleagues, reconnect with these people, talk about projects, things we’re working on. And then I’d come home and be good for another 5 or 6 days.

Kay

We all have those moments that stick in your head — the first day that we came back into the office, this was almost a year ago, one of my colleagues came up and said, I’m so excited to be here, I didn’t even bring my laptop today. It’s not a laptop kind of day. Today is a meet with everybody day. And I literally had heart palpitations. I don’t think I’ve ever, even on vacation, been more than a few steps away from my laptop. And the thought of leaving it at home and coming to the office and ignoring it for the entire day — I was like, now I know what a junkie feels like with withdrawals. I couldn’t even conceive of what he’d done.

Sandra

But that’s not healthy either, that’s hustle culture.

Kay

Right, it’s not. Don’t do what I do. I tell my children that all the time.

Sandra

Another thing I also wanted to mention is about learning experiences you were talking about before. I know you’ve had so many learning experiences through travel and the recent changes. This is something that’s been talked about for years and years now, but now there’s more focus on sustainability. So, using technology in the place of physical travel. Yes, there’s more of an advantage to meeting with people in person, but at what cost, from an environmental point of view? Where do you see that playing into how we think about working relationships and our interactions?

Kay

Let me play devil’s advocate here. Firstly, our industry isn’t even coming close to addressing what we need to as far as regeneration. I don’t even want to say the word that begins with S because nobody wants to just sustain, right? We all want to thrive. We are beyond just sustaining because we’re already in a bad spot. We’ve got to regenerate and rejuvenate, and we need to go above and beyond.

We’re not driving to the office, but the office is still there, being cooled and warmed, and now we’re running our houses, which aren’t as energy efficient as most of our office buildings. And we’re running at a higher capacity because we’re cooling and heating and using electricity there. We’re all paying for that, and our houses are belching our carbon while we’re saying, we’re not commuting.

But have you noticed how many delivery people are on the street right now? I find it shocking that nobody has raised the alarm bells. We all go to the grocery store with reusable bags, but when we order anything online, or food, a person is driving to our house in a car with a package. That is grossly excessive, for the one item that’s being delivered. The number of delivery drivers on the road, the number of Uber drivers, Door Dash delivery, food drivers, that are just wandering around waiting for us to call and need something — it’s replaced us being in cars. So, it’s not a clean swap. It’s not as easy as, we’re just not doing that anymore, look at how much we’re saving on travel.

Flights is absolutely a big issue. But what I think we’re going to see is a lot of our clients saying, we’re going to be more strategic. I used to be in an airport every day, but now I’m taking trips maybe once a week. I don’t think we’ll have as much travel, but when we do it, it’s going to be more meaningful and impactful.

Sandra

Let’s switch it up a little bit and talk about the design world. We talked about hybrid and these systemic things, but how do you see the practice of design changing going forward? Do you think there are any required changes? Thinking about how you used to design, and how you design now, what do you see as potentially necessary changes?

Kay

I want to give a verbal slap to our entire industry. Because if I go to one more conference and hear people throw up their hands and say, “nobody knows anything, we’re all guessing”, I’m going to go ballistic.

First of all, we know a lot. We’ve been doing this for a long time. There are absolutely lessons learned. If you’re not looking and applying those lessons learned or understanding why those programs were either successful or failed, then shame on you, because you’re not looking at what’s clearly out there. There are precedents out there.

Number two, we’ve tried forever to get people to take what we do seriously. Now the entire world is asking us what the future of work is. And our answer is, I don’t know? That’s not an acceptable answer. Are we going to get it 100% right? No. Are we going to get it 80% right compared to someone who knows nothing about what we do? Yes. I’m going to go with us and say we’ll probably get it more accurate than people that are just guessing.

Lots of companies are piloting and testing things. But if you test everything, you test nothing. I’m thrilled that we’re going through a period of piloting, people are experimenting and doing new things. But you have to be really scientific about what you’re doing so that you’re not just throwing a bunch of stuff in there randomly and hoping something works. We have to be more strategic about it, so that the chances of being successful are higher and so we can determine and measure what actually had an impact or not.

Now is our opportunity to step up and do amazing things. For the younger generation of designers, I’ve waited 38 years for this moment to come, and we need to capitalize on it. We may not have this again. We’re going to be in a rocky period for a while, and then I think we’ll have it more frequently. We’ll go for these long periods of status quo. But this is a really unique opportunity for us to be forward thinking and not just address the problem at hand.

All of those things are on the horizon, and it takes a much broader approach to how we should work, where should we work, what is the workforce, what should we do. I don’t think we’re taking a broad enough view and doing that future casting to really think about that. We spend a lot of time thinking about robotics, AI, holograms, and how those are going to impact us, how resourcing issues are going to impact us, how all of these things are going to impact us. But we aren’t thinking enough to see the writing on the wall.

Our industry right now should be helping our clients do scenario planning. We don’t know exactly what’s going to happen, but we have a pretty good understanding that one of these 3 things are likely to happen. What are you going to do when it does happen, are you just going to wait till it happens and then get caught flat footed and then try to react? I believe we should be more proactive and say OK, what if 6 months from now people aren’t coming back? What if 6 months from now a lot of people are back? What are we going to do, how are we going to position ourselves to be successful for when that happens?

Sandra

Some really, really good points you’ve just made. When you think about who you’re communicating with in organizations, are you working with other departments other than corporate real estate through these conversations?

Kay

Look, if we could get rid of the term workplace strategy, I would replace it with enterprise alignment. Because a lot of people say there are three things that are important. We’re going to say four. A lot of people say it’s people, place, and tech tools. I’m going to add process. Having a better understanding of what the business is actually doing. If you’re a sales organization, your solution should be uniquely different than an accounting firm or a law firm, or a trading company. They’re uniquely different and we need to have a better understanding of what work styles are happening, what people are doing, what they’re trying to achieve, what the culture is, where they want to go. And then we need to take all these things and develop a strategy that really helps our clients envision what they could or should be, and then chart a path to help them get there.

Sandra

Wow. That’s very true. Working with HR and IT and other people in the organization, it makes you think about corporate branding and communications and all that sort of thing, because they’re all interconnected. And traditionally it’s been led by facilities management, corporate real estate with some input required from other teams. But I agree, alignment is 100% required because ultimately the outcome is that you have an objective as a company, and your behaviours are the desired behaviours of the workforce. And how you make decisions about your workspace needs to be aligned with the vision, the goals, the objectives of what you’re trying to achieve as a company, which is unique from company to company. They’re not necessarily exactly the same. And also because the workforce makeup is unique. So even though your vision and your mission might be the same, the actual makeup of your organization is unique in comparison to someone else. And that’s what should dictate the alignment. How are you provisioning space or the practice of work for the people that work in your organization?

Kay

Yes, and as I said before, I think that the workplace world is being set up because everyone is looking at us to solve this problem. I actually think it’s a communication problem more than anything else. And again, workplace is a part of this.

But let me just run this scenario by you. What do you want? Well, I want to work from home forever. Whatever, I get paid a tonne of money to do it. Ok. Everybody is making up their own rules, and now it’s a change management nightmare because you’re not trying to change one behaviour. You’re trying to change what every single person has adopted as their own behaviour.

Let’s take scenario two. You need to be back in the office. We’re going to mandate that you’re there five days a week. It feels like a punishment.

Versus, there are a lot of great reasons why we want to promote you working from home to be in the office, whether it’s through mentoring, being there to really help our younger staff or help them get their footing and to really build that next legacy. Being able to get the teammates that you need to build those strong connections and bonds to really support you, so you can go out and do what you do best.

We want you to have that great work life balance. We want a blend of the two, but we also want to give you moments where you can thrive, whether it’s taking a break from being at home all the time or taking a break from being in the office. It’s about that balance. We need your help ensuring the company is successful, and we’re ensuring the success of the next generation of leaders with their work life balance and long-term ability to thrive.

Sandra

Right. And if we talk to people and lay all that out, I think that’s what most people do really care about. They care about their workforce, but they also have to get stuff done because if the company isn’t successful, we don’t have jobs. And I want to retire. And if we don’t have the next generation of leaders that are there, ready to step in and step up, that’s not going to happen. So, I think we’re not telling a compelling enough story about why we’re making the decisions we’re making. And I think frankly, a lot of CEOs are terrified, they don’t want to be the next Jamie Dimon or Elon Musk, that puts out a mandate and gets skewered for it.

Sandra

Well, Kay, this has been excellent. I wish we could go on for another hour, because this conversation has been so good! Thank you for your time today, I really appreciate it.

Kay

Always happy to. We’ll get together in a few more months and we’ll reflect again and maybe project what we think is coming. I think we’re in a really exciting time right now, and I’m going to encourage everybody to embrace this moment, to go big, and to go bold. You’re not going to get it 100% right. But I think the world is going to be more forgiving than they ever will or have been. And we need to chart a path forward to really help people thrive.

About the Author

Sandra Panara, Director of Workspace Insights

Key Takeaways & Discussion Points

What role do anthropology and ethnography play in the decision-making functions of CRE professionals?
How can anthropology and ethnography bring out the voice of the employee? 
Is this all just too “fluffy” for the C-Suite? 
We may be collecting the same data these days, but the way we use and interpret it is completely different from pre-pandemic times
Data without context doesn’t tell the whole story — qualitative analytics is key
How can you layer occupancy and demographic data to learn more about what sort of space works for your employees?
How do different generational attitudes towards work influence their use of space?
It’s important to listen to Millenials and Gen Zers about the future of work, urban spaces, and sustainability

Links:

Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
David Gray on LinkedIn – Senior Vice President Tenant Rep Workplace Strategy at Colliers International

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript:

Sandra

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

This week I’d like to welcome David Gray. David is the SVP Tenant Rep Workplace Strategy at Colliers International and is located in Silicon Valley. He’s been really busy crushing COVID by assisting his global clients with the agile hub and spoke fine tuning that’s needed right now. Missing speaking live at workplace conferences in 2021, he was able to fill the void last October at IFMA’s World Workplace event and will be speaking again at November’s CoreNet Summit 2022. Looking forward, David will be co-hosting the 100th Pandemic Influence Mosh Pit, where the edge of workplace is debated by dozens of influencers, from CRE leaders to applied anthropologists.

Everyone is welcome to join the Zoom waiting room any Friday from 11:45 AM PST. Be forewarned, though, it’s engaging and addictive!

Hey, David! Very excited to have you join me today on our podcast. Why don’t you tell listeners a little bit about yourself?

David

I’m really honored to be here. I’ve listened to a number of them, first class stuff that you’re doing. I am a commercial real estate broker representing just occupiers, tenants, users for over — aqre you ready? — a third of a century. So, I’ve been at this a long time, and I’ve always been baffled by people that are more talented than me because they can do both sides, landlords and tenants. And maybe not just the high-tech space. They can do retail, hotels, apartments, maybe even homes. I’m not that good. I just stay in one narrow lane, and that’s taking care of the occupiers. Now, I’m based in the Silicon Valley, but the world has been increasingly steamrolling flat the last ten years, and obviously the last two and a half exponentially. And so my book of business is scattered all over the globe. And I’ve got some metrics that people can check out on my LinkedIn resume that would bore anyone listening right here to death. But I stay extremely active, even with that breadth of experience, with my boots on, holding on to the laptop, hand pointed through the wind. 20 years from now, I’ll get them all! So, I really love what I do, and especially now, right? This is such a great time.

Sandra

I totally agree. I think I have these conversations almost daily with just how much uncertainty that lies ahead of us and how people feel very nervous about that. But the folks that are in corporate real estate are excited by that because I think it’s an opportunity to think differently, to do differently, and to speak more creatively than just mechanically about how we do things.

So, you said that you’re representing the occupier view. Obviously being in the brokerage space, there’s a little bit of tension between the occupier and the broker, or at least that’s the dialogue that I’ve been seeing online. People are coming back to work and companies are signing leases. And then on the occupier side it’s, how much space can we get out of? What are you seeing from your side?

David

I think that’s a great framing, Sandra. The occupiers are getting pressure from their board or those that hold the financial purse strings to say, listen, we’re experts now. We’ve read a lot and we have a few examples that we can toss out anecdotally and point to the fact that we just don’t need space the way we’ve needed it in the past. And I think where the rub comes is a lack of stepping back and harnessing all the different professionals from CRE tech to architects to anthropologists. That’s right. I used the a-word. All of the anthropologists and architects have to get together and agree that ethnography and visioning sessions go hand in hand. And that is the rub right there. If we start saying, “you’ve got to come back” or “the only way to get synergy is if we’re face to face” and “don’t worry about that 1-hour commute”, it’s falling on deaf ears. We’re already seeing senior VPs, some of the largest high-tech companies in the world, Fortune Five, resigning because they’re told from the top of the pyramid, have your team come in here three, four, five days a week.

No, they don’t need to. So, the challenge is marshaling the resources of CRE tech people that can identify with individuals through surveys and watching how they behave and react. Bring all these tools to the table and figure out what is it that a user needs now. Quick epilogue to that — it’s happening that way right now. I’m just reflecting what my eyes are picking up, and that is that one third of the companies are going out and making deals at the rate of 2019. The bottom line is it’s two thirds slower deal flow and that gets a little bit of anxiety going for people in the brokerage industry that perhaps have relied on a particular book of business moving at a particular rate. You have to throw all that out the window too. And once you do and get back to those basics about what it is that our people want, how do we recruit, retain the best talent to have the most impressive earnings per share, then everyone is on the same page.

Sandra

It’s interesting that you were talking about ethnography. I actually had many conversations, actually with a few anthropologists over the years, and I’m just thinking about how that function played into decision making pre-pandemic. Usually you tried to get perspectives from all angles in the business, so from leadership, middle management, and the employees, and then you match that data to say, this is the direction that we can all agree on in terms of the way forward. But that was based on, obviously, a time where the expectation was such that everybody was working from the office.

Now that we have all had the experience of working outside of the office for the last 30+ months, do you think that ethnography or the role of ethnography should occur now? Or do you think that that should be something that comes in after the decisions have been made about what role real estate actually plays within the organization? Because it feels almost like leadership needs to make a decision around that. A decision that takes into consideration people’s feelings. But people are very open. And there are lots of reports to look at about how people are feeling about space, and they seem to point in the direction that they don’t want to come back to the office five days a week. That’s a no brainer. It’s kind of that push and pull.

Do you do the ethnography first to validate that, yes, that’s the direction that you need to go to, or do you make the decision and then bring in the troops to basically understand, okay, now what do we need in order to satisfy our workforce?

David

Well, a little bit of mechanics here in terms of the adoption process. You and I toss around ethnography, and we’ve had many conversations with PhDs and applied anthropologists. So, it’s second nature to us to recommend that. And it’s going to take traditional C-Suites quite a while to feel comfortable that that is a true cog in their measurement watch.

So go to them now, introduce your favorite applied anthropologist to leadership and explain what it is that they do. Granted, right now, the data to measure is weak compared to what will slowly reveal itself over the next year or two. But you want to get that second nature, just as those decision makers right now may say, oh, of course, having an interior designer that understands the latest trends in use, I want on board. They get that. But reaching past the top architects and interior designers, the idea of connecting with people in your organization at all levels is paramount.

So, if you’re a 10,000-employee company, you can’t have a visioning session with 10,000 people, but you want the voices of 10,000. Those voices will feel a lot more authentic when somebody asks them a question and then observes all the things they do relative to that question. No, I don’t need snacks. That’s not a bonus for me. I just would rather be at home. Meanwhile, there’s empty wrappers all over their cubicle. So, the aggressiveness of an applied anthropologist is unparalleled when it comes to social design.

Sandra

If I put myself in the shoes of someone in the C-Suite, it just all feels so fluffy. They’re thinking, are you really going to use that information to think about how you’re going to plan for space? Because at the end of the day, from the corporate real estate perspective and maybe even from a business perspective, it really always comes down to dollars and cents, right? It’s like you need to be able to convert whatever it is that you’re going to do that it’s going to either generate revenue or it’s going to reduce costs one way or the other. So when you think about all of these conversations that are going on around human centric workplace, the way ethnography is going to fit into how you’re going to think about space, like I said, it feels very fluffy. Do you think the C-Suite would be open to that? Or would their reaction continue to be just trying to understand what would the value be to them, when you think about it from the perspective of cost and or revenue generation going forward?

David

I answer that with a rhetorical question. Who are the companies that are successful right now and have been successful in the past? They’re the ones that listen to their employees. If you want to listen to your employees, you have to walk down a pathway that may seem uncomfortable, it may seem like, isn’t this fluffy?

Well, there’s structure in the fluffiness because you’re asking people specifically, what is it they believe they want, and they don’t necessarily know. Everyone’s on a journey together, from the latest hire to the first badges in the company, so they have the same objective, they have the same OKRs, or they should disband. Anyone that’s not profoundly motivated where they’re at should move on down the road. And it starts with the individuals and then I think it’s hopefully shepherded by great leadership that says, I want to ask you what you think you want, tell me why. And yeah, let’s make sure that our earnings per share are up and away. And how else are they going to be up, up and away, unless talent is extremely, profoundly engaged?

In 2019, we had barely a third of the working population in North America bonded to their job, to their boss, to the mission statements of the companies and the values supporting that. Only 30%. Just ridiculous. That’s 2019. Now, granted, there’s been a Great Resignation and some of the people that didn’t feel engaged got pushed over the edge by circumstances. But I believe every single one of those employees is going to look at themselves and say, am I happy here? How can I be happy? And they will reveal that. And I don’t think they would have revealed that quite as readily in 2019. So, there’s an exciting opportunity here.

Sandra

I think the point you made about people not really knowing what they want holds a lot of truth. I remember back in the day when you were serving employees, the responses that you got were always within the frame of reference of what was familiar to them. So, if you were asking them to think out in the future — imagine asking someone ten years ago about working flexibly and what does that mean to you? You’re always going to go based on the boundaries of what you’re allowed to do in the organization, because you think, realistically, that’s not something that we would be allowed to do. And I find the same to be true.

Also, when you’re talking to the executives in an organization about new ways of working or thinking about different ways of doing things, their frame of reference is based on how it’s always been done. The challenge is, how do you break down those barriers? How do you bring those two worlds together? I think the biggest challenge is that you can only see so far.

I sort of look at what’s happened in the past 30 months. To me, the pandemic basically forced change management on everyone. It’s mind boggling to me that someone would choose to ignore the reality of what has transpired. That is to say, change is upon us, whether you like it or not. To force going back to something, I don’t think is a good idea unless you can prove otherwise. If there’s actually proof as to why that is actually required, but making claims that something is better or worse without really anything substantiating it, or better yet, using data that was captured pre-pandemic times is different. Times are changing.

So, as I said, the uncertainty is very uncanny for a lot of companies because they don’t know what’s next. There’s a term in our organization that we use, this “blind spot” that’s emerging where you’ve relied on data for the longest time. But the way that you use the data, though, it’s going to be different. As you think about the future of work, before you looked at occupancy, okay, how many heads are in a building? And then it’s relative to what? Is it relative to head count? Is it relative to future head count? Is it relative to your as-built seats?

This whole concept of flexible working, we’re talking about the 3, 2 reference that’s being made or coming up with these arbitrary programs without really substantiating it and understanding the behaviors of people. And I think the need to understand behaviors is increasingly important, where maybe it wasn’t before. But you’ve also got then the flip side of that, which is the privacy aspect, where a lot of companies will basically say that there’s a privacy factor and it’s the reason why you can’t look at data, which I think is a bunch of hogwash too.

I just wanted to get your thoughts. What did you think about data and analytics and how you used to use analytics before versus what is fthe use case for using data and analytics today? Do you see there being a substantial difference?

David

Absolutely, and I don’t think it was used enough in 2019. It’s taken a lot of internal teams quite some time to adopt sensors and analyze what the sensors mean and realize they have to do bed check at the same time. Meaning, as we both know, take a look at what’s going on with that sensor data. Oh gosh, this is a different person coming into the space. This is the same person. This person is actually by themselves, the sensor was off. There was a lot of checking to be careful and then utilizing the data — paramount, no question.

Now we’re in this transition, and it’s going to be different how we interpret it. Before we get to that, we have to be really honest, especially those that sell the technology and the services of metrics. It’s going to be richer and deeper and more needed than ever before over time. We are having people come back at 5%, maybe 8%. If you really look at utilization — just start with the parking lot if you’re in that type of environment, and reengineer who’s in the space.

So, it’s asking the question right now, in the lens of social anthropology, well, we’ve got some data, we know it’s just a thumbnail, but we want to ask the people that are using this space what purposes they find from the space. Whoops — a lot higher percentage of people really like the fact that they’re spread out in what feels like a library. And more and more people are leaving noisy, boxed-in distracting environments on the home front and the coffee shop in exchange for coming into the 10,000-sqft open office that has 15 people in it. Some personalities feel at ease in that situation.

So, tracking that, going forward, we’re going to go through a few waves back and forth. The surface is going to come in, come out, come in, come out. What are we really finding here? But I think one thing that’s really important, you said it earlier, and I want to weave into this data discussion, is we’re not going back to 2019. I don’t think anybody would, because there’s 8 billion people that have been forced to turn to the same page of the book. So, whether they disagree with what the remedy is for this particular page, we’re reading the same paragraph over and over. It’s Groundhog Day. Don’t say, well, that’s enough. Step back and say, 8 billion people have acknowledged that this is happening. Okay, let’s address that elephant in the room.

That’s not fluffy. That is structure. And measure it as best you can, even when you only have a little bit of information, as people aren’t coming back at the rate that most of the C-Suite would hope for. Measuring it is what it’s all about.

Sandra

I completely agree. I think what’s interesting too is that we talk about corporate real estate technologies like sensors, people counters, which obviously are making their place in the world of corporate real estate just because of what they can do that can’t be replicated through observation studies or any sort of manual attempt, even surveying for that matter. It’s just the sheer volume of data capture that gives you credibility in such a small amount of data.

So, for example, we used to rely on badging data and used to look at historical data, and you had to wait. You started to see the data normalized, usually at the 3 to 6 month window. The longer you waited, the more reliable the data was. What’s interesting about sensor data is that you don’t have to wait that long. You could do an install Monday, and by Friday you’ll already start to see some consistency in behavior because of the fact that you’re capturing data literally every 30 seconds, you know that someone’s there or not there. You’ve got 20% of your people at desks between 10 and 11, and then 40% of people using meeting rooms the rest of the afternoon.

So you start to see the shift in behaviors just as you’re monitoring the space on a regular basis to really understand how the behaviors are actually changing day to day and then week to week, month to month. What’s changing is going to be dependent on capturing that historical data.

What’s also interesting is how the data is also going to be used for looking forward. As we talk about things like predictive analytics and using AI to help people understand, the people that are using the space understand that when they’re there, what are the types of environments that are best suited to how they want to work? There’s that element of, if there’s an interaction between a human and some sort of technology application, that data that’s being captured can help the user basically have a better experience in the office.

But I think what’s interesting is even taking a step back, because I look at it and say, I’m about probably 15 years ahead in terms of how you use technology in the workplace where you’re doing mashups of data long before the sensors came up.

The reality is that a lot of the data can come from sources that companies already have in their environment. The reality is that most companies stop at looking at the badging data, for example. You get your occupancy number, and then everybody goes nuts with planning because only 50% or 60% are in, and that means we’re at a sharing ratio of 2:1, cut the space by 50%, call it a day. Right? It’s a little bit more complicated than that.

But what’s interesting, at least one of the things that I discovered fairly early on in my career, is how you bring context into the data analysis. People have always criticized the quantitative and the qualitative side of data analytics. Anything that you’re doing where you’re measuring is quantitative. It doesn’t have the qualitative side, which is how people feel or what people want, which typically would come from your ethnographic studies, your surveys, and types of things that you do. I have sort of been challenging that a little bit because I’m seeing more and more as I dig into some of the newer data right now.

We’re seeing new patterns in the data. Because you’re capturing data at such a high frequency, you can see the behaviors. If you know or you’re familiar with a certain behavior and what it looks like when you’re in a space observing people, it actually translates very well on the data side. You’ve just got to know that this type of behavior means this. Right?

Case in point, we had some data that we came across for a client just recently, and we got down to the lowest level of detail. And one of the things that I observed was these short meetings, or rather, use of meeting spaces. People were just going into a meeting room either as an individual where they were dwelling in that space, which is the new term for occupancy, I think it’s the new occupancy, where dwell is basically the continuous use of a space. So you’re seeing people that are dwelling in a meeting room for, say, five minutes, ten minutes at a time by themselves, and you’re like, what? Somebody be in the meeting room by themselves for five or ten minutes?

Well, from previous experiences, probably to have a telephone conversation, because there’s a room that’s close by to a workspace and they don’t need to walk to the other side of the office to use the telephone room. So that would be a typical behavior.

Another example would be 15 minutes or anything less than half an hour, really, where there’s maybe two people or maybe even three, are now in a room together. There’s no booking of that meeting room, but they’re in that room together for that same period of time. So that to me is more like a one on one. It could be a coaching, it could be something like that, where, again, it’s unstructured, it’s not scheduled. It’s more ad hoc. So if is happening in the organization on an ongoing basis, maybe you don’t have the sufficient spaces or the access to those spaces in order to be able to support that kind of behavior. And it makes me think of the many discussions with designers in the past around activity-based design where you did just that, you looked at how people were using space, and then you use that information to inform the future of design.

And now, well, do you even need to do that? Because if you’ve got the right technology capturing the information, you basically can pick up on those patterns now. True, you don’t know how people feel about it, whether they like it or they don’t, so there’s still that need for surveys. This is just the quantitative side, and it’s so much more than that.

David

Agreed. We are moving to cultures where everybody is on board answering a survey that describes their archetype, and in some companies, putting it on their signature block. So that may sound a little fluffy to some leaders that have been around even longer than me. But if we know somebody views themselves as a methodical thinker that really likes to go deep and deep and work by themselves and then report back for other team meetings and share their findings. That person is in the office. Their badge is swiped. And 20 other people that are like them are all in the office. But none of the people who describe themselves as the aggressive archetype, you need to get it off your desk now, jump to conclusion, none of them or a handful are just in the office. Maybe that tells us something. So qualitative comes with the quantitative.

We are measuring everything, and soon people will, I am praying, that everyone relaxes and says, yeah, you can track my cell phone when I flip it on to company mode. Absolutely. Of course. I want to let you know, am I in go mode and you want to know that I’m at the Starbucks or meeting with the client or I’m in the office with the one on one, or I’m at the auditorium or I’m gone at a sporting event, but who’s with me? Well, I’ll answer that if you want to be particular about me later.

And I think that needs to happen. I think we all have to address the two-way street. I’m not even saying trust and verify. I’m talking about, you’re profoundly motivated about the mission of the company, and there’s trust both ways. And they know I’m working when I’m at home next to the kitchen sink. And they know sometimes I’m taking a nap in the office.

It’s not about monitoring. It’s about learning what we want to do. And that’s the next level of ethnography, taking the personalities that we all report ourselves to be and have it validated by somebody that says, yeah, that’s that person. And now where are they and what are they using? We are going to discover, if people all haven’t already, that we all have multiple sides. They’re called moods. Sometimes even the chatty. Loquacious. David Gray likes to go to the library, heads down and not be interrupted. And if that library had books lined all over and I had flashbacks to the best university in the world, the University of California at Berkeley, I feel like I can drill down deeper than I ever have. This is wonderful. Especially if someone started talking not far from me and somebody dressed up in caricature of a librarian with horn rimmed glasses and in the 1950s outfit came waddling over and said, that’s what we need. We need activity-based work that is theatrical.

Sandra

I love that. I’m getting a visual.

David

I think we’re walking down the same path here together. We know this is a slow roll, but we know that the data is really going to be a key factor. Those that use it and have the most granulation with it are going to be those that win. There’s no doubt about it.

Sandra

You said two things that I think are really interesting. The first is the layering of the data to really understand. You talked about the archetypes — to some extent that’s also part of how you use the data better. You’ve got your occupancy data, whatever source it is that it comes from, but then it’s when you start to layer on things like the demographics, the hierarchy of the people that are being reported, depending on whatever it is that the company allows you to integrate. Lately we’ve been talking to customers that are also layering in their commutes. They want to understand and actually quantify the correlation between the commute distance, the commute time and the occupancy. How often are they coming to the office?

Just think of how marketing segments their customer to say, okay, we’re going after this particular customer and this is the way we need to market to this customer. It’s the same thing in corporate real estate. You’re basically segmenting your data, and by segmenting the data, I believe, is how you’re going to be able to think about your future workforce.

So, think about it. If you’ve got a group of Boomers that live out in suburbia that are commuting in more than 60 minutes, they’re only going to come into the office maybe once or twice a week versus the young, hip, and happening. Gen Z in the downtown core wants to be in the office. They don’t have a car, they’re within walking distance. And the convenience of being able to just walk across the street and go into the office to be with their friends, to socialize — it’s two totally different stages of life. And very different behaviors that are being observed in terms of how they’re going to interact with space now.

Is one more valuable than the other? No, not really. Do those two worlds need to come together? Absolutely. And that’s the stuff that you see when people start talking about how you mentor the young folks that are joining these organizations. They have to be in the office. And sure, but the people that are supposed to mentor them actually are not coming into the office because they’ve done their time or they’ve earned their time, as they like to say, where they don’t have to come into the office as often.

I think that was a bigger eye opener for me — when you start to segment occupancy data based on demographics, like tenure, age, even things like salary bands, you start to see behaviors that are very interesting based on these different things about people. It’s teetering a little bit into people analytics. The analytics that they do are very HR related, and they don’t really step into the corporate real estate territory. I think there’s a shared opportunity to bring the HR data into the corporate real estate world.

When you bring those two data sets together, you could think about things like where should our office be located? For example, the whole idea of decentralization will look at where your people live. If you’re trying to minimize commutes, if you’re trying to minimize greenhouse gas emissions, which some companies do, then you want to start looking at that and bringing that into your analysis so that you understand the decision that you’re making and the impact that it’s going to have on the people that you’re trying to bring into the office.

Same thing with decisions around amenities, like we’ve been hearing quite a bit actually, in the last while about how you entice people to come back to the office. You probably heard this more than I have, about organizations looking at bringing in amenities into their organization to try to entice people, it’s more of that hotel experience. The last thing I heard was putting restaurants in offices. Is that really going to entice people to come in? You already have existing spaces in society that do that. Is that really needed? Is that really necessary?

It makes me wonder, where are you getting the data to make those decisions? To say, this is what we’re going to do because we believe it’s going to bring people back to the office. It’s kind of picking something out of thin air and saying, let’s try this and see if it works. But I don’t know that any CFO would be willing to invest in an experiment and then realize that it’s not really going to work.

David

Well, especially an experiment that costs millions of dollars, like a high-end cafeteria. In principle we’ve seen the success of the cafeteria. We’ve also seen how they’ve been underutilized. The purpose has not been maximized. People come in for a couple of eating sessions and then Google invents three eating periods and then fills it in with coffee during the day. And then someone gets the fact that it’s a multipurpose room. What else can be done with it when those busier periods disappear? But you can’t gamble millions of dollars based on “I’m sure we can find a use for this”. Of course not.

You can experiment with some things in the hospitality realm. You brought this up, there’s a lot of working with local farmers, restaurants. Would you like to do a pop up here, come in at this particular time? Kind of a hybrid version of the food truck. And so maybe there’s an affordable entree, so to speak, but also the idea that people want it. And how do you find out they want it? You have to ask the question, is this something you would like? And we’re not seeing the big amenities with people like they have in the past.

Everyone’s in a state of change. I think a higher percentage of people are looking at themselves saying, what profoundly motivates me? How am I going to be happy? It’s not just the social construct of bragging that I have a 15-minute commute because the company moves towards me. It’s the energy, the well-being that you pick up to contribute back to the company.

When I say the company, I mean your team. I mean the people that are sharing the values you share and are trying to reach targets that you’re attempting to reach. And you’re reaching those targets because you’re communicating together. You can communicate like you and I are doing right now across one of the longest halls in North America, from Toronto to the Silicon Valley, and it works terrifically. But when I see you live and in person in Nashville world workplace next week, that is going to be the icing on the cake, or the glue, rather, that holds me closer to, “What we are trying to do? What else have you heard since then? And what about this? Hey, do you think this idea will work? I don’t know, let’s share that data. Absolutely, we’ll share that data.” I think there’s more collaboration and cocreation among so many different optics and competitors in narrow disciplines than there’s ever been before. That’s part of the excitement, right?

Sandra

Yes, I completely agree with that. It’s interesting what you also said about values. We’ve had this time to rethink or re-evaluate what we value the most. And everybody obviously has a different priority when it comes to things like that. You’ve probably heard as of late the whole story around Quiet Quitting. What does that actually mean? Recently I’ve also heard of “voluntary demotion” popping up, which is stepping back from the climb of the corporate ladder, the hustle culture that we all live through from a generational point of view.

The younger generations want to pursue success, but at the same token they want to have a life. It’s not just about the career. It’s not just about climbing the ladder. It’s not about just making money. There are all these other aspects that make you a whole person. I think that’s going to be interesting as well, because as you look at the generational mixes of people in the organization, as the older generations start to retire or move on, the younger generations have a slightly different perspective on productivity from how we thought about productivity and taking initiative or taking that extra step. What is that motivator for them? Like you were saying, there are different things that motivate different people to be their best, from a productivity point of view. What are your thoughts on these stories that are emerging?

David

I’m excited about the human data points that are emerging. You look at Gen Z — I think some of the young Baby Boomers and older Gen Xs get together and say, you know what, they may be authentic, but they don’t realize that you have to get into the office, you have to do this.

You have to do nothing! They’re not chasing the dollars the way that bracket of people did when they were 26 years old. I can feel the difference. When I was 26, it was about being the first person into the office, having the coffee on and then going, yeah, that’s right, I did that. They’ve gone to a next level. They’re sitting side by side, a couple with elbows touching and it’s quiet in the room. Pull back the curtain and take a closer look. They’re texting back and forth with each other. They’re sharing humorous clips with each other and having an internet experience. The older generations that did not grow up with tremendous amounts of AV besides a rock concert or two. It’s time to take a look and learn from this group that’s coming up.

I think the Millennials and the Z’s who are now about to hit the 50% of total labour mark are really reshaping what the targets are. Targets are about productivity and purpose. The only chance this planet has of being around several generations down is because of the attitude of people coming up that care about community, that care about everyone having enough resources. Because when it gets drier and the temperature goes up three or four degrees, not as much foods can get produced and it could be a very challenging situation. At least we have a wide swathe of people, of the youngest workers, to whom this is paramount. We can learn a tremendous amount from those sort of data analytics.

Sandra

I agree with that. I was on a call a couple of weeks ago, and there was someone there who was Gen Z, and we were talking about ESG calculations and how the metrics that we pull out of corporate real estate analytics feed into that. I mean, obviously the commute, everybody knows about that, but there are other opportunities there as well. And one of the things that he said that really amazed me was, he said if I was making a decision from an employer perspective and all things were equal, I would actually look at their ESG policies. But he says it’s not just about what’s written in their manual, it’s the actions that they’re actually taking. Are they actually following through? So there’s that level of integrity — you say that you care about something, but do you really? And people are looking very closely at that, and probably the younger generation moreso than the older generation. That might be a bit of a statement to make, but I think that there’s some truth to that, that the older generation seems to kind of look past it because it’s not as important as it is to the younger generation who are going to be picking up the slack because they have to.

David

You’re so spot on. And again, hats off to them. I really enjoy when I have a weekly workplace gathering and I get a couple of Gen Z’s on. They can be irreverent. It’s a lunch hour in the Silicon Valley. Three of them were on a couple of months ago, and these are top one percenters, very driven. But they’re eating their lunch. They’re talking while they’re eating their lunch. They’re muting the phone, yelling at mom and saying, hey, you know what it’s like living at home. And they come back online.

They’re not getting carried up with the Gen X, Boomer idea of building a corporate or a personal brand. They’re going for it. They’re getting things done. And they know that just because some fossil says, you should really get off that little mechanical device you have there, I want you to go on a walk with your best friend, okay? You have no idea. I got 30 best friends and I’m talking to them every hour.

Sandra

Do you think that there’s an element of professionalism or let’s say, a loss of professionalism? When you’re talking about the Gen Zers eating their lunches and yelling at mom or whoever and thinking about our experiences where if your dog barks or somebody knocks on the door, it’s like, oh, my God, it’s the worst thing ever because you’re working from home and people know that you’re working from home.

It’s almost like you’re trying to maintain this sort of professional appearance. Versus the younger generation, where they just say, this is me. There isn’t sort of that division between the work me and the home me. It’s the same person. And I think maybe that’s where there’s a difference and why there’s a lot of conflict, if you will, with the older generation saying that the younger generations feel entitled to certain things. But they do things differently and are quite successful in what they do. It’s just that it gets discounted because it’s not done the same way that you and I maybe would have done it.

David

Right, absolutely. In fact, that last sentence is what it’s all about. I would tell everyone that’s over 41 that’s still active working: relax and learn from everyone who’s below 41. They’re being their authentic self for their last million minutes and you’re being who you are for your last million minutes. And maybe your last million minutes have been ten years of working at two companies in the same exact industry. Congratulations.

They’re scattered. They’ve been growing up, and they’ve been fighting the most important part of their education and adoption into work during a pandemic. Learn from how they’re handling that and where they see the future. I love following a future of work expert who’s 26 years old where a lot of people would smile at that, say, oh, how they can be an expert at knowing what work is, they haven’t put in their million minutes in the office. No, they’re exactly what we need. A spokesman, a translator to an entire generation that’s going to do some wonderful things for profitability and planet. I’m really excited.

Sandra

It’s funny too, I was thinking about that younger generation and the idea of where the office is going to land at the end of the day. Going back to that idea of the younger generations living in the downtown core, the city center, that type of thing, that’s kind of the lifestyle that they want to live. And suddenly the demand for the offices disappears. Let’s fast forward and let’s imagine that the Boomers are going to make that happen because the Boomers make everything happen and then these offices disappear. How does that potentially impact that generation?

It’s a comment that comes up all the time that as you get older your stage of life changes in time. You tend to move into the suburbs, into neighborhoods with a larger home, you’ve got space, you’ve got kids. Someone who’s living in a 400 square foot apartment isn’t going to want to be there with their significant other working and living 24/7. It’s that opportunity to get out and about. And having said that, there are options — you don’t necessarily have to go to a corporate office to do that. There are like coworking spaces and cafes and other fun places to go and hang out and work, but it comes back down to what you said about how you enable your people to feel comfortable to do that. You were talking about trust and enabling people to feel that they could be themselves and work and go to the Jay’s game or whatever, but maybe they were working late the night before. This whole idea of accountability, it needs to be, I think, a little bit looser than what it has been. There’s that element of trust that I think is missing as well. How does that all play into all of this as well?

David

You said a lot there. I’ll grab onto two layers of the cake that really resonate with me. First is looking at the use of the central business district, the CBDs, the top 63 in the US. San Francisco is there and it’s failing right now and it needs an overhaul. To have San Francisco pushing beyond 20% vacancy is very unusual and I think it’s probably reaffirmed as we look at the data by the fact that you just have a high percentage of very mobile tech adapt workers and they know they can do it and even if they’re told to come in, they don’t come in. What are you talking about? You tell me to take out my garbage too? No, I don’t think so.

The Central Business Districts though, they’re coming back to strong versions of their former self with terrific retail, museums, and amenities to gather in, hardscape areas for meetings. For socializing, as it gets back to that, we’re going to see I think a resurgent of residential inside all the CBDs. I’m a little bit crazy and I think you always have to have a few people that are a little bit crazy, and I believe that.

You can see the vertical forest of residential towers scattered throughout the globe, the most impressive to me in Milan, Bosco Verticale. Imagine a Gen Z 5, 10 years from now looking at the cityscape and seeing a big tree, shrubbery and greenery growing out of every balcony, and saying, that’s where I live. That’s so powerful. And why not watch that happen with these 40 to 50 year old buildings? That really, no offense to the architects of the early eighties, seventies, late sixties, but not really the best-looking product. I hope we can find a way to rip the skin off of those, cut a little doughnut in the middle and turn those into residential vertical forests.

The second part of that is the “15-minute city”, being able to get to everything you need and could wish for in a 15-minute walk to wherever you are. That’s your Paris. If you’re in New York City, you have three 15-minutes cities in Manhattan stacked upon each other. Which one is yours? That should be the view of those 63 North American cities that are evaluating what’s next in sustainability, what’s next in engagement, how do I get people to come in and participate, make this the community?

I think we’ll see more small families living in those environments. And we’re watching as Austin, Portland swell, we’re seeing a version of that happening. So I’m really excited for that aspect primarily.

Sandra

It’s interesting that you raise the 15-minute city point, because one of the things that I don’t quite understand is the fact that it’s very focused on city living. I don’t know what it’s like in the United States, but in Canada, there’s a lot of bedroom communities. So people commute into downtown Toronto where the bulk of office jobs are. As soon as you leave the core, there’s not really much out there unless you’re working in an industrial unit or you’re working as an independent. So when you talk about 15-minute cities, right away I’m thinking, okay, urban centers, though, already have that because they have all the conveniences to be able to access restaurants, transit, all that stuff. It’s more when you get into the suburbs that you’re kind of stranded because there’s no bus service or very limited transit services or anything that would allow you to be able to access the conveniences of just living, let alone work.

How would the 15-minute city be different than what it is now? Are you talking about an expansion into suburbia?

David

I’m playing with the idea that people stay longer in a 15-minute city that provides them safety, security, and convenience. For a higher percentage of people, their main education won’t be the socialization of the school, but it will be the types of programs that their parents help steer them towards and they’ll be digitally implemented, I suspect. I see the cities working for a longer period of time, even though some say they’re broken right now, but down the road, people staying longer.

But I still think if you look at the list of the great small cities, and into Canada, all the fantastic rural space that people found second lives in as they continue to work, you may be leaning into the digital communication a bit, I suspect, when you get spread out like that. Because you’re absolutely right, in these small cities, you don’t really want to wait for the bus and then get picked up at the bus stop and hitchhike and all that kind of stuff. I think that’s a little sticky, but they’re thinking about a 15-minute grid anywhere is really the answer there.

So if you look at your communities in Silicon Valley, we have our version of sprawl. Southern California, they really have suburban sprawl there. That’s really retail strip after retail strip, roads, freeways. Well, we have that too, in the San Francisco Bay area. And part of the solution set is to get into it, to get out of it. Look at the downtown of your city and see how you can get there easily. Can you bike there? You don’t have a bike. Get a bike and get on your bike for ten minutes and go and enjoy that coffee shop and work remotely there.

It’s about thinking and acting responsibly. Not hopping in a car for an hour plus is not just a financial planet save, I think it’s an energizer that will allow you to do more profound things with your career. And I think we’re going to see this group coming up completely. The Millennials get it, the gen Zs live and breathe it. So follow the use changes. Get ready for the vertical forest. It’s coming to a central business district near you.

Sandra

David, this has been a lot of fun. Any final comments?

David

No, I really appreciate the honor of being interviewed by you, Sandra. As I’ve shared with you before, I follow all of your posts. You’re extremely bright. You do things right at the edge as well. So, what’s coming up in the wave? And I hope you’ll ever stop doing that. I’m a big fan.

Sandra

Thank you

David

Thank you!

About the Author

Sandra Panara, Director of Workspace Insights

Key Takeaways & Discussion Points

How can companies decide between all the tech tools that exist?
Does historical real estate data have any value for organizations going forward?
What is the metaverse?
What is special about digital ownership in the metaverse?
Does the metaverse even exist (yet)?
What is its purpose — why even have it?
Is there a dark side to the metaverse?
What are some of the use cases that could be applicable to the metaverse for companies and organizations?
What do organizations need to think about when considering their place in the metaverse?

Links

Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
Henry Massey on LinkedIn – Senior Vice President of Workplace Technology & Strategy at Impec Group
Decentraland – the first fully decentralized virtual world
Roblox – online platform and storefront where users create and play games
Sandbox – futuristic VR experience for playing games with up to 6 people
XRSPACE – a new world for art, culture, music, entertainment, exhibitions, and events
Virbela – a virtual world for work, education, and events

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript:

Sandra

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

Welcome, Henry! Very excited to have you join me today. Why don’t you tell us a little bit about yourself?

Henry

Hi Sandra! Thank you for having me, it’s an honour to be on this podcast, I’ve been listening to so many of your podcasts and always thought about being on it, but hey, here we are! So thank you for the opportunity.

To give a quick introduction on Henry Massey, I’m Henry Massey, Vice VP at Impec Group. I lead the Workplace Strategy and Technology team. A little history about me: I’ve been in the industry for 20+ years now. Informally I started my career somewhere around 8 years old. I like to give this little story so people get a quick background on me: our family was one of the first pioneers in the Archibus implementation consulting world, back in the early 90s. Created a company called Asbuilt Information Systems. Part of this organization was doing as-built floor plans, physically going out and doing laser CAD technology or doing draft planning, so forth and so on.

But at a young age, I always saw plotter paper, pencil, rulers, lines, numbers all over the place, and I found it fascinating at my age. What is this amazing thing, it’s like a puzzle, how do I solve it? My father saw that, and he said, hey Henry, how would you like to learn AutoCAD? And that was the beginning of my “career plan”, if you will. My introduction into this career that I’m in now. Did I ever think I was going to continue it? No. I didn’t. I actually thought about going into medicine, but here I am now in this world, in technology.

But fast-forward, I was able to learn how to draw floorplans. But me being who I am, a creative expressive, I wanted to know what’s next with these floorplans? What do you do with this information? We’ve created these beautiful plans, but what’s next? And that’s when I started learning Archibus and obviously the implementation of Archibus and understanding the business process of organizations, so on and so forth. My maturity in technology naturally evolved through that. And now here I am, SVP at Impec.

Sandra

What a story, I had no idea that your family was entrenched in corporate real estate to that extent. It’s pretty cool, being part of Archibus—Archibus has been around for a very, very long time, so being exposed to that at a fairly young age is fascinating. So what are you doing now at Impec?

Henry

So right now I lead the Technology and Strategy team. What we’re focusing on is providing agnostic consulting. We’re an advisory to organizations trying to resolve their business needs, their requirements, through technology. As I mentioned, back in my youth, it was all about Archibus, but right now, I’m focusing on: what are the different types of technology that are out there today?

What I’m sure a lot of us here and online have experienced is that we’re sold a certain amount of technology. We’re told, ok, it’s Archibus, it’s Manhattan, Centerstone—probably a handful of five. And not too many people know that there’s more than 200+ solutions in the marketplace today, and that’s where I’m really honing in and saying, hey, let’s educate the marketplace on truly what technologies do exist today, and align the technology with their requirements. Not, hey let’s go find a piece of tech that we’re invested in and trying to mould it into organizations’ needs.

We’ve created something called the tech ecosystem, about a good year and a half ago. For that sole purpose. Let’s pull back the curtains, let’s educate, here are all the different products out there. We work closely with vendors to understand what their value add is, and how they position themselves in the market and then with this type of data, we work with our clients and say alright, these are the value props of this particular solution. Let’s understand what your business requirements are, where you’re trying to go, what your scaling plans are, and then let’s fit you into that correct solution, if you will. So that’s one facet of what it is that we’re doing.

We also work with CAD, a lot of organizations have a big need to understand the floor plan perspective, and what their space inventory looks like. It’s typically the foundation of a lot of these floor plan tech tools. And of course, we also slap on best business practices in your workplace organizations. We try to look at it and assess, where are you going, what is your existing business process, and then how are you trying to put that into technology? Because in a lot of cases it’s the 80/20 rule. A lot of people think that technology is going to solve their issues. When the reality is the data you’re putting inside the tech that comes first. So, we try to work with organizations out there and say, let’s understand your data, your process, maybe tweak it a bit here and there to really align with the technology that you have, to get the output that you’re looking for.

Sandra

Very, very true, the data certainly is the driver there, because I’ve been in organizations that have implemented technology thinking exactly that—that technology was going to fix the problem, and realized very quickly that it’s not the technology. You have to fix the data that’s going to go into the technology to fix the problem first.

An interesting thought that I had while you were speaking was, when you were talking about the ecosystem: do you foresee, from your experience and exposure, companies looking to consolidate their technology stack? Basically go to one service provider that does it all? Or are you still seeing that distributed model where you go for best in class?

Henry

I think I’m seeing both. So, right now, to take one step back, I think in pandemic world, a lot of people were trying to slap a solution on to fix the immediate issue. The Band-Aid. And I think a lot of organizations are now starting to realize, oh my lord, I bought 30 to 60 different solutions, and I never thought about if these solutions even talk to each other? There’s so much redundancy in terms of technology and data that now it’s, I need to go back to pre-pandemic status and figure out how am I going to find solutions that actually talk to each other? That’s the biggest thing I’m hearing right now. No one knows what data to look at. What is the master data? They’re again trying to figure out how do I resync my data to be able to rely on that? So that’s one thing.

Is that to say that IWMS is the answer for all of this? Not necessarily. However, there is large value in IWMS solutions, minus the price tag behind it. But it depends on who you have in your organizations. What is it you’re trying to resolve? Where are you going? How are you scaling as an organization? And of course, naturally with these types of understandings, then that’s when the company would say, IWMS makes more sense for you. However, if you are not scaling, if you are really just focusing perhaps on booking a space, and you don’t understand anything to do with space allocations, then a space management tool might not be for you. So a simple, room-desk booking tool might be the answer for you. So, I don’t think there’s one answer, but again it comes down to, who are you as an organization, where are you going, what is your strategy, and what is it you’re looking to do, now and in the long term?

Sandra

I’ve often thought about this from the perspective of what’s happening right now in the market and as you said, IWMS solutions have quite the price tag. I know prior to the pandemic, a lot of companies who explored IWMS solutions always shied away from it specifically because of the price tag and either went for a less expensive option that maybe didn’t have all the functionality, the bells and whistles, or they used the good old Excel spreadsheets to manage their space.

But as I think about what’s happening right now with the uncertainty that we all are closely watching around what is going to happen, are people going to go back to the office, are companies going to continue to invest, or look to investing in technology when you’re starting to see a decline in the number of people that are going to the office space and does that require a different type of technology stack, because the needs are no longer about space planning, that type of stuff, which is more of the traditional way of thinking about space. Now it’s more leaning towards potentially the experience, and understanding supply and demand and how much that changes potentially from day to day, week to week, month to month, so that you can get ahead of it.

One of the things that I’ve always struggled with, both working in corporate real estate and then also working with companies that had corporate real estate teams was how reactive corporate real estate typically has been, and technology that has existed prior to this whole pandemic experience is always looking back. It’s always looking at data and then, how do we improve it? But it’s based on looking backwards.

What’s changed right now is all this stuff from the past really has very little significance in planning for the future, because the behaviour is completely out of whack. There’s no consistency in patterns, there’s no consistency in behaviour, it hasn’t normalized quite yet. We don’t know when that’s going to happen, it could be in a couple of months, it could be next year, it could be in a couple of years, and so when you think about it from the standpoint of companies trying to figure out, ok I need some kind of technology, but I don’t even know what kind I need, because there’s all of these moving parts to what’s happening—are you finding that most companies are just waiting, still?

Henry

They are waiting. However, the forward thinkers are not waiting. They’re starting to think about what technology they need. They’re having conversations with people like us to really map these things out. And again, it’s all coming down to strategy. It’s—who were you then, who are you now, where are you going? And how do I get there? What data do we need to get there?

So yes, a lot of companies are starting to reassess their technology. Can I say that they’re just scrapping it all and starting over? Not necessarily. They are actually just looking back at their data sets and saying ok, how do I make a story out of the data sets that we have? So we can’t say that all historical data is meaningless, because it helps us paint a picture of then and now. Yes, it is important to still have a space management tool, yes, it depends on what it is that you’re doing, are you reducing half of your portfolio, ok, that might mean that you don’t need such an expensive space management solution, but you still need a space management solution in order to understand what is happening today. You need your quantitative data still. People are still using space, sure it might not be a 1 to 1 assignment, however, people are still coming in at whatever percentage it is, 20, 30% now. But we still need to understand what is our current space inventory? How are things laid out? What is the distribution of my collaborative spaces versus my huddle spaces versus my conference/meeting spaces? And without these technologies to give us the data, the trends, we really don’t understand what is happening today.

So, you can’t say just eliminate space management, you can’t do that. You need a baseline at least, to understand. Or a tool to be able to capture that type of data. So I guess this is where the argument comes in, does utilization have a higher importance than space management tools? Probably, absolutely. IOT is coming in, a lot of companies are coming in, and that’s the big emphasis, how is space being used today? But on top of that, we also need to be grappling with qualitative data. Is Henry sitting in the space? How long was Henry there, but at the same time, was I getting what I needed? Am I getting what I came to work, to the office, for? Was I productive, was I just sitting in a chair from 8 to 5? Was I on Amazon buying things all day? That’s where the qualitative data comes into play.

So, there’s a lot of things that need to take place right now. 1) Let’s get all your portfolio information into a system. IWMS, a point solution, get into a solution. Understand your baseline space inventory. 2) understand what is the utilization? Are people coming in? so you understand the trends that are going on. And then 3) get the qualitative data. Why are people coming in? are they finding it useful? What’s going to enhance their experience? Once you have that type of information, then you can start mapping out, ok, this is how space is being used, this is why people are coming in, this is their satisfaction rate, and how do we mould or create this experience to grow and scale? If that is your plan.

Sandra

Yeah, I completely agree with that, I think the layering of the data, the technology, is key, in terms of—you’ve planned your space a specific way, you’ve designed it specifically with an activity in mind, the behaviour is the layer that basically validates, are people using the space the way you intended it to be used? And then once you understand that as well as what’s changed from the employees’ perspective, you bring all 3 of those points together to then think about, how do we need to think about space going forward? So completely agree with that.

This is a great segue into the next part of our conversation—you and I have talked in the past a little bit about the metaverse. The last time we talked, you were exploring the metaverse and I’ve been very excited about talking to you about this, because I know how passionate you are about it, and how much work has gone into exploring what that is all about. Why don’t we start the conversation with you just explaining to our audience: what is the metaverse?

Henry

Ooh! Big one. We should probably take the opportunity and have everyone in their own minds think about, what is it that they’ve learned, how they’ve been educated, what have they heard in the headlines about what the metaverse is?

And so while you’re thinking about that for a second, the definition that I might provide is going to be very different from what we’ve heard. And better yet, I think this definition is going to help really refocus what the metaverse is, and what it’s not, and the fact that the metaverse isn’t quite here yet. I know that concept’s going to be a little mind-blowing. What I mean is, a lot of organizations have really slapped that term on top of everything, and now everything is “the metaverse”. And for me in my journey, that was very confusing.

So hopefully this is enlightening to folks when I provide the definition which is this: a massively scaled and interoperable network of real-time rendered 3D virtual worlds, that can be experienced synchronously, and persistently, by effectively unlimited number of users with an individual sense of presence and with continuity of data such as identity, history, entitlements, objects, communications, and payments. That is the definition of the metaverse.

It’s important to break down this definition. When I do that, hopefully it’ll make more sense when I re-read the definition, so you can understand what it truly means.

The number one to talk about is 3D. Virtual worlds come in many dimensions. 3D is a critical specification for the metaverse. Without 3D, we’re technically talking about Web 2. What is Web 2? Before I drill down more into the metaverse, let’s talk about the evolution of the web. Web 1 was when the internet was first created, in 1991. Actually, the federal government and a couple of universities were talking to one another to collaborate and share information back and forth. One day they probably woke up from a dream and said, you know, we should probably open this up to the world. This shouldn’t just be us. So they made a tweak in some code in the back end and opened it up to the masses in 1991. That was the infancy of the internet. People were able to go in, read, and consume. That’s it. They weren’t able to edit or do anything with the data, just read it.

Several decades forward, there’s Web 2 where we’re able, as users, readers, consumers, to read, write, and edit too. So if you think about what we’re doing now, we have the ability as users to collaborate with other users and expand our definitions. In Wikipedia for example, we have editing rights, we have the ability to post pictures. We can buy things. That’s all Web 2. That’s our interaction with the web.

However, the data we put into these platforms are not owned by us. If I post a picture on Facebook, they own the rights to it. My entire story, my sentiment. I don’t own any of that.

That’s where Web3 comes into play, which is the evolution that’s happening now. I can read, write, edit, consume. I can also own. That’s the missing part. Web3 is about owning whatever it is you’re contributing. So, when I post the picture, I own that picture. Those are my rights. Where I have my identity posted on the internet, I own my identity versus my identity being owned by massive advertising companies who sell my information. Now I have the right to sell my own information if I want to and monetize that. So that’s huge.

Hopefully I didn’t get off on too much of a tangent, but that’s the evolution of the web. So when you hear Web3, that’s what it is. And the metaverse is a layer within Web3. Web3 is the umbrella, metaverse is under that umbrella. Meaning I can buy things in the metaverse, and they’re mine. My identity is mine inside the metaverse. So those are just components. I don’t want people to think the metaverse IS Web3—it’s just a component inside of Web3.

Getting back to the definition, the next concept is virtual worlds. I’m going to list a couple of names: there are virtual worlds like Decentraland, Roblox, Sandbox. People throw the word metaverse on top of all these virtual worlds, which is not necessarily correct. These are just virtual worlds, they don’t speak to each other. They’re not interoperable, which is the next word I’m going to talk about.

In short, the metaverse can’t be the metaverse unless it’s interoperable. Again, I want people to really think about this one—when you hear all of these different names to focus on, like Roblox, these aren’t the metaverse, they’re just virtual worlds. They are standalone products that are usually created by one specific organization of people. They don’t connect, they don’t talk to each other yet. And when they do, that’s when the metaverse will be here. So that’s something to focus on.

The next one is real-time rendered. When I say real time rendering, that’s the process of generating 2D or 3D objects or environments using a computer program. To give a perfect example of this, think about the Pixar movie Monsters. If I were to try to render that movie on my personal computer, it would take 2 years to render this particular movie, which is an insane amount of time. What rendering means is making something visible. You need a supercomputer in order to really reduce this time. This is what large organizations like Disney use massive supercomputers to be able to render these kinds of movies quickly, to make it available to us. Now, in order for a virtual world to be alive, real-time rendering is required. Which means ideally 120 frames must be rendered per second. We’re not there yet in technology, and that’s the goal. We need to be there. We need to provide real-time rendering for that to manifest itself.

The next is interoperable network. I talked a little bit about it inside the virtual world concept, and that refers to the ability for computer systems or software to exchange and make use of information sent from one to another. So, what this means is we’ve got 160+ virtual worlds right now, and no one speaks to one another. If I create my identity, for example, in Decentraland, I create my avatar, that avatar cannot enter other virtual worlds with that same identity and appearance and so on and so forth. If I spend money in a particular virtual world for clothing, for example, that doesn’t carry on into other solutions. Nor does your identity. You have to have multiple identities. So, you need that interoperable network in order for the metaverse to exist. That’s why I’m saying, the metaverse isn’t here yet, and we don’t know when it’s here. But mass adoption is expected within 5 to 10 years from now.

The next concept is “massively scaled”. In order for the metaverse to be the metaverse, it needs to be massively scaled. As we know, on the internet, there are an infinite amount of web pages, and it’s constantly growing. Every new LLC creates a website immediately; that’s how they market themselves. That’s how they’re so-called “alive”. What’s being said is, for the metaverse to exist, an infinite number of virtual worlds need to exist. And within 5 years, which is what I consider mind-blowing. In 5 years, every company’s going to have a virtual world like they do a website. So, instead of going to a website to find information, to find out who is Impec Group, who is Relogix, they’re going to go to a virtual world and go get experience with this company from a different perspective. They can walk into HQ, they can be greeted by an individual. They can get an understanding of your mission statement and what you’re about. This is our services, and so on. Myself, as a visual person, I’d prefer to walk into a visual HQ than going to a website. I think that would sit a lot better in my mind.

The next one is persistence. I love persistence. This is a very interesting one. To give an example of what persistence means and why it’s important: think about the Super Mario Bros. You jump into a level and you have to defeat turtles and these brown wolves and so on and so forth. You jump on the turtle and fall into a hole. It continues the journey, and then it’s dinner time, and you have to turn off your console and when you come back, you have to defeat the same little things you defeated before. So persistence in the metaverse is: if I jump on the turtle the turtle goes away. It’s gone forever. And not just for me, but for every person who’s experiencing the metaverse at any time. Not just for that time, but literally forever. I never have to jump on that same turtle again. The same concept is, if I were to cut down a tree or throw a baseball through a window in the metaverse, the computational formulas that are showing on the back end are saying, ok, Henry just broke the window, do we keep this change forever? The answer is yes. That’s a massive amount of energy that’s needed, just to understand and sustain change now, forever, and for everyone. That’s the idea. Persistence is that my change, that I didn’t reverse, is a permanent change, and it’ll be seen by everyone.

I know I’m throwing a lot of words around, and that’s why I’m going to re-read the definition at the end, to paint a full picture.

Then, synchronous: when you’re on a Zoom meeting in video, you think that you’re speaking to the person live, like right now, you and I think we’re speaking live. I put my hand up and you think I’m doing that right now. So, the question is, are we in a synchronous connection right now? The answer is no, which is mind-blowing. What’s happening in the technology is that, let’s say in this case Meet or Zoom is recording my hand motions, my voice, and it’s packaging and sending you little snippets at a fast enough pace so that you think this conversation is live.

Something that I never even thought about until now is that maybe you’ll see that your partner is all of a sudden talking really fast, and then they slow down, and then it goes back to normal. That’s because someone at some point experienced a disconnection. You’re offline, and technology is still capturing your recording and sending it to the other person fast enough to hopefully catch up to the conversation and psychologically make you think there was never a disconnect there. That is mind-blowing to think about. So again, for this to truly be the metaverse, we need to have a truly synchronous connection. It can’t be these little snippets going back and forth.

The next is unlimited users and individual presence. Some of the most successful gaming companies with the most powerful computers have a hard time sustaining 150 users in a shared simulation. 150 users. So, if you put more than 150 people in the simulated game today, that means you’ll start to experience a lower quality of experience, so it won’t be equal for everyone. Or there might even be a server crash. For the metaverse to be the metaverse, we need to be able to have an infinite amount of people. Thousands of people who are able to again go into any virtual world and cross that back and forth. Your experience needs to be exactly the same. Because if you don’t have this, people are not going to adopt this solution. Or the technology.

So, I provided a big definition of the metaverse and I pinpointed certain worlds to hopefully highlight aspects of the definition. I’m going to re-read the definition: a massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence and with continuity of data such as identity, history, entitlements, objects, communications, and payments.

So hopefully now with the context, reading the definition makes a little more sense.

Sandra

Yes, absolutely—it definitely adds clarity to where the gaps are, especially when you talk about what we think the metaverse is versus what it actually is, and realizing that there’s still a lot that’s forthcoming. It’s not quite there yet.

I wrote a couple of notes as you were talking initially. You were talking about the ability to upload photos and that sort of thing, you were talking about ownership. This is the first thing that jumped into my mind, and I’m sure some of our listeners are thinking the same thing: how does copyright play into that? Right now when you upload your photo, they own the rights to it. But technically, when you post something on the internet, depending on where you post it, you do retain copyright, that doesn’t necessarily go away. Are you saying that in the metaverse, copyright stays with you regardless, until you decide whether or not you want to assign it away to someone else?

Henry

Right. That’s the beauty around blockchain technology, and we’ll talk a little bit about NFTs later, but I know a lot of people think about NFTS as being those funky looking apes. That’s a component of NFTs, but it means: a non-fungible token. And with the way that NFTs are developed, they’re supposed to be smart contracts, essentially. Like a gym membership, like my Disney pass, or any of that kind of stuff. They can even be for real estate, like a lease. It’s just a smart contract that says, this is my lease, these are the dates. These are the terms and conditions, etc.

So, to your point about copyright, if I post a picture, I have to first convert that into a smart contract. I convert it into an NFT that says, OK this NFT was created by Henry Massey, here’s his IP address and so on. Here’s the details of this specific piece. So, if I were ever to transfer it, meaning to sell it, it shows the origination. It shows where it came from. The history of the transaction will always be there. That’s technically the copyright, if you will.

Sandra

Interesting. The second part you were talking about was persistence. You said if you were to break a window in the metaverse, that would be maintained in the metaverse. Does that mean it gets maintained for you as part of your experience, or is that for everyone? I kind of look to Wikipedia for an example: if I go into Wikipedia and make an edit, everyone can see it. Not just when I log in. The version of Wikipedia that I see shows the changes I make, and everyone can see them. Is that kind of the metaverse experience as well?

Henry

Same exact concept. Let’s say I’m in front of a building and I throw a baseball through a window. Not only will I hear the window crashing, everyone around me will also experience seeing me throw the ball, hearing the window shatter. Everyone gets the experience at the same time. And that change will be there forever. Everyone will see that broken window, that Henry did for whatever wild reason.

Sandra

It sounds like fun! And then the third point is around synchronous or asynchronous working. I was thinking about the Sims, and Second Life. Based on your definition, those worlds are more VR worlds than the metaverse, but very much along the lines of you building whatever you want, it’s there, and you can go back. There’s that persistence aspect. You can go back into it a day, a week, a month later. I went back into my Second Life recently, and my avatar was still there from the 90s.

Is that different from when you talk about persistence and synchronization in the metaverse? I guess it’s probably tied to the previous idea of the turtle in Super Mario—when you talk about that experience and then you don’t have to go through the process again. So, if you build something in the Sims or in Second Life, it’s there until you take it down, you don’t have to go through that process again. It’s something that you build upon over time, and it’s available to people who are in that community, and not to people who are outside of it. They can experience going into your space and interacting with you. How close is that to the concept of the metaverse, or is that still VR, technically speaking?

Henry

So, unfolding a couple things you were saying: one is about persistence. If I’m building something, if I have something in the virtual world, it’s there not only for myself when I come back a decade later. That’s the whole concept of persistence. Persistence exists in a lot of virtual worlds. I think that’s the beauty right now, is that a lot of these virtual worlds, they’re not on insane tech stacks right now. They can bring in the experience people are looking for, they can bring in synchronous connections because they’re still small.

But in order for the metaverse to be the metaverse, we need to enhance that type of technology tenfold. Because we need to keep that integrity, that experience not only from the virtual world, but across an infinite number of virtual worlds, connected. So that’s why I’m saying, right now, if you were to try to do that, you’d lose your persistence, because there are some serious computational mathematics going on. They’re solving problems and trying to answer questions as algorithms, all kinds of things. So again, on a small scale you can do that now, but again, to this huger scale, it’s not here yet.

Same thing with synchronous. That is the concept of making a live conversation really live. Because you and I right now, it’s weird to say it isn’t really live. What does live really look like? We can’t tell the difference from a technology perspective. Technology is not quite there yet.

Sandra

Yeah, pretty confident that we will be too at the rate things are going.

So, what would you say is the purpose of the metaverse? Now that we understand what the metaverse is, what would you say is its overarching purpose? Why have it?

Henry

I think that’s a very loaded question. I think right now the use case can be everything and anything you want. But I think what’s probably more important to talk about is the possibilities—what is the metaverse allowing us to do? And then I think, from there, we can talk about its use cases. Where are we, what are we doing, what are the possibilities?

One, I think digital identities using avatars is the biggest component. Right now it’s number one. A lot of people are saying, well, why do I want to create a digital identity using an avatar? That’s just funky to me. And it depends on the generation you’re talking to, too. Gen X’s prefer real life, but if you’re talking to a Millennial, if you talk to a Gen Z, they’re going to give you a completely different response. They’re going to say, my digital identity is more important than my physical identity. Because I’ve spent countless hours developing and forming my digital presence. Everything they do is on a digital platform, social media, TikTok, Instagram and so forth.

So, they already have their avatar. This is already how they identify themselves. That’s the beauty though, around the metaverse—it’s allowing people to come into the metaverse and create themselves how they please. If you want to go in to the metaverse as a completely different person, you can. You can be a robot, a unicorn, or you can be you. You can come in and identify yourself however you please. That’s the beauty around all this.

Another perfect example is that I was talking to a Gen Zer, 25 years old, and I was asking the question, what is it about digital assets and avatars and all that is so important to you, and they flipped the question and said, let’s talk about physical mail and emails, which one would you eliminate today?

And with physical mail—why bother? My Gmail has decades of information on it. If someone got rid of my Gmail account today, that would destroy my day. I think I’d be mad about that for quite some time. It has a lot of information in there. So, it’s exactly right. We spend a lot of time building our digital assets, and we’d prefer to trade in our physical assets for that. That was a real tangible example for me.

And also, with digital identities, there’s no bias from gender, no segregation. It absolutely eliminates this concept, which is something we’ve been fighting for for hundreds of years. I think that alone is a massive possibility that’s coming in, and people are saying yeah, this is incredibly important. We need to pay attention to this.

And then of course, global citizenship, which is another important facet, is that there are no boundaries. There’s no racial segregation or questions about where you come from, what’s your sex, gender, identity, religion, none of that. We’re just all part of this. It’s a concept without boundaries, which I think is beautiful.

The second possibility is true digital ownership. Owning a piece of the internet is massive, like I was talking about owning your identity. I don’t think enough of us have thought about that. We sign terms and conditions without even thinking about what it means. “Click here” and you’ve sold your soul to Facebook and they own you. Digital ownership is massive. I don’t even know what I’m going to be able to do with that, to have that type of power back in my hands. That opens up all kinds of possibilities.

Three is the concept of time and space. I know this is another one people like. We can fly, we can jump around, we eliminate all physical laws or barriers of the real world. We were all born on Earth where we have gravity, and we’ve accepted those terms. I can walk, I can jump, but I can’t fly. Someone asked me in my leadership program at CoreNet, Henry, what’s your spirit animal? I said, an eagle—I wish I could fly. That would be phenomenal. If I can go jump and hover over the clouds over the mountains and see the sunset, the sunrise, get to locations faster, all while experiencing whatever I’m hovering over, that would be incredible. And that’s the whole concept of eliminating time. How do I change the reality of time? Because I can’t jump in an airplane all the time. I can’t get into my car and just teleport, drive across the world, it’s not possible. But if I can fly, I can get to most places a lot faster and experience a lot more. No accidents and all that jazz.

So those are the possibilities I think we’re going to be looking at and again, to answer your question very specifically, I don’t think there’s one specific use case. I think everyone who’s coming into the metaverse has their own idea of why they wanted to be there or how they want to augment their existing reality, not replace it. The different ways I could potentially use the metaverse are massive for me.

I’ll talk about me specifically—I work from home. I’m a remote employee, 100% of the time. My connectivity with my employees, colleagues, friends, and family is very limited. So, if I had the ability to capture all these individuals, bring them into the metaverse and have a little more “real life” experience—instead of a conversation on Zoom or Teams, which is a 2D image. I can literally be with you somewhere experiencing something, which will enhance my experience with you.

A real-life story here, I was part of a Masterclass I talked about a little bit on LinkedIn, and this class had around 100 people, and as the icebreaker, we jumped into a virtual world to meet each other and play a game of bingo. The concept was you had to run around, go talk to as many people as you could, learn about them, and match their name to their bingo card, and whoever got to meet the most people, they’d win a virtual world for example. And I thought ok, that’s fascinating, that’s interesting—being the type of individual that I am, I jumped in, but I found myself doing quite the opposite. I was intimidated. I was vulnerable because I felt like I was in a room with 50 different people. Sensory overload. I wanted to stay away from people and get more familiar with my surroundings first before I interacted with anyone. But we had 15 minutes to do the game, so I can’t spend 10 minutes walking around this place and trying to figure out my controls, and then spend 5 minutes at the end talking to people.

So that was my first experience literally jumping in, thinking, cool, I get to hide behind an avatar, so my shyness isn’t going to manifest, but it was quite the contrary. So, when people do start to think about jumping into these things, they need to think about certain things. If companies start strategically thinking about building the metaverse and bringing it into their company, and then just throw everyone in, I think there needs to be instead some kind of onboarding where you get familiar with your surroundings. And then when you’re ready to interact with people, great. Do that at your own pace. So, it was definitely a lesson I learned. So, hopefully I’ve answered your question on where we’re going and why people are using it.

Sandra

They’re all good takeaways. The possibilities are so exciting, when thinking about the potential use cases and all the cool things you could do and just how our experiences as people on Earth could be enhanced, because it creates opportunities for you to do things you weren’t able to do in the real world. The opportunity for a more generic term is there, in the sense that you need to get on a plane, or a car, you need to go somewhere to interact with people, whereas in the metaverse, it’s just there at your fingertips, whenever you choose to participate in this world, you know you can have just as much impact or significance as if you were doing it in real life.

I think the flip side of that is, as with everything that relates to technology, although it’s probably true of humanity as well: there’s a dark side. You’re in this world that has no rules, because really, there wouldn’t be any rules. So, there’s a level of vulnerability from that perspective as well, because you’re going in in good faith that people are there for the right reasons. As I said, there’s other thing we’ll probably have to experience before we come out on the other side of this, where all those hiccups will have been worked out.

Henry

You bring up a great point, which is security. A lot of people are questioning what sort of security they’re going to have inside the metaverse. You have a lot of creators that are starting to finally think about that because, if you have a great idea and just throw it in there, they don’t take into consideration your mental well-being, your physical well-being in that particular space.

People are starting to implement that heavily now. There are solutions that are, for example, creating invisible rings around you, that don’t let others in unless you let them, as a default rule. This is really cool, because I’m sure you’ve seen the news article a couple months ago about the individual who felt harassed, and because of that we’ve implemented this sort of thing inside our virtual worlds. We’re going to see a lot of that come up still, because we haven’t necessarily peeled the onion back far enough, to think about all these different concepts yet.

Sandra

This very much reminds me of my Second Life experience, in that you could actually work and make money, which you could convert into real dollars. And when I learned that concept I thought it didn’t make any sense, but people were doing that and continue to do that. But I remember HP had an auditorium in Second Life. And another recruitment company whose name I don’t remember. They had a place where you could go in and there was a bank of computers, so if you were looking for a job, it was almost like you were in their office interacting with this recruitment companies. And when they’d have their meetings, depending on if it was a public-facing or private-facing meeting, you could be in the auditorium and listen in, kind of like a virtual webinar. This is going back to the late 90s, maybe the early 2000s, when I first saw that, and I thought it was pretty cool.

From a business perspective, it was mostly social stuff. People were there to have fun. But it was that same concept of creating worlds where you walk in through some doors and you don’t really know what you’re going to experience until you’re there. So, when you’re talking about Decentraland and some of these companies that are in those locations, it’s almost similar to walking into the Nike Space or the Lego Space. It’s all in the same community, but the experience that you’re going to have will be different. I can kind of see how the connection to the other virtual worlds would play into what that experience might be like. So the cartoony look and feel might be better suited to the Lego space versus a more real life kind of experience if you were to walk into Nike. That’s really cool.

It feels like it’s light years away though, because how in the world would you ever bring all of that together? But I think the key is, if you have communities of people working together for the greater good, so that the experience isn’t just for one group, it could be extremely, extremely beneficial.

So what are some of the use cases that you think would be applicable?

Henry

So we’re seeing eight that have popped up. Right now we’ve done some studies, some polls, some surveys, all kinds of questions to the audience to figure out what people would like to see implemented. We’ve implemented our own thoughts on this as well. But to talk about this really quickly:

One is virtual onboarding. We’ve seen three large organizations do this internally. They’ve expressed that it created a fantastic user experience. If you have everyone from around the world, and they can’t do it in real life, they still all get that baseline experience, which is massive.

Two would be as a learning and training center, which I think is starting to take over as the number one most critical concept. Everyone’s talking about baselining. How do I baseline my training provided to my employees and teams, and how is this helping eliminate language barriers, eliminate technology issues? I can give the same information to anyone all around the world, and everyone’s getting the exact same experience.

Three would be as a company library. Think about all the different areas where you get information now—your HR handbook, employee handbook. What are the benefits? We could find all these things in the Metaverse. I can walk into a room and I can see that all in a room that creates an amazing experience. I can quickly find my HR guy here, I can quickly view the mission statement modernization. Then I can learn and I can re-engage with the company that way.

Number four would be as a company helpdesk, HR, IT. I know in my experience, in my career with HR or IT I have to go find the IT group and then wait in line. You can do this in a virtual world, you just pop in, go to a kiosk for example, and there might be more resources to help you in this area. I don’t have to go anywhere and it’s a little more seamless.

With virtual work, people say, what’s the value? With virtual work I can go in and, to use myself as an example, I’m in Tucson, Arizona. I don’t have an HQ around me. So, I would love to pop into the HQ on the Metaverse, sit and collaborate with you somewhere around the world would be awesome. People are finding value in the ability to just pop in and pop out of wherever you’d like to be.

Six is creating engagements. A lot of people are saying, I want to be able to just interact with people in a different way. Whether it’s a yoga class, a wellness class, an event, a concert, whatever that may be. I just want to engage with people, and that’s a huge use case that people are looking for. How do I engage with people in a different environment?

Seven is for functional venues. People are trying to find virtual worlds that are providing infrastructure, like a conference room, a building, an event location, whatever it may be. So I don’t have to go in and buy land, I can just go in and find something that fits my needs and use it for what I need.

Eight is digital twins. I think this is going to go in multiple different directions. It can go into literally mapping out your existence with data and all that good jazz. But we’re not going to go there—keeping it simple, digital twins is duplicating your reality. My reality is what I have around me. What if I want to experience this reality in a digital fashion? I can jump around, I can fly over Tucson if I wanted to. Right now I can’t do that in real life. Same thing with HQ, or creating digital twins of their buildings, where people can pop in.

So those are eight different use cases that are totally dynamic. They aren’t static in any way. The platform will continue to grow. But these are the big eight that we’re seeing as the primary use cases.

Sandra

So if we think about what we’ve talked about from the business side of things, is there anyone currently that you can think of that’s leading the charge with respect to certain genres, or even just organizations that are leading the charge in the metaverse space?

Henry

There are definitely a few creators who are creating virtual worlds—I’ll give you some mainstream ones and then I’ll give you a few that aren’t so mainstream but are starting to make a name for themselves. So of course, you have Decentraland, Roblox, Sandbox, all VR spaces. Those are the main names you’re hearing right now. A lot of those are decentralized platforms that are again, just open worlds. They’re open to everyone and anyone, from a child to a senior individual who can come in and explore the space. If you’re thinking of getting into this space, these are the things everyone needs to step back and think about: what is the use case for these specific lands? For Decentraland, I’m sure everyone’s heard a lot of headline news with Snoopdog and Decentraland, Nike and Decentraland. It fits their strategy as an organization. Does that fit your strategy? Is that the type of user experience you want, or are you allowing the world to come into your organization? These are things you have to think about from a strategy perspective.

So you have a couple names like that in the corporate world, if we’re talking about being able to see or be in a virtual world that provides meeting rooms to meet with internal and external colleagues, 3D showrooms, so on and so forth. You have XRSPACE, which is a pretty cool virtual world that’s fully enabled to provide those things. They provide wellness activities, events, brand experiences, so on and so forth. They use it for onboarding, where you can create your own digital avatar, still a little cartoony, but it looks more like you than what some of the other products look like. So again, that one’s focused on virtual meetings, conferences, and events for brands and businesses.

Then you have another one called Virbela, which for real estate also offers virtual workspaces to bring people together and learn, take meetings, train, interact from anywhere. These are all non-decentralized platforms, meaning a corporation’s creating these virtual worlds and you’re probably paying a subscription fee to come into this type of environment.

Now, if I’m going to peel that back, there is another option called Cornerstone. They were a decentralized platform, and the beauty of this particular virtual world is that it’s hyperrealistic. So if you want to have that real-life, mature type experience, this is probably where a lot of people of our generation, Gen X, the Baby Boomers, will be able to assimilate more, because when you go into this land, you notice that the grass looks really real, the trees are swaying in the wind. They map the weather to a city and it mimics it. What’s awesome about a place like this virtual world is that they actually vet you before you can enter it. You say, I want to buy land in this area, and they will evaluate you and say, who are you? Are you a speculator? What’s your deal? Are you a creator or are you just coming in to buy land, let it sit for 5 years and then make a profit at some point?

They’re looking for creators who are going to come in, present their plan. They want you to actually build on the land. And not just for you—how is it going to benefit the community? Which is phenomenal. You actually have a virtual world that’s not just interested in making money, but it’s interested in building a community where everyone works with each other in some interesting fashion. There’s a use case—I was in the Discord the other day, and saw that someone bought land so they could build a cemetery and have their family plots there, so people could come in and mourn there, and visit their family in a virtual world. I never thought about that use case, but people were finding value in that.

Or on the contrary, you could build your corporate buildings as masterpieces and you could bring in people as virtual guests, have events, conference events, bring in your teams, and things of that nature. So, there are definitely solutions that offer different types of experiences, going from your Lego field to your hyperrealistic.

It depends on your use case and what it is that you’re trying to do, but there are fascinating virtual worlds popping up right now.

Sandra

Let’s bring it back to companies and organizations. Do you think companies should be thinking about their place in the Metaverse today, why or why not? I think I know where this is going to go, but I’m curious to hear your thoughts on it.

Henry

I think first and foremost, it depends on who you are, and what your strategy is. If you’re Nike, if you’re a retail company, you’re trying to get your brand out there where it might not be accessible to everyone in the world today. I think at the same time, there are multiple facets to this. You have to ask, what should companies be thinking about? What should they be educated on? I don’t think the answer is just to jump into the metaverse. I think what people need to be doing right now is understanding what the metaverse is, what Web3 is, how, if at all, am I going to implement this concept in my organization.

Let’s think about it from a financial perspective, in corporate real estate. I was talking to someone saying, we’re using Web3 to eliminate the middle people who are controlling our leases, or throwing it into the blockchain, putting it all into smart contracts, and that’s what we use. I just read an article this morning about how a lot of organizations are trying to figure out how to get into Web3 because of this whole component of eliminating the middle man. Imagine how much money you can save if you do that, because now companies own their information instead of hiring middle companies to be managing all of this for them. So that’s one component.

Another one is, who are you trying to reach out to? What is your purpose to be in the metaverse? I think these are all questions you need to answer first. Are you trying to create a brand, or are you trying to create awareness around your existence? Who are you trying to attract? A perfect use case I didn’t talk about before is HR people are finding incredible value in members saying, let’s pop into our HQ. In the metaverse, I have access to a lot of people worldwide. They can come into our office and they can learn about us. I can learn about them. I can hire people right off the bat. So, for HR, this just makes sense.

There was a law firm that just popped up in Decentraland, and that’s their concept—they wanted global outreach. People can walk in and say, I’d like a consultation on XYZ issues, and that’s how they initiate discussions. I think one step is that organizations need to understand technology, go get educated, and then figure out next how do I fit into that model? If you do at all.

We’re helping organizations of all kinds go through that process, helping them figure out all the different solutions that are out there. That’s step one—the tech ecosystem. I’m not sure if everyone here has seen that, but we were the first ones who created tech ecosystem, mapping 200+ different solutions and where they sit in the spectrum. We did the same thing with the metaverse saying ok, let’s find all the different solutions that are out there. What platforms are there in the virtual world, mapping out what genre they’re in.

Where are you in your cycle? Are you active or still in development? What projects are you working on? What genre are you in? And then what are your use cases? What are you providing? So that when companies come to us and say Henry, who are the key players, like you asked me—the ones I listed are the ones that are making moves inside the corporate real estate world. But there are hundreds more that we didn’t even talk about. Again, we help organizations define what their requirements are, and hopefully provide them with a list of different virtual worlds that are out there and how they can potentially fit their model.

Sandra

This is such a new topic, and as you continue to talk, new ideas keep popping into my head, especially as you were talking about the middlemen and this whole concept of ownership of data. I think the upside of all of this, over the last 15, 20 years is that we’ve seen an explosion of data on the market, and not many people know what’s out there. How is it being used, who owns it? The example you gave that everything is online these days, you always just read “Click here to agree” and nobody reads it. But you don’t know what you’re technically signing away until there’s an issue. So, I think from that perspective, there are major advantages.

I can’t stop thinking about how this is going to change the fundamental concept of business. When you said it eliminates the middleman, and people can do things themselves because they have access, and the ability to do it themselves, because they have ownership. Just imagine the impact to the business world as a result. So it’s strategy to a point, but there are also just the pros and cons of choosing to be a part of something. And like everything else, at some point you’ll have to make a choice, because you’ll be missing out on what’s happening in this world because maybe you didn’t see the value in it.

It’s an extremely fascinating topic for discussion. Oh, and the company I was referring to before was Manpower. I know they have videos on Youtube that show what their environment looks like.

So final question, what are the three most important elements for the future of the metaverse?

Henry

I think the first one will be interconnectedness. I should be able to go to the Maldives to just experience the beach. I should be able to go to New York to catch a show or even Amsterdam to enjoy a festival all on the same day. To experience all this. And the only way to do this is through an interconnected network.

Number two would be decentralization. That allows users to experience the Metaverse from a space of safety, greater privacy, and less manipulation.

And to wrap it up, I think the most important component of the Metaverse is inclusivity and diversity. For the first time in human history, diversity and equality becomes your reality. The Metaverse is eliminating inequality by creating opportunities for everyone. A student from India, a lawyer from the US, and a worker from Europe can all find a place of equality and inclusivity in the universe. This one concept alone makes the entire metaverse worth it, in my perspective. And that’s supposed to be the future of what we’re doing with the metaverse.

Sandra

My mind’s now gone off to a hundred different places. With diversity and inclusivity, I think that’s true. But I can also hear people saying, it assumes people have the technology, because with the diversity and inclusivity aspect, you have to think about the people who don’t have access to the technology. But I think we’re all working towards this idealized version of the future, and like you said, technology is always evolving, so we’ll figure out how to make it accessible for everyone.

I’m sure there’s a lot more we could talk about, but I wanted to just say thank you for your time, I really appreciate it.

Henry

Thank you!

About the Author

Sandra Panara, Director Analytics, Insights & Innovation

Sandra has both a deep and wide understanding of Corporate Real Estate and Technology. Since early 1996 she has been applying non-traditional approaches to extract deep learning from the most unsuspecting places to inform, support, and drive executable strategies. She has developed an appreciation for always challenging the status quo to provoke and encourage new ways of thinking that drive continuous improvement and innovation. Sandra believes square pegs can fit into round holes and that the real ‘misfits’ are those that fail to adapt. Her deep knowledge in CRE Analytics to surface key insights have helped many Fortune 500 companies inform their workforce and location planning, space and occupancy planning, and global workplace strategies. 

Some of the highlights of the show include:

Why did we start going to offices?
What has the evolution of the office looked like over the past 8 decades?
How is hybrid/remote work different for Gen Z, a generation born into tech savvy?
How do you develop a corporate culture without a physical office?
How does productivity correlate with whether employees are working in the office or not? And why does it correlate this way?
With the nature of work shifting so fundamentally, do we need to develop new KPIs?
What will become of the legacy office? Should they be retrofitted, or converted to residential?
Is coworking in residential neighborhoods the way forward?
Is big tech trying to solve problems, or is it just being developed for its own sake?
Is technology enabling us to be more productive, or is it more of a distraction?
How do you deal with red tape related to privacy and security when trying to be productive with a particular tech stack?

Links:

Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
Francis Saele on LinkedIn – Workplace and Real Estate Solutions
Radious – home-based remote office marketplace platform
Kastle’s Back to Work Barometer – weekly occupancy rates for 10 major US cities

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript:

Sandra
Hey everyone, welcome to Let’s Get Real with Sandra and Friends, a workplace consortium podcast brought to you by Relogix. I’m excited to be sharing conversational musings about current events and how we envision the ever-changing world of work. I’m Sandra Panara, Director of Workplace Insights at Relogix. With 25 years of hands-on experience, I help value engineer global workplace portfolios and employee experiences by aligning workplace analytics with corporate real estate needs.

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

Francis Saele, an accomplished senior-level corporate real estate and workplace executive with a broad-based global background, is my guest. Francis has designed and implemented successful portfolio service programs for two global service providers and hundreds of clients. He’s a respected thought leader in the evolution of remote work, driving the transformation of the workplace and its impact on the built environment.

Francis has an MBA in Finance and a BA in Psychology, and has worked at CBRE, Accenture, Newmark Group, and the Nashville Chapter of the NAIOP, an organization that provides advocacy, education, and business opportunities for developers, owners, and investors of office, industrial, retail, and mixed-use real estate.

Sandra
Hey, Francis, welcome to the Let’s Get Real podcast. Really excited to have you on the show this week. Why don’t you tell us a little bit about yourself?

Francis
Hi Sandra, great to be on the on the program with you and looking forward to this very much. It’s on a subject near and dear to my heart, but we’ll get to that. So, a little bit about me:

My professional background is almost entirely consumed with corporate real estate and corporate services in real estate. It really started right out of college. I joined a local bank and went into a management training program. I was a psychology major, which probably didn’t make me an ideal candidate for many banking functions, but it did make me a good candidate for corporate real estate.

So, I went to this small group that was doing corporate real estate, which was kind of interesting. I learned a lot and grew into that business. I had the experience of the typical corporate real estate manager who has the users calling and saying, I don’t have enough space, it’s too hot, when can we move to a bigger area, we don’t have space for our new people, that sort of thing. And at the same time, the bosses are calling and saying you’re spending too much money, how could you possibly have a budget like this?

It’s a really high-pressure job. I learned a great deal there. In the end, I wound up convincing the board to build a new headquarters building, which was a great experience for me.

Then I got the development bug, so I moved into the commercial real estate development business in office and industrial properties and did that in five states with two companies. I learned a great deal there, at some point I had a really decent balance sheet. But then the crash would come, and the balance sheet would go away. So, after a little bit of that, I decided I wanted to be in business for myself.

I formed a small company with just me and a couple other people who joined later to do corporate services and portfolio services, lease administration and related tasks. It was at the time when building information databases were beginning to do scanning of documents. That sort of thing was just newly happening and there was a lot of that work around. So, we built a pretty good business there and got some good corporate clients, one of which was a major provider in the space.

We did major projects for them around the country. They wound up buying the company 10 years later and I went to work for them as a lead for quite a while. Then after that, I joined another corporate services provider, doing essentially the same thing but in a new way. We decided we were going to outsource the back office from the US to Asia. And we did that very effectively. It was a really good experience, we cut a lot of costs and it really made us much more efficient. And also, in the end, we were able to move to a remote environment for our team. We had teams in Pittsburgh and Dallas, and I was based in Dallas.

But people were driving an hour and a half each way to work, and they started to come up to me and say, why can’t we do this work from home? We have all the tools. And we said, yes — actually, we said yes after we lost someone to a competitor because they said yes. So, we began to do the work-from-home thing. This was a year and a half before the pandemic, and we were almost entirely remote. It was a very effective operation, and people loved it.

Then, I spent a short time with a consulting provider and did some real estate consulting for them, but the moment of truth hit with the pandemic where I convinced myself that the biggest new thing in corporate real estate was the pandemic and the impact that was going to have on both the workplace and corporate real estate. So that’s where I am today.

Sandra
What an impressive background! It’s always fascinating to me to hear about how people ended up in the roles that they currently play. They seem to all have come up through the ranks working in the trenches and gaining the hands-on experience and collecting takeaways from that.

I didn’t know that you had a psychology background, that’s definitely a great thing to have when it comes to corporate real estate. I’ve been in similar shoes where you’ve got people coming at you from all angles saying, this isn’t working, that’s not working. And you’ve got to think about people’s behaviors and how to minimize that unhappiness that people seem to bring forward when you’re in corporate real estate. There was always a saying that if people aren’t complaining, that’s a good sign.

Francis
That’s it. I should point out though, in the first few months I was with the bank, I remember an experience in some accounting group where they said, you need the debit this and credit this. And I said, how do you feel about the debit? And that that led me to the conclusion I needed to go back to school. So, I did go back and get an MBA in Finance. But psychology is a really interesting area and I think particularly at this time, it’s a very important subject to look at for the workplace.

Sandra
For sure. You also mentioned a little bit about your work-from-home exposure. What year was it that you first got exposed to the work-from-home option, or when did people started expressing interest in that?

Francis
Well, I’m sitting in my home office, which I started my business in 25 years ago. So, I’ve been working from home for a long time. I did have office experiences with the providers who acquired us. We did have an office here in Cincinnati, I worked in the office and did commute.

But the experience that I mentioned was in terms of offshoring, I was in Dallas and that would have been around 2017, 2018, a few years before the pandemic.

Sandra
Given your background in corporate real estate and the different areas that you’ve worked in, I’d be curious to hear a little bit about your perspective with respect to the history of the office. Thinking about those last 25, 30 years, how did the office emerge? How has it changed in the past 30 years from your point of view?

Francis
Actually quite a bit. And I think we should really start with why there is an office to begin with. The reality is that the major driver for getting people together in one place was that all of the knowledge work was done on paper. There weren’t copy machines. Frankly, you had to have original documents. So, in order to use those papers and do anything with them, you had to be in the same place. You also didn’t have telephones, or air conditioning. It was pretty rough, back in the primordial office. But things began to change — I think around 1950, air conditioning came out, which is great.

Then there were technology’s major advances in the in the 90s. I think of the Internet certainly and being able to digitize documents, that was really the beginning of the movement to do things anywhere.

It started with people who had notebook computers. Those eventually came out and they could put their work on their notebook computer, go home and do something on it and come back to the office and then upload it and work on it.

And of course, since then, there’s the Cloud, which has made it so much easier for almost everybody to do anything from any place, as long as you can get an Internet connection. So, it really obviated the need for people to come together. The work follows them wherever they go with a couple of clicks.

What’s of course missing in the remote environment as it exists is how we interconnect with other people and how we exchange ideas, how we innovate and plan and create new things. That’s really the missing piece. I think that in the remote work environment, that’s the thing that requires the most attention going forward.

I call that the remote infrastructure. We know that that exists in the office. The legacy office has all of that. It has everything: it has the rooms, it has the technology, it has all the people, and it has food. But it does have the deficits associated with the commute. The cost of that, the time associated with it, and all of the other nuisance things that you’ll see about being in the office. Most of those occur around the water cooler around the way to the men’s room or the ladies room, as there is a nuisance factor to being together with people all the time. That’s really a negative to the office setting.

Sandra
Yes — the water cooler comment is funny, because I know that there’s been a lot of discussion about that on LinkedIn and other channels that I follow about how valuable are those are. I think there’s obviously something to be said about the social aspect of work. But the flip side of that is we’ve made our entire life about work. Work is the be all and end all of what we do, actually.

Just this morning I posted something on LinkedIn about how a lot of people are talking about this negative impact of working from home because of the impact on social skills and things like that. And I was thinking this morning, there’s some truth to that. I reflected on my own personal experience — I did work in an office, so I had those experiences. You reach a certain point in your career, where you say, OK, I’ve had enough. I’m OK with working from home and never stepping foot in an office ever again. But when you think about, the new kids on the block that are just joining the workforce that haven’t had that experience.

You kind of wonder, what might their experience be like? I’ve talked to a couple of friends and younger people that have just graduated or are on the verge of graduating. I ask these kids, how do you envision work? They’re still thinking about the traditional office. I don’t think they’ve really understood the impact of remote work, in terms of what’s actually happening.

I also think what’s different with them versus us is they’re virtually born with technology in their hands. They can do 10 things at one time with 10 different devices and be super effective, which is overwhelming. At least it is for me anyways, I can’t replicate what they do. I’m pretty tech savvy to begin with, but I’m not that tech savvy.

So, I think that’s where there’s a bit of a gap in terms of understanding the effectiveness from your point of view. From my perspective, I wouldn’t be as effective doing that, to me that’s just major distraction, but for them, that’s life. They’re on Instagram, Tiktok, they’re consuming. I guess that’s the other part, you’re consuming information versus creating and managing information, which is what we do at work. In any case, people talk about there being distractions working in other places, but I think you have to consider all the factors. There’s gain and there’s loss to both in every generation, because of different experiences.

Having said all of that, how would you define what the office is today?

Francis
That’s a really good question. That reminds me of the inquiries in the Senate or the House recently where they asked someone who is up for a political office, can you define what a woman is? And nobody wants to answer that question. So, I’m going to take the same the same approach.

I’m not sure what the office is today, particularly as the workplace within it is turning into something that never existed before. It’s completely different.

We have to think about the question, what is the office for? I think it’s in the remote infrastructure for sure.

But I’m going back to your earlier comment about Gen Z and the late Millennials and being good on their phones. I keep getting texts from my daughter that have links, and I really need to have a computer in front of me to look at them, whereas she doesn’t think about it. She does it all on her phone.

But I think, going back to the initial reactions we had to the whole idea of perpetuating the remote workplace at the beginning of the pandemic: it was the Jamie Dimons and David Solomons who said, you need to get back in the office. There’s corporate culture there. How can we develop corporate culture when nobody knows anybody and nobody has the opportunity to talk directly with another person?

I think you have to segment the workforce a little bit into the nature of the work, for sure. What is their work all about? And how much collaboration goes on? I know that varies quite a bit in different work, but also the age and the orientation of the new employee. Is the new employee right out of school, or have they been doing that work for 10 or 15 years, and they know how to do it and can do it remotely, but need to know people? Or are they more mature candidates who have been doing this a long time and they can be anywhere to do it, and don’t need to interact that much? You can always interact virtually.

And usually where you have in-person interactions in an office or someplace else, you’re also going to bring in people virtually anyway. So, it just seems as if the virtual piece is there forever, and it’s just a question of how many people are together and where they are. Should there be times where people are all together in person? I think they should be, but to go to the default position of, well you can do that in an office, doesn’t mean that the office is the right solution for those. That’s where I think you really have to dissect what is the need and where is that best served, and what’s the optimal solution for the business and the employees.

I posted this morning actually that there was a report out that productivity, in the first two quarters of this year, has dropped more than ever before, and that there’s something going on there. Now, of course, some people will say, it’s because people aren’t working in the office, they’re at home and they’re watching television. I don’t think that’s true necessarily.

There are a lot of other reasons for that, so I wouldn’t default to say that if you had people back in the office, that productivity would go up. I think just the opposite would happen. It’s a very interesting subject and I think it requires study, which hopefully is going on now. I think it’s a great research area and hopefully we’ll see some interesting conclusions to some research that’s underway.

Sandra
It is interesting. I did see your post, and actually had a chat going on in LinkedIn yesterday about that statement that Sudhir Hasbe from Google made, about productivity being down and their expectations around headcount. My question was, how do you measure that?

Similar to what you’ve just said, this morning I was looking at NASDAQ and I just happened to look at Alphabet’s earnings per share. I was curious to see what their Q2 results looked like, and I saw that they were profitable the last two quarters, Q1 and Q2 of 2022. They saw a decline of about 3% in Q1, and a decline of about 6% in Q2. So, I googled Google’s fiscal year, which happens to be in February. And I was like, hold on a second, Google also mandated people to come back to the office around April, which would have been into their Q1 and into their Q2.

Again, we don’t know for certain, and I agree that there’s definitely an opportunity for some research there, but is it coincidental that you were at 22% earnings per share in Q4 and Q3 of last year when people were working from home and then Q1 and Q2, shortly after you’ve mandated people to come back to the office the first month, it was down, and the second month it was even further down. There seems to be potentially a correlation between maybe disgruntled employees or something else that’s going on. Maybe they’re saying, you’re forcing me to come back but I’ve recognized that I can be productive working out of the office. So maybe that’s a way to dig your heels in, so to speak.

It’s fascinating because nobody is going to come out and say it. There’s no way to really prove it. But this information begs the question, is it coincidental or is there actually a correlation there between the people being in the office or out of the office and why we’re seeing productivity rise and fall?

I was looking at a Gallup report last night and they were saying people are way more productive working outside of the office. People are more productive because they’re happier. And as a result, it impacts their ability to be more engaged in their work when you’re pushed to go back to an environment they don’t really want to be in. Not because you don’t want to work, but because you don’t want to do it from the office, because technology enables you to do it elsewhere.

It’s interesting how it potentially impacts psychology, right?

Francis
Right. I’m sure there’s some impact there, no question about that. We were talking recently about how productivity was being measured and, in the office, really the prime measure was the boss looking through his glass wall to see who was doing something. And that that’s not really a good measure of productivity, if someone’s there and punching buttons.

I think one of the things that has developed to some extent, and you may be closer to this than I am in terms of gaining knowledge about productivity and being able to actually measure it quantitatively: we certainly know a lot more about where people are and how much they’re producing. That can be easily measured and analyzed on an ongoing basis. And I suspect that given some thought, you’d be able to track that productivity in terms of where they were. So, if you had an objective measure of productivity, and you have the objective data with respect to where people are, that’s an experiment waiting to happen. I think it hasn’t been done.

Sandra
I agree. I think that there’s definitely an opportunity that brings up another thought process that I had. Thinking about the fact that work is shifting, a lot of our old practices of work are shifting, and in this new way of working it just doesn’t work: it kind of begs the question, are the KPIs wrong? Are they dated? Do we need to be measuring things differently in terms of whether it’s productivity or engagement, with this new way of working? Does it still apply? What are your thoughts in that regard?

Francis
You know, I spent a lot of time building KPIs for our clients. The best way to come up with KPIs is to come up with a handful that are really meaningful ones as opposed to 182 that aren’t worth the time to calculate.

To the extent that the work is being done differently, I think that the KPIs associated with that work must be reviewed and changed to adapt to how it’s being done. In this article we talked about earlier in Yahoo Today, they talked about the two things that were going to improve productivity: remote, and AI.

To the extent that you can build AI into your operation, you’re going to have greater levels of productivity for sure. I think AI is in its infancy in terms of permeating through the office. It’s certainly advanced in some areas but not everywhere. So, I suspect a lot of processes can be improved quite a bit.

Sandra
With regard to KPIs, what are you seeing from a scorecard perspective, what are companies interested in measuring today? What are they focused on?

Francis
Well, the KPIs that I’m experienced in are those related to outsourcing programs, but you know, it would be the quality of the work, the timeliness of the work, any issues associated with the work, were there any losses, any mistakes that caused problems, those kinds of things. Those are all probably still in place. But again, it’s a question of the components of it.

For example, if you were doing something manually, but that has now been replaced by some piece of technology that has to be adjusted — is the technology working right, those kinds of things, I think need to happen, but clients are really only concerned with the quality of the work, the timeliness of the work. And can they rely on it? Because once the garbage flag goes up, it’s more challenging to recover. Let’s put it that way. As a service provider, once that seed of doubt is planted, it’s very hard to move forward.

Sandra
Right. Let’s shift gears for a bit. You talked about where things are with the legacy office. We’re at a stage right now where there’s a lot of uncertainty as we think about the future of the built environment. So, let’s talk a little bit about what becomes of the legacy office.

Francis
That’s a really great question and I’m trying to get some stats on this recently, which I think I shared with you. It’s really difficult to zero in on the amount of office space. When you look at total commercial spaces, 87 billion square feet now, very little of that is offices. Something like 16 billion. But most of that is one- or two-storey buildings, mom-and-pop situations. The segment that I think we’re talking about is the multi-story, the high-rise buildings, and that’s a much smaller segment, but it’s still a couple billion square feet of space. I mean, you have 206 million, I think, in New York alone. There are a lot of bigger markets, so if you add them up, that’s a lot of space.

There was a post recently that talked about how this was all forecast, that in the future people were going to look at these major buildings, and architecturally, are going to be baffled and amazed by them. I think we have that vision in our heads. We haven’t experienced it yet, but I think it’s coming.

I think we see a lot of deterioration in occupancy for sure, and that’s easy to validate. There really is very little growth there. There is some growth in much better, higher-quality buildings with their air conditioning, lighting, amenities, that kind of thing. Those will continue in those markets. But it’s all the other buildings that won’t be able to keep up with that — there is no market to support the quantity of space there, and there will be a fair amount of deterioration in those markets. Some adaptive re-use will occur. I think you’ll get some multi-use properties emerging, some conversions from office maybe to residential, but that requires a very specific set of architectural considerations that allow that to happen. There are many offices where that can’t happen.

So, I think it’s going to be an interesting period, difficult financially for a lot of investors and lenders in commercial real estate to create products that are marketable, and there are many offices where that can’t happen.

Sandra
You and I talked earlier this week also about companies like the FAANG companies in particular that are heavily invested in real estate. We joked a little bit about Apple and the “donut office”, and how do you split the donut, or how do you repurpose the donut if return-to-office ends up completely dead. It looks like we’re not going to exceed 30, 40% occupancy.

You can kind of see why some companies are really pushing hard for return-to-office, because they’re so heavily invested in real estate. But what happens in those cases? Those are the ones that stand out, but I know from working in different portfolios that there are usually companies where 20, 30% of their portfolio is owned, which can be substantial. And they’re office buildings usually, so what do they do in that situation? How do you start thinking about offloading space when, first of all, there’s no demand for space from an owned perspective?

From an investment point of view too, there have been conversations about older buildings needing to be retrofitted or needing new amenities. I saw an article last week that the Empire State Building is putting in a bunch of amenities in hopes of bringing people back to the office. But are companies and landlords and building owners willing to put money in without really knowing whether people are going to go back? It seems a bit weird to me. It doesn’t add up.

Francis
I think the short answer is no. They’re always going to try to put other peoples’ money in there. So maybe they can get someone to invest in that. They have to be able to convince a lender to let them borrow the money. But I think the financials associated with the retrofit today are really difficult. I think that’s also affecting the coworking market too, because lenders are really sketchy about what’s going to happen. And with good reason, because they really don’t know.

I made this comment to several people. There’s a big buzz around coworking, and there are thousands of operators and a lot of them are small mom and pops. But a lot of what’s going on in terms of growth — you hear about it, you see announcements — but you don’t see a lot of activity there, and I’m kind of surprised, frankly. I think it’s driven by the financials associated with it and the tenants, most of whom already have this legacy portfolio. And it’s difficult for them to say, I have this 15-year lease and I can’t sublease it, I can’t give it back. I’m stuck with it. It’s hard for people to have to deal with it. Particularly in corporate real estate, I can imagine what it’s like, having sat in that chair. You’ve got this portfolio, you’ve leased it, and now what do you do with it? It makes people nervous.

So, it’s a lot easier to say hey, we’ll be more productive and we’ll put in a pool and people can go swimming at noon time. But like you said, I don’t think that’s going to work.

Sandra
Yeah. And I’ve asked the question to many people, is there actually anything that a building could have from an amenities perspective to entice you back to the office? And they look at me blankly and say no, absolutely not. You get the odd response about a daycare. But if you think about it, say you’re working 2-3 days a week in office, and if you’re bringing your child to a daycare at work, you drop the kids off and you go to work. But then on the days you’re home, you still have to trek down to the office. So you haven’t really improved anything.

Francis
Right. That probably worked with five days a week in the office, but it doesn’t work with one or two days. So those investments are gone, they just won’t survive.

Sandra
You mentioned coworking; earlier this week I interviewed Amina from Radious, which is a new company in the coworking space that’s basically looking at bringing coworking into the suburbs through peoples’ homes, which is very different. The coworking spaces that are located in central, downtown locations, you’re still required to commute. You’d think, if I have to go downtown to use a workspace, I might as well just go to the office if it’s right there. What’s the difference, why would a company pay extra for me to go into this coworking space instead of just coming to the office? Maybe the building is newer or updated or it has the latest and greatest amenities, everything that makes people feel more comfortable.

But her whole concept of bringing the office into the neighborhood made me stop and think, why would I use that? If I’m working from home — I don’t have children so it’s hard for me to fathom. Why would I go use someone else’s home other than if I’m meeting with someone and it happens to be a convenient place to meet, which doesn’t really work for me in particular, just because I live so far from the city center.

But she was saying, some people have multiple family members working from home, kids that are doing school virtually, young children at home. There’s just too much going on in the household, as well as some people just needing the routine of leaving the house. I get that, because I can see that sometimes you need a change of scenery, without wanting to drive for an hour or sit in traffic to get to the office.

It’s fascinating, as we think about different uses of space, the fact that there’s still a lot of concentration on the office, and in essence, it feels like we’re trying to keep the office alive, which I’m having a hard time trying to understand. It’s a relatively small percentage of square footage when you look at the big picture, but if you go to the downtown core of any major city, you see the towers, and you start to imagine, what would life be like if these towers remain empty from here on in?

Francis
Right. I think it was Peter Drucker who made the comment back in 1980 or so, that one day we’ll look at these big buildings with amazement. They’re beautiful buildings, but we’ll wonder what did people do there? Why did they go there? People won’t have any sense of why that happened.

I do think there’s going to be a greater penetration of coworking in the suburban areas. I was just thinking about this neighborhood thing myself. I mean, we have a 3200 square foot house. And a full basement that isn’t finished, which I could finish. We had two kids but now it’s just my wife and me. The kids grew up here, but they’re gone, and now we’re in this cul de sac, and there’s maybe 40 homes, there’s nice people around who have that issue of where to work.

We could easily convert a number of these rooms into offices, meeting rooms, and form our own business. We could probably take some investment credits and tax credits and appreciate the house and make it financially viable.

I think that’s a great idea. Frankly, I suspect there are a lot of people who, once a program was put together to do that, would be willing to do it. That’s a great idea. So I think the people you mentioned will have some success there. People are going to look at it with some suspicion as to whether it will fly or not. But I think experimenting there would make a lot of sense.

I do see neighborhood centers occurring, and these are the centers that will eventually be relatively close to most people. They’ll be generic and have hologram capability. So, if you want to have a meeting, you’ll go into a room, turn on a screen, and it’ll be a hologram, so you’ll see people live. Not avatars in the metaverse. You just won’t be able to physically touch them. You can do a digital handshake. So that capability will be here and those kinds of meetings will happen. You remember the Fifth Element with Bruce Willis.

Sandra
It’s actually really fun to think about these possibilities. I remember my first time seeing a vision of the future, you know, with flying cars to solve traffic congestion issues and things like that. And here we are. There are some crazy ideas out there, and right now, the Metaverse is a prime one. A lot of people talk about it, and we’ve talked about it in the past.

I’ve always been intrigued by technology. When my daughter was younger, she used to play on these Metaverse-like things long before Roblox. Habbo Hotel was one of them, it was really fun for kids. And then someone else introduced me to Second Life, which I was fascinated by. Second Life is essentially what Facebook is now calling the Metaverse, and others that are now in that space.

It’s really interesting to think about the applications of it, because it’s not new. It’s been around for a very long time, but it hasn’t been widely used for work. I know HP and Manpower were definitely in those spaces. And it was interesting because you were an avatar. So professionalism sort of disappeared, and you could wear what you wanted, have a Mohawk, dress yourself up as an animal or human. But it was this ability to see each other in this virtual environment and feel like you’re having a conversation with someone there. Similar to the idea of a bunch of holograms of people together in a room.

To me, it’s hokey, because again, why do you have to be in a room to do that? It comes back to always necessitating the location. The association with real estate makes no sense.

Francis
I think that’s true, you certainly can do holograms anywhere. But again, think of the idea of a neighborhood facility where you can go and get away from your kids and the dog and get some peace and quiet and do your work. And then also meet on a high level virtually. I think that does make some sense. You have to have the infrastructure for it, for sure, because that’s expensive stuff.

Sandra
Absolutely. Hopefully in time the cost of being able to use that technology to that extent will come down significantly. I think that leads to the next point about how effective the technology is. Because right now the whole push and shove, tug-of-war is about whether technology is an enabler or does it actually impair your ability to be productive?

You’ve got people on both sides of the camp where in some instances, yes, technology can be effective, it can definitely be an enabler. But in other instances, it detracts from the experience if it’s clunky. If it’s not where it needs to be. Again, I believe that goes back to the fact that you’re taking what you know from the physical experience of work in an office and forcing it to fit in a virtual world, and it just doesn’t work all the time.

Francis
Right, I think that’s true. In the old days they called those people systems analysts, where they would figure out the new workflow and build the technology around that. I think that’s what’s happening today with the whole Web3 thing where you have crypto — they build something really neat but it’s very expensive and risky, and you see what’s happened.

Same thing with the Metaverse. Someone made a comment recently about buying real estate in the Metaverse. Absolutely crazy. Why would you want to buy real estate there? But there are some good things in terms of NFTs and things like that, but I think we’ve sort of lost focus sometimes in tech. We build big tech that does a lot of really interesting things and then we try to find an application that they can possibly do with it, and does it make sense? Sometimes it doesn’t work. I mean, it works from a tech perspective, but it doesn’t really help anybody. It doesn’t advance society, it doesn’t generate income for the firm. It’s just there, and you don’t want to be left out there. So, you better get on board with Web3.

Sandra
I think the other piece to it is the evolution of tech and the speed at which tech evolves. I look at it from the experience of going to work from one company to the next. What’s the tech stack they offer, both from a software and hardware perspective, and how does that impact your ability to be productive? We started out this conversation about how at one point everything was on paper, and there were no digital files. You had to be somewhere physically to access documents in order to be able to do your work.

It’s the same thing in the sense that you’ve got Sharepoint, you’re creating documents, you throw them on a shared file and anyone in the organization anywhere in the world can share them. But the other day when you and I were chatting, we talked about frustration. Sometimes the frustration that the tech creates is crazy, just because of red tape or bureaucracy around the tools that help people work outside of the office.

The example I gave was, you’re working on a document, you know it exceeds the limit that you’re allowed to transfer over your network. So how do you get it to someone in another country? It’s a challenge. I’ve faced that many times. Then, there are tools to enable you to do that, but obviously IT doesn’t want you downloading stuff onto your computer. Sometimes they even lock you out. So, I think that, in essence, is what prevents people from being fully productive.

Again, thinking about younger generations and just watching and learning about what they use, it’s stuff I didn’t even know existed. My daughter is 30 and has always sort of been under my wing in terms of being involved in tech. She’s super savvy with virtually everything. I’ll say to her, I’m really struggling with this one thing, and she says oh, you should use this. It’ll be something that just does it for you. And it’s something I didn’t know even existed.

So, number one is awareness that the tool exists, that there are enablers. And number two is the red tape in terms of being able to get access to those tools or use them when you’re working so you’re not held back by trying to figure out how to do what you need to do within the confines of what you’re allowed to do in the organization.

And I think it all stems from the concerns that companies have around privacy and security as it relates to technology.

Do you think that’s something that will take on a different direction in the future, as we think about what that means for remote work? I mean, if you’re working from home on your home Wi-Fi, how secure is that? Everything falls under privacy and security. You can’t do anything as it relates to data or sharing information because of privacy and security. But is that a catch-all for everything?

Francis
I think we generally need more progressive IT professionals in every organization who understand what the risks are in a remote environment and how to deal with them. Is it a VPN, some sort of encryption? I don’t really understand the details of them, but somebody certainly does. There are threats everywhere. If you talk to anybody who takes care of the infrastructure and ask how many hits did you get this week of people trying to break in? Everybody’s trying to break into everything. So, you need progressive people that will allow the work to be done remotely but have the tools and processes to control the risk. I think that’s what you really need.

I mentioned the other day the situation in Dallas where we went fully agile — the CFO would only allow desktops, which were $500, $600. And notebooks were $1000. Why should I spend $500 more? That was a tough sell at the time, but when we went virtual, everyone was glad that we went mobile. You’ve got to have that foresight, in terms of structuring.

The same kind of issues are going on in HR and in real estate. I’m struggling with this transformation of the workplace going from the 15th floor to 15 or 20 different places. That’s an evolution that’s under way today. We’re right at the beginning of it really.

Sandra
That’s interesting. I have to ask this question: I often wonder, is it a make-work? You think about the fact that you’ve been 2+ years working from home, with probably a very small percentage of companies prepared to deal with that transition and not feel the risk. It’s the same with HR. As Mark Gilbreath said in the previous podcast episode, nothing happened there. The stuff didn’t hit the fan.

So, is there a need for that? Is there a need to put policies in place, is there a need to have these types of things or is it again more of a make-work? Building processes around something that maybe doesn’t even need processes? To me, hybrid is something that doesn’t need a schedule in order to work. You need to have maximum flexibility. You need to have the ability to work autonomously. That sometimes includes technology as well.

The example I gave is, I need to do something, I’m working on a global team, and I need to be able to send information back and forth. The restrictions put in place sometimes are inhibitive rather than truly supporting productivity. Do you think there’s a need for that, considering that most people have experienced the freedom to do some work on their own devices?

I’ve talked to a number of people who have desktops at the office, not laptops. So they needed to go out and buy a laptop when they have a laptop at home.

Francis
Whether any organization wants to be fully remote or fully in the office, we don’t know the next pandemic or the next reason why we can’t be there. Even if we had the next variant of COVID converted to a death rate of 25% or something, or there’s Ebola, or Monkeypox, who knows. There may be a reason why we want to flip the switch and become fully remote. So, I think the baseline setup has to be that all of these processes and controls and IT infrastructure around it are fully remote.

My sense is that there will be a lot more of that in the future. Why don’t we have that today? We’re two years into it. The reality of it is that if you think back to the spring of 2020, after we had a month or two of panic, we thought we’d be able to get back by August or September. And then another variant came out, so we can’t do that. We lost a year and a half of people dawdling with, are they coming back to the office or not?

And it’s only in the spring of this year when everyone’s okay to return to the office. I call it a return to the past. So, it’s only been a few months that people have had this, “we need to get people back”. And we had the boil the frog crowd, you know, the three amigos, where you’ve got to be back in the office Tuesday, Wednesday, and Thursday. Well, that didn’t work out very well for them. And you showed me yesterday a flatline that Kastle returned, a 40% plus or minus that hasn’t changed in months. And that flat line is probably going to go down, not up, as we go ahead.

Sandra
Correct. Well, Francis, thank you very much for your time. I really appreciated the conversation today, it was very enlightening and always fun to chat with you.

Francis
Sandra, thank you very much. It’s always a pleasure, and I look forward to next time.

About the Author

Sandra Panara, Director Analytics, Insights & Innovation

It’s been over two years since many of us have pursued a hybrid workplace model, and many employees have become accustomed to this way of working. According to a 2022 Global Benefits Attitudes survey from WTW, a majority of employees prefer remote or hybrid work, and 70% of respondents noted hybrid work has helped them achieve a better work-life balance.

While hybrid work is here to stay for the foreseeable future, I firmly believe that when employees do come into the office, the office should be seen as a sanctuary of productivity and collaboration that is always ready to meet employees’ changing needs. To do that, business leaders have an opportunity to utilize behavioral data to identify the right purpose for their spaces and ensure that they are providing value to employees in a way that simply cannot be replicated when working remotely.

Don’t Just Try to Fit People Into Spaces

Next to office labour costs, office real estate spend has been the second largest expenditure for most organizations. A recent McKinsey article reported that “Fortune 50 companies alone occupy 2.6 billion sq. ft. of real estate”. A good chunk of that real estate sat mostly empty for long stretches during the pandemic, and continues to do so.

Historically, the standard workplace management model has been based on fitting people into spaces: assigning an employee to a desk, chair, and equipment in an office or cubicle. When the hybrid workplace was implemented at the beginning of the pandemic, organizations equipped their employees with the technology needed to do their jobs at home, and the research now shows that most employees found that the resources provided by their employers met their needs.

As a result, Advanced Workplace Associates, a management consultancy, found that 86% of surveyed employees want to work from home at least two days a week. And an ADP report revealed 64% of workers would consider quitting if forced to return full-time.

While the hybrid workplace does have its benefits, there is – and always has been – benefits from in-person collaboration. For employers, defining the purpose of a physical office to meet employee needs is what can reconnect them to their workplaces and colleagues.

Utilizing Human Behavioral Data to Create Spaces that Have a Clear Purpose

Purpose in workplace strategy and design means providing each employee with resources, collaboration opportunities, and the ability to connect with others. The key is to focus on human-centric patterns of behavior, space use, and flexibility in function and inspiration for a hybrid workforce. Critical to achieving this goal is understanding the distinction between occupancy and utilization in a space so that strategic investments decisions in workplace design can be made based on how employees are actually interacting within the office.

Building purposeful workplaces starts with understanding four factors that influence employees’ perceptions:

Social conformity – What do people think their environment is telling them to say, do, and want? Employees often alter their behavior because they’re aware of being observed.
Wishful thinking – People believe what they’d like to be true about their workplace and the jobs they do within it.
Context – People respond differently in different contexts. No two people see and feel their workplace in the same way.
Mindset systems – Daniel Kahneman describes in his book, Thinking, Fast and Slow, two systems that impact employee mindsets. “System one” is fast, instinctive, and driven by emotion. “System two” is the opposite: slower, more deliberate, more rational. When predicting what they’ll do in a particular situation, employees use system one. When they make a decision, system two instinctively kicks in.

By aggregating behavioral insights, facilities managers can create spaces that employees actually want to work in – all while ensuring utilization is aligned with business needs. These behavioral stats can then be combined with occupancy and utilization information from other sources – such as sensors and badge swipes. Accessing key information and data points in this manner allows employers to view near real-time insights as opposed to just snapshots with little or no context surrounding them.

By focusing first on purpose – then maximizing data from all workplace sources – business leaders can evolve their spaces to address immediate employee needs, while also maintaining flexibility to adapt to new work requirements, unforeseeable crises, and potential growth.

About the Author

Simone Fenton-Jarvis, Director of Customer Workplace Solutions

Simone is a workplace thought-leader who’s passionate about creating human-centric workplaces. She strives to build a world where companies become the vehicle for people and societies to flourish and make the planet a better place. Simone hones in on the employee experience and the impact on organizational performance along with data insights to deliver change and business improvement in culture, space, process, and technology.

When it comes to making decisions about corporate real estate portfolios these days, waiting it out seems to be the most popular option. Organizations are waiting for signals about how the economy, the pandemic, and labour trends will evolve, and they’re being cautious on making major moves like re-designing, retrofitting, or even shedding excess space.

This may seem like a solid, risk-averse tactic. But the cost of unused corporate real estate is higher than you might think—a “do nothing” strategy is actually highly unfavourable for the overall health of your organization.

If your company is opting to do nothing, you’re missing out on an excellent opportunity to enhance the employee experience. The greatest risk here is loss of talent, which is a real risk in the era of the Great Resignation. Your people are the key to your business’ success.

The Do Nothing Strategy: The True Cost of Idle Corporate Real Estate

The Lights Are On, But Most Offices Are Empty

This applies to organizations of all sizes too—workplaces are needlessly sitting idle. Reports of weekly office metrics indicate occupancy rates are hovering at approximately 44.1%, and there has been little to no change in the past 12 weeks. It’s clear just how much space is sitting empty.

The most important consideration here is the wasted cost of holding on to this empty space. A passive approach of waiting for new realities to settle in is, in fact, an active decision not to explore and invest in your organization and your people. It’s a wasted chance to better align your organization’s actions and values with those of your employees, which is key to retaining talent and growing as a company.

From Saving to Investing: What Is Your Purpose?

There’s a long-standing debate in corporate real estate about whether cost savings is a driver or an outcome. Any space reduction or optimization strategy will certainly come with the chance to lower costs—but that’s not the final goal. The actual final outcome depends on having well-defined objectives and goals aligned with your company’s mission and values. Cost savings should be surfacing opportunity discussions about what’s needed to fuel the purpose of your organization.

With office real estate reduction, funds can be freed up to re-invest in other areas of the business and enable growth. You could invest in better technology, implement people programs like learning and development, improve compensation packages—the list goes on. When you think about it like this, it is easy to see how there is a true cost to doing nothing.

Perspective (And Positioning) Is Key: Aligning Strategy with Mission

Forward-thinking companies recognize that change is upon us, and they’re empowering themselves to do something different. Like what?

Imagine you have 100,000 sq ft of office space serving 500 people. A 44% occupancy rate means:

You could reduce your portfolio by +/- 56,000 sq ft (5,203 sq m) and save the expenses that come from the lease and operating costs
You have +/- 56,000 sq ft (5,203 sq m) of surplus space, which could be repurposed to suit the company’s or the community’s needs
You could reduce your portfolio and re-invest some or all of the savings

Whatever you choose to do, it should be tied to a commitment to your organization’s values. Think about how you can use the savings, re-investments, or space to align your strategy with your mission so that ultimately, your people become the priority.

What could that look like?

It could look like one, or a mix of these options. Any space reduced, for example, could be a great opportunity to speak to the value of sustainability. The higher the mobility rate, which is determined by simple daily office occupancy metrics, the more your company can broadcast its commitment to reducing greenhouse gas emissions. Cutting down on the commute for a sizable portion of your people is both popular and environmentally responsible.

Or, if you repurpose some surplus space, think about how this could benefit your community and your people. Maybe you opt to make the space available for events—you could extend the offer exclusively to non-profit charities. Supporting local organizations in the community can help to solidify your company’s philanthropic position.

If you choose to re-invest, where can you put that money to improve your employees’ wellness, well-being, learning and development, or compensation packages?

It’s crucial to remember that whatever you do, your strategy should have the employee experience at its heart. People want to work for and stay with organizations that align with their values, like sustainability, community philanthropy, and valuing employees. The underlying message of your action should be clear: we put our people first.

A “Do Nothing” Strategy Sends the Wrong Message

Just like taking purposeful action sends the right message to your employees about your organization’s values and priorities, doing nothing sends the wrong one. A “do nothing” strategy looks like a desperate clinging to the past. It looks like false hopes of returning to a nostalgic way of living and working.

However, it’s obvious to most of us that the world is not going to return to pre-pandemic ways. We need to change how we live and work. This is the only way to align in purpose so we can all contribute to bettering our lives, our society, and our futures.

…And Sending the Wrong Message Harms Your Organization

The pandemic has taught us a valuable lesson: purpose is at the heart of productivity.

Budgets and the question of where to invest is often contentious. We understand that the goal in budgeting is an increase in revenue and/or a reduction in cost, but it is important to remember that the best outcomes are rarely linear.

At the heart of employee experience is engagement. An employee stays engaged when they feel their organization genuinely cares. Engagement means they relate to their company, experience an alignment of values, and share a sense of purpose. If you and your people do not align on the “why,” engagement—and thereby productivity and profitability—will suffer.

How To Start Enhancing the Employee Experience With Idle Real Estate

How Do I Start Enhancing the Employee Experience With Idle Real Estate?

Understand your company’s occupancy metrics relative to your portfolio, and quantify the square foot or square meter opportunity and cost
Assess your company’s mission, objectives, values, and goals. Identify what your company cares about the most and why that truly matters.
Assess the options available to you based on factors like when your leases are due and identify your non-negotiables.
Read between the lines—how can you translate potential opportunity into something that is feasible, that will change the course of your organization for years to come, and which your current and future employees will appreciate?

Need help? Get in touch with Relogix and we’ll get you the data you need to start implementing your new people-focused, pro-active strategy—because the costs of doing nothing are just too high.

About the Author

Sandra Panara, Director of Workspace Insights

Some of the highlights of the show include:

What does trust and empowerment have to do with the employee experience, and how is it lacking in today’s world of work?
How can companies with excess space take advantage of Space-as-a-Service models to repurpose parts of their portfolio?
What can we learn from watching high-growth tech companies experiment with the employee experience and hybrid workplaces?
Decision-makers, in this era of uncertainty and obsolete data, desperately need new data signals to start to learn about the new rituals and rhythms of work.
Organizations like Relogix and LiquidSpace have a responsibility to help companies re-build their vision of work and place, to ultimately enrich the employee experience.
To what extent should workplace professionals and leaders turn towards more experimental methods and decisions in this new era of corporate real estate?
The genie isn’t going to go back in the bottle—employees expect a certain level of flexibility and agency at work now.
How do organizations need to switch up their management of workplace when there’s no longer a traditional lease, and instead countless workplaces and workplace partners?
How is the hybrid workplace movement, in a way, like Jurassic Park?

Links:

Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
Mark Gilbreath on LinkedIn – CEO and Founder of LiquidSpace
Liquidspace – Global marketplace of on-demand office space and workplace management platform
Kastle’s workplace occupancy data

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript:

Sandra

Hey everyone, welcome to Let’s Get Real with Sandra and Friends, a workplace consortium podcast brought to you by Relogix. I’m excited to be sharing conversational musings about current events and how we envision the ever-changing world of work. I’m Sandra Panara, Director of Workplace Insights at Relogix. With 25 years of hands-on experience, I help value engineer global workplace portfolios and employee experiences by aligning workplace analytics with corporate real estate needs.

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

This week, I’m super excited to have Mark Gilbreath join me as my special guest. Mark is the founder and CEO of LiquidSpace, the hybrid workplace management Software-as-a-Service platform and on-demand office marketplace for enterprise. The LiquidSpace marketplace is the only platform today that is providing dynamic companies with the superpowers to provide a global workforce with workplace flexibility and provide their workplace leaders with the tools to control and to learn from the new rituals of work and workplace. LiquidSpace is serving the growing community of companies on the right side of history who have chosen a hybrid workplace future, including companies like the GSA, VMware, ATT, Spotify, Shopify, Etsy, and many more. A Silicon Valley veteran, Mark began his career in the semiconductor industry in the late 1980s before founding and operating a series of software and real estate ventures culminating with LiquidSpace. When not at work, you are likely to find Mark on a bike.

Welcome, Mark! Really excited to have you as a guest on our podcast this week. Why don’t you tell us a little bit about yourself?

Mark

Thank you, Sandra. As a long-time follower of the podcast, it’s great to be on it as well as to get to listen to it. So, thanks so much. About myself—30 years in technology. Wow, it’s crazy to think it’s been that long. Electrical engineer out of the University of Virginia, goes to Silicon Valley. Spent the better part of a decade in the semiconductor industry, which is what gave Silicon Valley its name, before I got lured by the appeal of the Internet and software. I took a shift career-wise from a technology standpoint toward building software-based solutions for companies, and had my first dabbling with a marketplace-type company in the late 90s.

In the early 2000s, I somewhat unexpectedly had an opportunity to make a life-work balance move and move to the mountains of Idaho. I didn’t think it was going to be an 18-year jaunt, but it has been. And it was from my perch in Idaho that I started to get involved in the commercial real estate industry, as a developer on a very small scale. That was a relatively short-lived period, but that actually ended up inspiring the last 14 years of my career, which had been in and around the flexible office itself.

I opened a coworking space in the Boise, Idaho area in 2008 and for the last 11 years I’ve been deeply and fully involved in and committed to technology serving the flexible office industry, or as it’s perhaps more recently referred to, coworking and hybrid workplace. The term of the hour, so to speak. So, long ramble there, Sandra, but: technology and real estate.

Sandra

Interesting. I remember hearing about LiquidSpace back in the mid 2000s and I thought back then, what a really cool concept. So, I’m just curious, what was the inspiration behind LiquidSpace? What was the problem that you were trying to solve for companies back then?

Mark

In 1999, I was a first-time CEO of a start-up company and venture based in Milpitas, California, Silicon Valley, and we had just raised a healthy Series B capital raise and we were poised for a lot of headcount growth. That thrust upon us the decision to go seek an office that we could grow in. We had been in a small sublet office in Santa Clara prior to that. We found a broker, which is what you do, and we ended up signing a five-year lease for an office space in Milpitas, which is what you did.

I do vividly recall, even to this day, the emotions and the uncertainty that came with signing that lease agreement. I was literally having to speculate what our head count and resource needs would be five years down the road. And I didn’t have a crystal ball on even two years down the road. But nonetheless, the form of real estate transaction that was available to me to satisfy the next tranche of my growth was a lease. And a five-year lease, as I’m sure all of your listeners will relate, was a relatively short-term lease.

Even that discomfort that came with that decision stayed with me. As it turns out, the space that we took was more than we ever ended up meeting. So, it ended up being a bad decision which probably many of our listeners can relate to. Sometimes you need more. Sometimes you need less. Rarely when you make a long-term commitment have you hit it on the nose. So that professional experience stayed with me.

I also got involved in commercial real estate development here in Idaho. It was down in the Boise, Idaho market where I ended up building a small portfolio of self-storage facilities. And if anybody’s ever used self-storage or mini storage, you know that the business model and the service offering tends to be flexible and scalable.

You can have any size locker that you want. It’s a month-to-month agreement. You don’t need an attorney to review the license agreement with you. You don’t negotiate on the terms. You move in when you want to, you move out when you want to. You upsize or downsize when you want to. And that type of service serves consumers as well as businesses. The efficiency of that business model, which I got to know deeply firsthand as an operator, inspired me. I routinely reflected on, oh my goodness, if only something of that flexibility and scalability had existed when I needed office space eight years ago, that would have been a better model.

That actually inspired me to stumble into the world of Space-as-a-Service. And I ended up building a coworking space on some retail frontage of one of the self-storage facilities that I had in Meridian, Idaho. I was inspired by the notion of taking that very same business model: any size you might want, by the month, or longer if you need it. Upsize, downsize, never waste space. Never have too much. Never have too little. That was the guiding notion. The name LiquidSpace was actually the name of the membership model at our coworking space in Meridian, Idaho, when we had a vision of building a physical network of locations.

This was in 2008, and the global financial crisis had other designs on that, but the principal idea lived on. So LiquidSpace was actually an Act Two of a concept that I’ve been experimenting on as early as 2008. LiquidSpace launched in 2011, carrying forward the same principles: provide people with the best space to do their best work, more happy people working in better spaces. “The planet smiles” was and is our mission statement. Never have more than you need.

And lastly, always empower the individual, whether it’s the sole proprietor of a one-person company or whether it’s the employee of a 200,000-person enterprise, always trust and empower the employee to have some measure of agency over how, where, and in what type of environment they work. They know better than you possibly can. So it was that arc that led me from something as random and adjacent as self-storage into what is going to be, for me, a career-defining focus on trying to make the workplace better, and make people happier by virtue of enabling them to tap the space that they need, when they need it, where they need it for their best work.

Sandra

I always thought that the name LiquidSpace was brilliant because you totally know where you’re going, from a business model perspective. I did not know that how it came to be was because of the experience that you had in storage. And now that I think of it, it’s so true. I’ve actually experienced the whole storage thing and being in transition when I was moving between two places. I had five months where I had to figure out what to do with my stuff. You think you need a little bit of space and then you need a little bit more space, and then as you’re getting rid of stuff, you need less space. And that flexibility is exactly what’s needed. And taking that concept and bringing it into the workplace or into the leasing model, or non-leasing model, if you want to look at it that way, is absolutely brilliant.

Mark

A quick sidebar on that: I think it’s half of what’s needed in the office world. I think the self-storage notion, shorter-term agreements, flexible, scalable, upsize, downsize, that’s desperately needed on the business model and agility dimension of how office and workplace work.

The other thing that’s desperately needed, that isn’t personified in self-storage, is the human experience. There’s a criticality of trusting and empowering individuals to be able to choose how they work and to recognize that one employee to another, one team member to another, one individual to another, have wildly different preferences. They have needs based upon their temperaments, based upon the tasks at hand, based upon where they are physically, where they are life-wise, career-wise, their family situation.

And by the way, all those variables are themselves dynamic. If you accept even a little bit of that hypothesis, that the best space for Sandra is a highly unique thing to Sandra and highly dynamic for Sandra, then how can you possibly seek to come anywhere close to optimizing workplace for Sandra if you arrogantly presume that you’re going to design in an entire office, and dictate to Sandra that she’s Cube 34 Row H? And that’s going to be a place where she can thrive?

Sandra

It’s so interesting, there’s a lot to unpack there. I’m just thinking about my own personal experience working in various coworking spaces, Space-as-a-Service, here in Toronto when I was doing my own HR tech start-up, kind of along the same lines of work and life coming together and having flexibility. And this is going back to maybe 2011, 2012. My experience was that the majority of the users of such space were more self-employed entrepreneurs that didn’t have a traditional office or the need for these large office spaces. Has that changed? Are you seeing more like a variation of user types in these types of spaces?

Mark

Absolutely, without question. When LiquidSpace launched in 2011, coworking wasn’t even a familiar term. There were maybe 20 coworking spaces across the US. “Serviced office” or “executive suites” was the more familiar name, owing to the early pioneering work of companies like HQ and Regis.

Now coworking has rocketed into general awareness to a large degree, fueled by over $10 billion of soft bank capital that was injected into WeWork’s wild ride. But the awareness, the persisting, the remaining, the ongoing awareness and proliferation of coworking is well deserved. In 2008, when I launched my coworking space in Boise, the typical user for us then actually was a blend. About 15% of our customers in 2008 were large enterprises. We had Motorola as a client, we had Minolta, we had Cisco.

And then yes, to your comment and perception, Sandra, a lot of small businesses, individual proprietors, freelancers. But through this most recent decade, as coworking found its legs and scaled, it became increasingly a choice for dynamic organizations. In 2019, the last full year before the pandemic put its stamp on history and on the future, enterprise or mid-size and larger organizations was the fastest growing sector from a revenue standpoint for our business and the industry as a whole.

It was fully 30% of the general consensus of what the coworking and serviced office industry consumption was. For LiquidSpace, it was well over 50% of the activity we’re seeing pre-pandemic. And in 2019, flexible office as a category of asset management for large occupiers was still well less than 2% of their total workplace. So, it’s such a vast category. Mid-size and large organizations are such a large piece of the office pie, it didn’t take much shift in behavior on their part in the late 2010s for it to become a really important growth area. Then the pandemic hit, and we can talk about what the implications were there because it’s only been an accelerant.

Sandra

So going back to when you first started with LiquidSpace, back in 2010, 2011, that was around the time that we had the stock market crash. I was at CBRE at the time, and I remember there were a lot of corporate headquarters in the US that were looking to get out of excess space. It was very similar to what’s happening now, although driven by the pandemic. Was there a difference between what companies were trying to do then versus what companies are trying to do now?

Mark

From my vantage point, I’ve had the privilege of getting to engage with a great many firms. I think absolutely, both the global financial crisis in 2008 and the COVID pandemic were massive macroeconomic shocks on the economy, but also on companies. I’ll run through a couple of quick observations on what’s the same, but then also what I think is absolutely different now.

Both of those things were black swan events. They were large, they were unpredictable, they had a huge impact. They both created economic strain on organizations, in particular with regards to the commercial real estate industry. I think both of those events created an urgency, or at least a period of time where CEOs, CFOs and heads of Corporate Real Estate at mid-size and larger companies were told to take a look at the problem. In 2009, 2010, 2011, revenues are down. The top line performance is down, and what can we do to bolster our financials. What can we do? If revenues are down, we can’t control that. What can we do to trim costs? Human capital is a variable cost. You see things like layoffs that certainly happened in the wake of the global financial crisis.

But I still recall 2009 to 2012 as a meaningful period of time when companies were looking a bit more earnestly at the question of utilization of workplace. And of course, this goes right to the “why” of Relogix as a company, which I’m a huge admirer of. But it was well understood for a decade prior to that that most large offices were highly underutilized in any given working day. Countless studies from various companies, whether done digitally with technology such as yours, or done manually, walking around and counting butts in seats, the general consensus in 2011, 2012 was: 30% to 40% of the office is sitting empty. So that same reflection and inspection took place here in the wake of COVID starting. In fact, it was one of the things that we predicted within weeks would be a shockwave of this work-from-home experiment when it kicked off in March, April of 2020. We reasoned, okay, past is present. Enterprises are going to be looking at cost savings again. And for the better. It’s not secret, we knew that workplace was underutilized. So, that’ll be a healthy thing.

But something else is different. We benefited from a second prediction also coming true. We also expected, even if the pandemic lasts for just three months, that will be enough time for managers and employees alike to come to grips with the fact that the shit didn’t hit the fan when I had to work at home. Productivity didn’t collapse when I was given the ability to choose wherever else I might work. Whether it was my home, whether it was the coffee shop down the street from my house during the pandemic, whether it was my vacation rental, or a coworking space. And so that’s the piece that’s different this time. I think enterprises are even more aligned today than they were in 2008 around the cost savings opportunity, which is why we’re now seeing the growing clarity on what’s happening in the traditional leasing world.

And companies of all sizes are increasingly embracing an entirely different perspective about employee experience, about workplace experience, about agency, about enablement of flexibility and choice for employees, entirely different than what was even contemplated in 2009, 2010, 2011, post GFC. Simply put, companies are letting employees choose where they’re going to work, all while looking to reduce, transform, rationalize their pre-existing, and for most companies, bloated footprint.

Sandra

Interesting. We’re seeing the same thing. I think the other part that’s interesting about this shift is that you don’t know how big of a shift it’s going to be. As people that have been in the industry for a long time, as you and I have been, you see the writing on the wall, and it doesn’t take a rocket scientist to figure it out. But you have to let business do their thing, and eventually they’ll come around.

One of the questions that we get quite often is about existing leases. Some companies still have a couple of years on their existing leases, and they automatically look at that and say, well, we’re committed for the next couple of years, and there’s nothing we can do about it. Well, there is. There’s a penalty, obviously, associated with doing that. But does looking to Space-as-a-Service provide an opportunity for companies like this? I’m thinking about past experiences when I worked at other companies that were looking at their excess space and actually implemented something like Space-as-a-Service within their own portfolio. Maybe it didn’t generate revenue, but it was kind of like having a sub-lease. Or at least you were recovering costs. Or better yet, you were using that space as an event space or making it available to other people within the community. Are you seeing anything like that in your world?

Mark

Oh, absolutely. Let’s take the simple kernel of idea that was LiquidSpace in 2011, when we launched at the South by Southwest Conference in Austin, Texas. We had three coworking locations in our marketplace and serviced offices in the Bay Area. The basic kernel of the idea there was, we’re going to give Sandra the ability to open up an app and search, find, and book a space on demand. We’re going to empower the individual with choice. And that choice implicitly gives her flexibility around where she’s going to work.

What we sort of invented in our industry seems commonplace now, but what we invented then was the ability to book space for the duration of the task. That might be an entire day of work, or it might be an hour for a meeting. So that was the core notion: enable every employee to be able to procure space that meets their needs, for their perspective, for the duration of the task. Now let’s apply that to what we see happening right now as companies are, in a grinding way, trying to adapt themselves to the new normal or to the realities that we’re now facing.

And that notion of the individual having the ability to take space on their terms when they need it, where they need it, is manifesting in multiple ways. Many companies are looking at their existing portfolio and they’re doing hybrid transformations of their existing office. And there’s a fair bit of practice work that big service providers and architecture firms are rallying around to help companies who in 2019, may have had an office that was assigned work points, lots of benching, dedicated desks and offices. They’re looking at, how do I take that existing portfolio which Sandra, as you touched on, may have 3, 5, 10 years of lease term left, and make it more relevant for the now?

And more relevant for the now means it needs to operate with an “as-a-Service”-like dynamic to it. How do I turn my own offices into a portfolio of choices for my employees? Furthermore, what sort of adaptive redesign of my internal environment might I undertake to make it more relevant for the type of work that employees are coming back to the office to do? Maybe I need more spaces for collaborative work, or convening and gathering, whether it is informal and relationship building in nature, or whether it is intensive and concentration-oriented scrums and collaboration suites.

There’s lots of activity underway right now with companies thinking about their own portfolio, that they’re chained to, “as-a-Service”. Most are doing that for their own employees as the customers. So, I’m a 10,000 person company. I’ve got 300 employees. I’m going to look at my existing portfolio of 20 offices, and I’m going to turn it into an environment that my employees can come into when they want to and we’ll give them some technology so they can see what’s available and book a seat.

In addition, some companies are revisiting a concept that we’ve been a champion of for all of the history of LiquidSpace. Say we’ve got more space in our portfolio than we need. We talked to our broker partner and the sublet market is soft, so we’ll share some of that excess space with other entities.

So, you’ve got a reconsideration happening now, of companies looking at platforms such as LiquidSpace marketplaces that can enable people with excess space to be able to monetize it.

Thirdly, many employers over the course of the pandemic were hiring and growing their organizations in new ways. They were hiring people beyond the geographies of where they had previously had real estate. That’s an enormous aspect of what’s been happening over the last two years for many companies. They’ve been hiring anywhere and now they’re finding the need to provide workplace where their people are. That’s forcing them to contemplate hybrid workplace, flexible offices, coworking space, because it’s, practically speaking, the only viable way to solve for tens, hundreds, thousands of employees who may be a diaspora of your employee base. How do I reasonably solve for hundreds or thousands of locations for hundreds of thousands of employees in a dynamic, flexible way? You’re not going to do that with 1000 more long-term leases. So coworking and the flexible office industry is really coming into its own now as more and more companies have embraced distributed workforces, hiring in more in more diverse places, including secondary markets, tertiary markets, mountain towns, international locales.

So, the concepts of coworking and flexible shared space, they’re permeating the corporate campus and they’re permeating the diaspora of locations where employees have chosen to put themselves and still remain members of companies.

Sandra

That leads nicely into the next question. I’ve recently had a conversation with someone about bringing coworking into neighborhoods. If you think about the traditional offices, you’ve got urban city centers where all the corporate offices are located, for the most part. Coworking spaces are kind of along the same lines, although you do get a little bit more distribution in some of the suburb areas. You’ve got a concentration in the city, and then you’ve got the coworking spaces that are picking up on these other areas to take advantage of the fact that people have left the urban city centers, but they might still have a requirement for offices.

But even Airbnb is jumping onto the Space-as-a-Service bandwagon, and going after that office market. And it’s interesting how, like you said, it’s about the experience. We heard at the beginning about how offices now are competing with the cafes and the hotels and all the other sort of typical spaces.

But now we’re seeing it actually coming into people’s homes, which when you think about it, opens up a whole new market. Now you’re in neighborhoods. You’re down the street, potentially, from where people live.

How do you see that whole model of “as-a-Service” playing out? Do you think that’s something that’s going to be more common, in the sense that people can basically make decisions to work wherever they want? And then that obviously is going to create challenges for companies from a management perspective. How do you see that playing itself out?

Mark

Jurassic Park comes to mind. And notwithstanding the most recent installment of that franchise of films, which I didn’t care for as much, nonetheless, I’m a big fan of the storyline. I think it was the very first movie where Jeff Goldblum, as this quirky philosophical individual, says, “life finds a way”. He was talking about sort of the pervasive nature of life, finding a foothold, and he was referencing how dinosaurs were reincarnated and let out in the wild. They’d find a way. They would cling to life.

Well, I think the concept of flexibility and choice and this enablement that employees have now been given over the last two years, this grand and far longer than expected experiment, will find a way. Life finds a way. It’s clinging to every surface that it can. People are working effectively in an infinite number of locales beyond what they had previously. They’re relocating, they’re recalibrating their lives, they’re rethinking their priorities. They’re doing great work. They’re finding a way to redevelop the rituals of work and workplace connection with colleagues. And we shouldn’t underestimate the amount of good work to be done to help rebalance and foster culture and team against the backdrop of a distributed workplace.

But life finds a way, right? Team effectiveness is finding its way. But we’re rebuilding a new forest, a new ecology is being rebuilt. We’re not going to put that genie back in the bottle. I firmly believe there are some in our industry who are championing quite the opposite of that. But I think that genie never goes back in the bottle. Life finds a way. Happy people, inspired, productive, enthralled employees are finding their way. And likewise, the means by which to have great, high productive, high performance, high velocity, engaged and supported teams is also finding its way. Now across a tapestry or an ecosystem of places.

Back to your original point, which includes the smallest of towns, includes Space-as-a-Service options that are yards or meters from the front door of where someone might be living, if not in their own house. I think Airbnb has always been a Space-as-a-Service company from day one. It’s obvious to me that they’re going to be a natural and important participant now as work and life blend. It’s just so obvious that their pre-existing ecosystem of great places to go and belong that are largely residential in nature are running headlong into the great places to work and thrive that are largely commercial spaces.

Sandra

It’s blending! I like the comment of the genie and the bottles being let out and pulling the genie back in. We’re hearing a lot in the news these days about tech companies that are taking on more space. And we think about how tech has always been ahead of the curve when it comes to workplace employee experiences. I was reading an article last week about how tech is about 20 years ahead of everybody else. So do you think we’re taking cues or we will be taking cues from what tech is doing and that eventually we will be going back? There seems to be this underlying belief that this is all going to blow over in a year or two and everybody will just go back to how it was.

Mark

Well, I partly agree and I partly disagree. I think tech companies will continue to be massive influencers of the broader business ecosystem and frankly, few companies today are not tech companies themselves. But the classic software, high tech, high-growth company, I think will continue to be a massive influencer on the broader business community by virtue of the fact that they do blitz scale, they hyper scale, and they’re oriented around building scale rapidly. But I disagree, I suppose, that we’re seeing lots of headlines around tech companies taking lots of space. I actually don’t think we’re seeing much evidence of that. I think granted, we could talk about perhaps some of the high profile and much broadcasted large leases that have been done by a very few large, conspicuous tech companies. But broadly speaking, the rank and file of other tech organizations: I don’t see it.

Sandra

They’re not going down that path.

Mark

Well, we are nowhere close to the 2019 occupancy levels of existing offices. We are nowhere close to the leasing velocities of 2019 for companies large or small. In fact, we’re seeing the opposite. We’re seeing anemic return to office—there are various firms that are thankfully sharing data—we’re seeing anemic recovery on that. We’re seeing anemic leasing activity. The one place we’re seeing strengthening is in perhaps the last place you want to see it if you’re an office investor, which is sublet inventory.

No, I don’t see a database argument that says that tech companies are going back to the office wholesale. I do believe that they will continue to be the influencers of the broader ecosystem of companies because they learn fast, they make mistakes, they fail fast forward. And tech companies are, as a category, experimenting right now at high velocity, high pace around hybrid workplace. They are experimenting with giving their employees choice. They’re learning the first compelling lessons. Data driven conclusions around how to create a profitable and engaged organization are going to come from tech companies that have been the early adopters of hybrid.

Sandra

Now that I think of it, I think it’s true. There’s only maybe two or three of the FAANG companies that have had stuff out in the news around taking on space in New York City, taking on space in Silicon Valley. You look at that and you think, okay, is it because real estate is seriously discounted? You go in and you take the space just in case, and then you think, well, what happens if people don’t want to come back? Like we’re seeing with companies like Apple, where they tried to push the return to office and the employees are saying, no, it’s not happening. So, you’re heavily invested in real estate, but your employee base is saying, we want to maintain the ability to be flexible. How do you balance that?

Mark

I am enormously empathetic to the workplace and CRE leaders and the C-suites that are faced every week, every month now, with agonizing decisions. Day by day, week by week, lease renewals are coming up. We’re two and a half years into this black swan event of COVID, so we’re a quarter of the way through a leasing cycle. So, we’ve got a long way to go still. But day by day, week by week, companies are encountering this decision. Do I renew? Do I terminate? Do I downscale?

The reality is that the people that own those decisions, the traditional CRE leaders, the CFOs, the CEOs, the planning models, the assumptions, the data insights that gave them confidence in 2019 or 2015 or 2010 to initiate those leases, all that data is no longer relevant. And our industry, the work and workplace industry, is wracked by uncertainty right now. So, what’s needed desperately is new data signals that can start to bring confidence to these business leaders around what the new rituals and patterns and rhythms of work are going to be. Because right now these are major economic decisions to make. And good companies at least don’t like to make decisions blindly, and the data is not there for them.

It’s tough, and no one wants to be wrong. I mean this comment with empathy, but the CRE world, pre-pandemic, was not one that was expected to or asked to be experimental or to be hyper creative. Yes, we brought creativity of thought into workplace design, but the fundamental notion of site selection and scaling and long-term asset management, dollars per foot, it’s looking at spreadsheets. It’s not experimental.

So, it’s a perfect storm of heartburn for that community. Now you’re being asked to make very large economic decisions with little to no data. And the alternative for you is something that is, yes, experimental and new. It’s embracing something like hybrid, where the opportunity is to run thousands of little experiments and learn what your new workplace pattern needs to be. That takes a different kind of thinking and a different kind of execution and for some firms, probably a different kind of workplace person, or at least in addition to the team, because it’s a different rhythm. Today workplace is much more like software. You can ship new code every week and within hours or days you can learn whether it’s working or not. Workplace is going to learn its new footing on a similar velocity.

Sandra

I totally agree. I think the way that you described it as not being as experimental pre-pandemic is absolutely true. I was lucky because I had an opportunity, I worked at a company where they were experimental. And that’s really when I learned a lot about what else can you do when it comes to thinking about not just workplace, but also workforce. Again, if you’re thinking pre-pandemic times and you’re trying to understand where is the demand for talent? You’re opening up the market to say, well, we’re not just hiring here, we’re going to hire where the market is for the talent that suits our needs, which might not necessarily be in the city where we have an office. There’s a whole shift in how you think about people first and then whether or not space needs to follow, they’re all interrelated. You need to understand all of that. And obviously data certainly is going to play into that.

What’s interesting though about the data is obviously in our world we see it every day because it’s what we do. Office occupancy certainly remained low. Another company, Kastle, puts out a weekly barometer, and last week that they indicated that office occupancy was hovering around 43%. That seems to be, plus or minus 1%, the trend week after week. They only isolate the top ten cities, so that 43% is across the top ten US cities. And as I said, our data is showing a similar average from a desk occupancy perspective of about 30, 35% with a range obviously being as low as 5% and then in some instances being as high as 60%. So when someone thinks about Space-as-a-Service, when you think about occupancy being so low, where’s the demand coming from?

Mark

Against all of this optimism and ebullience about the flexible office industry, a couple of observations about the flexible office supply base. First, much of the inventory from the conspicuous names. Like if I said coworking, what name comes to mind for you?

Sandra

WeWork. Regis.

Mark

Right, if I say serviced office, you say Regis, if I say coworking, you say WeWork. Those are the two largest names. Regis is far and away the largest on a global basis, WeWork number two at about a third or a quarter of their size. But for both those firms, much of their inventory, their locations are concentrated in the CBDs. Especially so for WeWork, in the football cities of North America and the gateway cities around the world. And what happened on Week 1 of the pandemic was people went home and people tend to live—yes, people in New York live in Manhattan—but in many markets they live in suburbia and they commute, or they moved there over the course of the pandemic.

But unbeknownst to a lot of casual observers, the flexible office market is massively fragmented. There is a vast ecology of space providers, over 5000 brands of coworking around the world, 50,000 locations. And day by day, week by week, more and more new space options are emerging. Whether it’s Airbnb locations that are being used for work, or whether it’s new coworking spaces that are launching, as we scan our ecosystem of partners, tens of thousands of locations around the world, it’s not at all unusual for us to encounter in a small secondary market, whether it’s a Boise, Idaho or a Bend, Oregon or Kalispell, Montana or Lisbon, Portugal, operators that are running full right now.

So, I think if you looked at the occupancy of coworking spaces in downtown Manhattan, you’d probably see a healthier picture than traditional real estate, but not the level of intensity that you’re seeing in some secondary and tertiary markets. So where is the demand coming from in terms of segments of demand? It’s coming from the freelancers and start-up companies that had been using it and reliant upon it pre-pandemic. That didn’t change.

It’s also newly coming from a wave of large enterprises—and we’ve got a front row seat to this—that have declared hybrid workplace culture and policies as their go-forward strategy, and who are putting platforms in place such as ours and giving their employees wholesale access and privilege to go out and tap into all of the possibilities of that ecosystem, wherever they might choose.

I touched on earlier, pre-pandemic flexible office was well under 2% of the collective footprint for corporations or enterprises as a class. There are abundant predictions out now that that percentage of enterprise or corporate footprint is going to rocket. JLL has long declared as much as 30%, I think. Even if it only surges to 10% in the next several years, which we think is a slam dunk, you’re talking about a 4x increase in the industry.

So, the demand is coming from the long-established base, and it’s coming from a whole new cohort of liberated enterprise employees. And that’s the genie that’s just not going to go back in the bottle. That’s the expectation that any knowledge worker is going to bring to any hiring possibility or decision with any company. Not every company will do it, but I think the general expectation is going to be that, hey, there ought to be some level of workplace choice that comes with this role you want to hire me for, Sandra. Otherwise I might say no, I’ll take the other offer.

Sandra

Yeah, I agree with that. I think it’s similar to what we’ve seen with workplace flexibility. Thinking back in the early 2000s where 15%, 20% had flexibility, some people were actually working remote, and now seeing it swing way over to the other side where it’s almost flipped. So now you’ve got 20% that want dedicated space and 80% that are looking for some level of flexibility and being able to provide those options is definitely the way to win.

Mark

Just a quick data story Sandra, if you don’t mind. I can’t divulge the company name, but one of our larger enterprise clients, about a 40,000-person employer, from the CEO level down, they had declared a hybrid workplace path forward. They were going to rationalize their fixed portfolio and provide employees with choice. A year ago, their plan of record was, we think 15,000 of our roughly 40,000 employees will be eligible. They had done a thoughtful inspection of who’s going to be home based, who’s going to be office based, who’s going to be flex and need something else. They came up with 15,000.

Nine months later, post launch, with the success that they were seeing from the initial cohort of test users and the deepened convictions that they had about their long term future, they ripped up their plan and rewrote it. 100% of their employees were to be given access to their hybrid workplace program, which we have the privilege of being the back end for. 100% are given access to it. No spending constraints, no red tape, no bells, no constrictions, go forth and work productively. And so not only are we seeing an order of magnitude of enablement by enterprises, we’re also seeing a number of companies lean even more deeply into the scale of that.

There are more and more conversations about how important it is for the hybrid offer to be equitable. In our social existence, on this planet where individual rights are so much in the news and on some fronts retreating, I think a lot of companies are reasonably hypersensitive to this sort of inalienable right of employees to have some level of agency over how and where they work. That doesn’t mean they never have to come to the office. It certainly doesn’t mean that there isn’t great value in coming together and bonding. But it does mean that there’s a recognition that mandating where you work and enforcing that as a default always requirement, I think, is going to be a thing of the past for most organizations.

Sandra

Yes, I would agree with that. From my perspective, again, I started doing workplace strategy consulting back in the early 2000s, really full-on, going in deep with the data. I remember companies starting out with allowing 20% 30% of our population to enroll, or we expect 20% to 30% of our population to enroll in some level of flexibility. And then six months, nine months, a year later, it was at 40% or 60%. It’s continuously maturing. And if you went back a year or two later, 75% to 80% were in some mobile capacity, and that 15% to 20% was more referring to people in the office day to day.

What’s interesting about right now is we kind of skipped over that maturity model. We went from being in the office to be working from home. Going back to the office three days a week, that would be in the old way. The path that would get you to remote working is that you start with three, four days a week in the office. Then it’s two days, then it’s one day, then it’s one day every two weeks. And just over time, it matures. And so it’s interesting to see how the business is thinking about the purpose of place and the needs that people have or may have, and then watching how the employees are actually responding to it because they’ve had the experience of working this way.

Mark

Yeah. I think your comments, which I totally agree with, also opened the door to another dimension that we, the collective we, people like Relogix and LiquidSpace and all of the great workplace leaders and HR leaders that are thinking about that, we all need to recognize a responsibility for us now. We have to help our organizations rebuild the rituals and the rhythms of work and place, the rituals of why and where we gather. The answer to the future, or the optimized outcome for an organization, is not going to be just as simple as giving every employee a tool like LiquidSpace and saying, okay, you’ve got flexibility and choice and expecting that they’re going to optimize their use of it. We should not underestimate how deeply set these new patterns are of us all, as we’ve been forced to be working away from one another for over two years.

So, we as practitioners, LiquidSpace as a company with a solution that is a lever on this, we have to be thinking about how do we nudge? How do we provide our constituents the cues and the visibility and the nudges to come together when it’s appropriate, when it might enrich an experience, when it might yield more productivity for a task, when it might create an experiential or a culture outcome that will be relished?

Nothing can replace the power and the energy you get and the strong bonds that get forged when you come together. Absolutely nothing will warrant saying you have to hop in the car and commute every day to the office again. So, what’s the right titration of those two extremes? Life will find a way.

But if we want to get to the better solution sooner, we need to be empathetic and supportive, but active in that we the practitioners, we have to help nudge and rebuild those rituals, guide people to the right balance and experiment test our way forward.

Sandra

You talked about HR and CRE and the need for those two teams to work together. Let’s talk a little bit about the CFO. You spoke earlier about setting up partnerships with “as-a-Service” companies—how does cost get handled? In a traditional lease model, you had your rent, your OpEx, all that stuff that hit a certain line. How is that different in a Space-as-a-Service model?

Mark

A quick definition first: hybrid workplace, by our definition, is the totality of places that an organization works. It’s every employee’s homes. It’s the company’s offices, which are generally leased and capitalized on the balance sheet and thought about as dollars per foot. And then it’s the rich tapestry of flexible office locations in between, some of which may be transacted by the task. Think of this as the spoke, you and I coming together to do this interview in a professional recording studio or a meeting space for 2 hours. In other cases, they might be more persistent hubs that might be a flexible office or an institutional landlord flex space that’s been procured for months or a year or two, not a ten-year lease.

All of that, those hubs and spokes, the flexible office economy, is implicitly a flexible term, “as-a-Service” industry. Whether it’s a meeting room for an hour, an office for a day, a team suite, or a hub for six months, that revenue or that transaction spend is “as-a-Service”, it’s not a capitalized lease. So it’s a different type of procurement than the vast majority of real estate leaders are familiar with. And in a lot of companies, it’s going against altogether different budgets. At a lot of firms, it’s coming out of HR or out of administration rather than out of CRE, which has been the owner of assets.

So, one response to your question is yes, the budgets and the cost allocation of the flexible office aspects of hybrid is different than that of traditional real estate. And a lot of companies it’s going to different owners. In addition, I’d say broadly speaking, most companies are seeing that their total cost of hybrid workplace, fixed, traditional, plus hybrid, is going to be less than what they were spending as a total cost of workplace pre-hybrid. Companies are going to be more economically efficient coming out of this and arguably more productive as their employees find healthier and more personalized approaches to whatever the right mix of work and place is for them individually. It’s going to be an economic win across the board.

Sandra

So that’s interesting. It makes me think of what you were talking about earlier, about just how vast the ecosystem is when it comes to these new and emerging workplaces. So how does the company even begin to think about managing costs? To me, that’s the part that they think is probably most overwhelming, having been the person on the other side of the table where you have a traditional lease, there’s a process, there’s a structure to how you manage costs. What happens now when you’ve got bills coming in from all these different companies? How do you see that playing out?

Mark

Well, in 2019, we were a thriving, profitable marketplace for workspace on demand. Individuals by the thousands, companies came to Liquidspace.com, they could search for a workspace, pay for it, boom, Bob’s your uncle. The market was accelerating, and everything was looking rosy, and then the pandemic hit. And I touched on the two hypotheses that we forged pretty quickly. We thought enterprises were going to become a lot more reflective and look to reduce their fixed real estate expense. We also thought that these old canards, these old tropes of, “you’ve got to work in the office for productivity”, were going to get broken, and that employees would want more. That led us to a fundamental new point of view about what the market was going to need from us, from LiquidSpace. It goes right to your question. How do large enterprises who see the opportunity of economic efficiency and workplace experience gains out of hybrid? How do they control this?

And what we surmised, literally ten weeks into COVID, was that yes, enterprises are going to buy a whole lot more of this stuff. We also predicted they’re not just going to tell their employees to go to Google and search for coworking and send us the bill. That’s not how it’s going to happen. Companies don’t work that way. Rather, they’re going to want to do this in thoughtful ways. They’re going to want to do it systematically. They’re going to want to make it easier for their employees, but they’re also going to want to stay in control, which means they’re going to want to have data insights, and they’re going to want to have the ability to put permissions and policies around that behavior.

That inspired us to create a wholly new product to complement our thriving marketplace. We built a SaaS application that we call Workplace Manager, which is a tool for organizations to be able to define the policies and permissions around a hybrid workplace program. How much can Sandra spend per day, per month? Where is she allowed to use space for what types of activities? From what vendors? So, all that permissioning now is a part of how our platform works for companies. In addition, we knew that companies leaning forward and looking to optimize this activity would want data. We believe in this. We’re now seeing it that companies would be starved for the new insights around what the rhythms and the rituals of work are.

So, the other critical thing is data. I want to give my employees agency. I want to give them flexibility and choice within the boundaries of permissions that we set up. But then I want to be able to observe. I want to learn what is working, what isn’t, how are they reviewing the spaces they’re using? Where are they spending? Who are my best providers? Where am I seeing employees return to? Where am I seeing employees not returned to? There’s so much to learn. And so the data insights flowing out of our platform to our enterprise clients are amongst the most powerful things at play in our business right now.

Sandra

That’s great. I love it. I think that that’s probably the burning question or will be the emerging burning question for a lot of companies as they start to see the writing on the wall with respect this new way of working. It’s, how do I manage it? And you’ve already figured it out. So, kudos to you and your team.

Mark, this has been fun, and a great learning experience for me. I love your passion, I love what you’re doing. As I said, I was very impressed when I first heard about LiquidSpace back in the mid 2000s. And I think that you guys are on the right path.

Thank you again for your time, I really appreciate it.

Mark

Of course. You know I’m a huge fan of Relogix and your colleagues and team. For the companies that recognize that the world has changed, and most are coming to that recognition, they need data insight platforms. They need tools that can help them decipher all of the data and get the real signals out of it. So, you guys are certainly on the right side of history and in the right place at the right time to be a powerful part of that. I couldn’t be more excited about all of our opportunity ahead. It’s a great time to be in the business of work and place.

Sandra

Totally agree. Thank you.

Mark

All the best.

About the Author

Sandra Panara, Director of Workspace Insights

Some of the highlights of the show include:

What was the pandemic like for Relogix, a workplace analytics organization, when offices emptied out around the world?
The corporate real estate and facilities management industries are at an inflection point, with an uncertain future
Organizations are concerned with how much space to shed and what design changes are required
Since the pandemic, historical benchmark data is no longer useful—how do we forecast the demand and needs for space with so much uncertainty in front of us?
Capturing live data is the key to finding the signal within the “noise” and keeping up with evolving workplace requirements
Encouraging employees to return to the office requires a paradigm shift and a tremendous change management effort
Who owns, or should own, the experience of work? HR, IT, facilities management?
Elasticity or agility in real estate portfolios is going to be key going forward
How do you collect data on how people work when they’re not in the office?
There’s a lack of data scientists with corporate real estate knowledge in the industry—how do you convince data scientists to make the switch to corporate real estate?
How do you deal with confusion surrounding terminology in the marketplace?
Are employees actually on board with this massive shift towards hybrid work?

Links:

Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
Andrew Millar on LinkedIn – Founder and CEO of Relogix
Mark Gilbreath on LinkedIn – Founder and CEO of LiquidSpace
Convene – Collaboration-focused co-working space

If you liked today’s show, check out more episodes of the Let’s Get Real Podcast! This podcast is available on iTunes, Spotify and Google Podcasts.

Transcript

Sandra

Have any questions, comments, or suggestions for future podcasts? Please drop me a line at [email protected].

Jillian

Hi everyone, welcome! We’re happy to have you here. My name is Jillian, and I will be your organizer for today. I’ll hand you over to Sandra.

Sandra

Thanks for joining us today, everyone. I’m excited to be speaking with our CEO today, Andrew Millar, about what’s happening in our workplaces and how the people behind the scenes like you are managing so much uncertainty and the uncertainty that still lies ahead.

Welcome, Andrew! Really happy to have you join me today. The past 2.5 years have been an incredible journey as the CEO and founder of Relogix, given the nature of our business. We’d love to hear your thoughts on what that experience was like.

Andrew

Thank you, Sandra, and thank you everybody for joining us today, it’s great to have you. I appreciate you taking some time out to share some experiences here with us at Relogix. We’ve been in the real estate technology game going on 15 years now, so we’ve seen an awful lot. I’ve seen an awful lot. But I must admit the last two years have been what we call quite the headwind for us.

Everybody on the call, I assume, is in corporate real estate, so I thought I’d just share my thoughts on the last couple years and what it was like. I was thinking about the story you’re going to tell 5 years down the road about how you got through the journey of being a real estate professional, and how you got through COVID. Someone might say to you, didn’t you work in the real estate industry? What was it like going through the pandemic? And I was thinking, ok, you’d start the story by telling them well, obviously the pandemic hit us and then all the offices, our core business, emptied out completely around the world. Everybody went home, and stayed home for almost two years.

During that time, on and on it went: the macro scene and economic instability, around the world stock markets are teetering, we’re dealing with massive inflation, and the price of everything has gone through the roof. We’ve got social unrest going on around the world, so we’re trying to struggle our way through that. You’re in real estate, so you might be trying to do some projects in your offices. We’re providing sensor technology, so we were all dealing with a global supply chain melt-down. Very difficult to get anything done, there’s no parts for anything, we continue on…we’ve got a war for talent raging, certainly in Canada, I’m sure around the world trying to find folks to join your team is rough. The price of talent, the price of folks is going through the roof, so there’s a war for talent’s going on.

And for sure, it’s just been one of those situations where absolutely everyone has struggled, but if you look at the corporate real estate and facilities management folks that are out there, no question that the commercial and corporate real estate industry has been disrupted. I think that’s a given. And it’s undeniable at this point that the industry is at an inflection point. And we can talk about that today. But the good news is, I think with the disruption comes lots of opportunity.

Sandra

Let’s jump to a quick poll. With the uncertainty of what’s next, I’m curious to gauge where most of the interest lies within your organization with respect to some of the challenges that you’re facing. As you think about coming back to the office, what are the challenges that your organization is facing and trying to figure out? Is it figuring out how to incentivize people to come back to the office, maybe you’re looking at design changes that need to take place in the workplace because people aren’t using space the same way that they used to, or how much space you should keep if you have leases that are coming due? A lot of companies are thinking about that as well.

There’s also just the big question around, should the company be considering hybrid work or should they be looking to transition to being fully remote? These are all the things we’re hearing from organizations we’re speaking to, and it’s kind of all over the map with respect to where companies are putting their focus. There isn’t a clear focus much like there was before the pandemic, in terms of workplace optimization. So, I’m curious to hear what’s happening in your organization.

Poll: What’s the biggest workplace challenge you’re facing?

Interesting, so how much space we should keep and should we design the space are at the top, which are pretty much the areas where most of our customers are also playing. Obviously with leases coming due, or not coming due, people are realizing that there’s too much space. They’re asking themselves how much space they should actually be keeping and how they figure out how to do that. Then the flip side of that is actually just looking at the fact that, as I said before, the way people are interacting with space has changed. You may have allocated a bunch of desks and now people are coming back to the office, but they’re using a different type of space. A lot of companies are asking, what is the preferred space, do we have enough of that kind of space and what are the changes that we need to make?

Interestingly enough, there’s also the question, will people come back to the office? I think there’s a belief in a lot of organizations that there will still be people coming back in greater numbers that what we’re seeing right now. That’s basically a wait-and-see game, we don’t really know what the future holds. We’d love to be able to look into a crystal ball and see what that is, but it’s certainly not something that we’re able to do effectively with any data that we look at. It’s a huge unknown.

So having said all that, Andrew, thinking about all of these different things that are challenges to organizations, where do you see the market headed?

Andrew

From where I sit, the biggest challenge I’m seeing in the market right now, for our customers and people we’re working with globally, is this tremendous blind spot when it comes to the notion of return to office. I think what’s really interesting about that is, this is a global challenge that we’re facing, and every corporate real estate professional you talk to in the world is struggling with some of the very same things, which I find is really unique, in my career for sure. But it’s absolutely clear to me that we’re not sure how this is going to unfold in front of us, certainly for the next year.

We as a data company are always looking for historical patterns and pattern recognition, but as you know, Sandra, all that data we’ve had for many, many years, a lot of that is out the window. Those patterns are now irrelevant. Our lens is only looking forward, day by day, as this unfolds and we’re trying to figure out what’s going to happen next.

So, with this blind spot, the real estate leaders that we’re working with are struggling just to answer those basic questions. They’re asking the same set of questions, and how do you answer any of those questions with confidence without any data? Just the simplest things like, are people going to return? Who’s going to return? Where and how often? And then as you said, when they do return, what are they going to be doing in the office? What kind of work are they going to be doing, what spaces will they be using, how long are they going to be using those spaces, and what kind of space ultimately do we need as a result? We like to call that trying to understand peoples’ intent versus their actual behaviour. I think that’s really important to try to understand.

But the billion-dollar question is, how do we forecast demand and the needs of space with all of this uncertainty in front of us? And everybody is talking about trying to create a better employee experience, but how do you do that when you’re flying blind, and you don’t have the answers you need?

Sandra

Exactly. It’s interesting, you mentioned in a recent conversation of ours that during the pandemic, one of our customers was having a lot of conversations with us about booking systems, focusing on meeting and collaboration spaces. Some companies rushed to make changes to the space in anticipation of this change that was coming, and then it kind of fell flat. What was the outcome of that particular customer’s experience as a result?

Andrew

I characterize it as, everybody was stuck with one foot on the break, one foot on the gas, for the last 18 months. Now we’re all sort of saying ok, it’s over, let’s get going and make some decisions. People are trying to make decisions, making capital investments and changing space, buying tools and technology for a better workplace experience, like desk booking, visitor entry, people are investing in all sorts of solutions. Some of the reality is now that they’re 2 years into this game and people are still slowly coming back, they’re questioning whether or not those investments were the right investments to be making. Some of them were a little nervous that there were knee-jerk reactions. There’s going to be a lot of rightsizing and likely rationalization of space footprints across portfolios and if you made investments in some of them, it might be for naught.

Jillian

On that note, Brad Clark you have an interesting point to add to this. I’ll read off his questions here. He’s saying, exactly! Why do they really need to return? Why does the business or want/need them to return? What are the benefits? How do you navigate another culture shift to encourage on-site collaboration?

Andrew

Absolutely. I think we’re in a “work anywhere” world and we’ll talk about what that means today, but it’s pretty absolute that the makeup of the office has changed. A lot of our customers, from what we’re seeing, are really opening the doors and now wondering, how come occupancy is not increasing as we thought? We set a target, it’s not happening, now what do we do? And that’s it. We’ve got a lot of clients that are looking at us saying, we’re working on what we’re going to do next, but the data is not unfolding the way we had thought. And it’s a big part of the question.

If you look at this graph here, this is really interesting for Relogix. We’ve been in a very interesting position over the last couple of years, as a data company. We’re sitting there watching the patterns of data unfold globally from all the portfolios we’re studying. It puts us in a very interesting position to watch it, and we’ve been watching it obviously continuously.

occupancy trending graph indicates desks, offices collaboration and meeting room spaces where presence was detected daily.

This graph is the last couple years. It’s showing UK and North America as the dark line. So, you’re on the internet, you’re reading all of what you might call the “noise” that’s out there right now. Everybody’s got an opinion of what’s going to happen next, but we have the opportunity to find the signal within the noise. Because we’re looking at the numbers and the data that’s unfolding, capturing live occupancy data in real offices around the world. We’ve been doing that for the last five years, so we have quite a pattern.

And then the last couple of years, as the graph shows, that line is obviously pretty spiky. And now today when you look at those numbers, there’s no question that certainly in North America, we’re still not seeing even close to 50% overall occupancy. Over all these years, Relogix has been screaming from the rooftops that offices have sat empty around the world pretty much in the best of times. And that’s just the reality of it. We’re trying to convince folks to be more effective with how they use space. And if the world sits at 28% or below, and this continues, there’s no question: this part has been disrupted and it’s going to be interesting to see where we go next.

Sandra

I think what’s interesting about this too is, when you look at a graph like this, there’s the temptation to look at the past and try to predict the future, to say, it’s great that we’re starting to see the incline, we can sort of predict what the future might potentially look like. But that’s not necessarily true in the market that exists today, because it changes literally from week to week, month to month. There’s something that happens that’s COVID related, or some other thing that’s happening, you’ll see a significant dip in the numbers and then it almost feels like every time there’s a dip, there’s a bit of an erosion to the confidence level of the actual return. Well, what’s the point of even bothering to go back? So, that basically results in this jagged line that we’re seeing.

The other part is just the nature of the line and the fact that it’s demonstrating volatility. We’re basically looking for it to flatline. Once it starts to flatline, that’s where we can start to say, ok, that’s what the new normal is. We have absolutely no way of predicting at what point it’s going to flatline. Because it’s completely at the mercy of the employees.

To the point of companies trying to figure out how to bring people back, we’ve seen in the news that some companies are trying to mandate and put their foot down and say, you need to come back to the office on specific days. Employees just are not having it. They’re just not interested in mandates. That’s what makes this really unique, and hard to really predict what’s going to happen in the future going forward.

Jillian

We have another question here from Andy.

Andy

Hi! When you talk about change management and how to get people back to the office, you’re coming from a different paradigm. It used to be that everyone was in the office and becoming an activity-based worker was a change but now, everyone’s home, they’ve been home for 2 years and they’ve adjusted their lives to it. So, changing that paradigm mix is now what you’re coming up against. And it’s a different dynamic. I don’t think that a lot of organizations understand the full impact of how hard that is, unless they’ve gone through activity-based work incorporations or things like that in the past.

Andrew

No kidding, a tremendous change management exercise is going to be going on for the next year for all of us. No question.

Sandra

Just to add to that previous slide, this is a graph that I pulled down, it’s showing Google mobility trends. They’ve been tracking this information since the onset of the pandemic based on whatever that baseline was with respect to people transitioning or going to the workplaces. Obviously, Google’s smart enough to know if you’re at home or if you’re out shopping or if you’re in a workplace setting. And what’s interesting about this is the drop-off rates. We all have heard, if you’ve been in workplace strategy, what real occupancy numbers looked like before the pandemic. 50 to 60% was the norm. Some companies got up to 70% but it was very rarer to see anything over 70%. So, when you look at the onset of the pandemic, with that drop-off of 40, 50%, you’re looking at potentially the fact that you had skeleton staff in the office, so maybe 5, 10% of the people. We saw that as we were watching the mass exodus happen in other parts of the world before it hit North America.

Google Mobility Trends – USA illustrating workplaces are still 20-25% lower than where they were pre-pandemic in the US

But what’s interesting is, when you start to look at the incline as people are starting to come back to the office, you’re still about 25 to 30% away from whatever that baseline was before. So again, using that 50, 60% proper occupancy rate before the pandemic, subtract 30%, you’re probably at about 20%, in terms of the rate of return. As I was flipping through the different countries, the only one that actually showed a steep incline was India. All the other countries were pretty well flatlined. So, there’s really very little movement with respect to people going to the workplace and being captured from mobile devices. This is fascinating to me because maybe this is an indicator of the fact that it is steadying out and it has been over the last couple of months or at least the last couple of quarters.

Andrew

Sandra, a lot of your podcast I’ve heard you talk about separation of “work” and “place”. Maybe share a little bit about the employee experience side of that or what are you meaning when you’re talking about that?

Sandra

It’s not necessarily focused on the employee experience per se, because that’s a pretty loaded topic in itself. It’s more about being more generic about what the experience of work is, and thinking about who actually owns that now. Before, you always had HR, IT, facilities management, and a whole bunch of other roles that were tapping into building this experience of work when you physically had a workplace. But obviously there are growing roles and responsibilities within the organization around this thing.

There’s also a little bit of an ego situation happening, where everybody wants to be a hero. So, you’ve got HR that basically says it’s about culture and wellness, from that HR slant. Then you have IT, which is all about the technology, so you’ve got workplace technology and all of these new requirements where you’re trying to get at data as it relates to the actual space itself. And then facilities management, which is sort of all encompassing, depending on the structure of the organization, about space planning and preparing for the maintenance requirements as people are coming back to the office. There are so many moving parts to all of this. And often, these teams are competing for the same budget.

The bottom line is that there’s business to be done. Business requirements are what they are. And whatever it is that that experience needs to be, everybody needs to get on the same page. It’s not an HR initiative or an IT initiative, or corporate real estate initiative. It really should be one that is a joint initiative, as an organization, so that you get that cohesion and, more importantly, the alignment around what you want the experience of work to be, for your employees. Is it in the office? Is it out of the office? Is it a hybrid solution? How does that all work? I think the whole concept of managing is going to become that much more complex because of the volatility.

As we said before, we don’t really know what the future holds, and so companies are kind of in a hold state right now. They’re toying with the idea of hybrid, and there’s already a bunch of challenges that are coming through with that just because it can’t really be scheduled. If it’s true hybrid, you’re not going down that scheduling path. So, it doesn’t work for people. It creates mayhem for corporate real estate, for facilities management when you’ve got companies like Apple that are mandating the specific days that employees are coming in. You’re basically putting a lot of emphasis, and a lot of demand on space in just a few days in the week. Whereas if you left it more open-ended, you would have a greater distribution across the five days of the week.

So there’s all these puts and takes as it relates to how you’re going to shape the experience of work going forward. What’s interesting in all of this is how the role of the experience has not necessarily changed, but it’s becoming more and more distributed.

One of the things that we’ve seen quite a bit over the last little while is these new titles that are emerging. We’re going to do another poll now, curious to know if these new roles have been created within your organization. Because what we’re starting to see more and more is that the whole role of the experience is being pushed off to a new title, but in reality, it’s not about a new title. It’s about the cohesiveness of the team and working together to establish what that experience needs to be and then working on that experience in a joint fashion.

I’m curious to see the results of this one.

Jillian

We’ll just give it a couple minutes, but in the meantime, have you seen any of these titles yourselves in some of the conversations that you’ve had?

Andrew

Yes, I’m certainly seeing a lot of Experience Officer—the word “experience” in titles right now is popping up for me all the time.

Sandra

I think the other important question too is under what umbrella does that role fall and who does it report to? Is it part of real estate? Is it part of IT? Is it part of HR? There’s massive confusion as to who actually owns the experience, and the expectations around that, I think more than anything. What does that mean exactly?

Poll: What are some new roles and job titles you’ve seen?

Interesting. I wondered, when I started to see this emerge and was looking at the job functions—is this a workplace strategy role renamed? Because I think a lot of the roles and responsibilities for the Chief Workplace Officer really includes many of those objectives. It almost feels like it’s a modernization of workplace strategy. It feels very place-focused versus experience, although the word workplace again is a bit of a touchy subject, but we won’t go there.

Alright, now we’ve understood the emerging problems, and the fact that we’re not really sure who owns ultimately the experience. We also know that solutioning never really starts with tools—so Andrew, what would you say are some of the emerging problems as a result of this confusion that’s happening in the market?

Andrew

No shortage of challenges out there for us, folks. I would say that it’s undeniable that we’re in a
“work anywhere” world, we like to say. Actually, a friend of ours, Mark Gilbreath over at LiquidSpace, he coined it “the trillion-dollar dumpster fire” that’s going on in commercial real estate. I thought that was a little heavy, I’d call it “the Great Re-alignment” rather than dumpster fire, but no question, offices are not going to disappear any time soon. It’s the biggest SaaS class in the world, so it’s by no means going away.

But I believe it’s absolutely certain that we’re going to have a percentage of people working from home permanently. I don’t think that anyone’s going to deny that that’s a fact we’re going to be dealing with. But I also firmly believe that a percentage of folks are going to be working at third places. Co-working spaces, coffee shops of the world, all the other restaurants becoming co-working spaces, a percentage of folks are going to be always in those types of spaces as well.

And I think what we’re going to see is that companies really need more elasticity in their portfolios moving forward. That’s the key, that agility or elasticity. Because we’re going to have to figure out how to deal with these ebbs and flows of the supply and demand equation. The only way to do it effectively is to realize we’re not going to be in our leases forever, we’re going to have to have an elastic portion of our portfolio until this thing starts to balance out. There’s no other way to deal with it.

That, to me, speaks to the need for more real estate as a service. I think that part of our world is going to continue to increase, to deal again with that ebb and flow. The challenge of that realignment for corporate real estate and facilities management is that we’re the ones that have to try to figure out, using whatever data and tools we have, what pattern is going to unfold in front of us. And we have to make strategic decisions about our portfolio based on not the best data at the moment.

So, the challenge is really, what data do you collect, and how do you collect the data that you’re going to need to make informed decisions in a work anywhere world? And how do you collect data around how people are working when portions of them are working from home? Portions of them are working in third places? Data privacy is heightened more so than it ever has been, so for us to capture that data—it’s really, really tricky to do. And we still struggle with how we’re going to capture any data from the folks that are not in our office. Those patterns for us are really the key to understanding what’s going to unfold, so we have to find ways to be gathering any day that we can get our hands on, and how do we improve?

We were talking about how to improve the experience of work when you don’t have the data to even effect the common decisions that you need within the workplace? That puts us really in uncharted territories, as far as I’m concerned.

Sandra

I know before the pandemic, a lot of the drivers with respect to optimizing the workplace stemmed from cost-savings. Companies were all about cost-savings. Do you see cost-savings still being a key driver, or has that become secondary?

Andrew

I think it’s the secondary equation right now. It’s falling out the backside of us, just trying to understand, again, the patterns of work right now. We’re going to spend the next years figuring out the patterns of work. Most organizations are shedding space. But we’re stuck before we can make any kind of rationalization, rightsizing decisions across the portfolio. We’re still waiting, hesitating to see what our occupancy is going to be looking like and in what cities and parts of our portfolio, what cultures, what departments, what organizations. You’re going to definitely see that rightsizing coming but it’s not the immediate focus. You’re focused on that experience piece first, to then inform the right optimization program, coming out the back of it.

I threw this one in for you, Sandra, because someone said to me, “data’s the new oil”. We’re a data company so we think a lot about it but, with the price of gas right now, oil’s just not cool. Nobody likes oil. Data’s maybe the new bacon, and we’re Canadian so I thought that was kind of funny.

Sandra

Very appropriate!

Andrew

To finish my thought, I’m sorry to say everybody out there that you’ve got a challenge in front of you. So, if we all believe data’s the new bacon, corporate real estate and facilities management are going to struggle, because what we need is more data analysts, data engineers, and data scientists. I know, after being in this business for so many years, finding those folks is a huge challenge. Finding those folks who know even how to spell CRE is a massive challenge. We’re trying to hire and recruit all the time, and I hate to say it, but corporate real estate and facilities management are not the coolest kids on the block, when it comes to tech.

It’s about trying to convince folks to shift their career out of some other area like finance, IT, other areas where data scientists and engineers live and get them to come over into our universe and focus a part of their career on figuring out corporate real estate—it’s a real hard lift. My recommendations right now is to be looking at intermediate level and other folks maybe popping out of school. And then you’re going to have to do upskilling and train them up. Give them subject matter expertise. Just having expertise around data, without the context of our business and how it works, is very difficult. You don’t get a lot of value out of the data if you don’t understand the industry and the context. A massive challenge for all of us ahead, is going to be talent.

Sandra

That’s an astute point. I’ve worked with many companies in the past before I joined Relogix, where they had a business analyst or a data analyst that was in IT without any corporate real estate background. They could put visualisations together fairly easily if they had the resources to do it, but then the million-dollar question was, well what does this all mean? There was no interpretation of the data, which is where it kind of fell apart. And I’ve seen that, time and time again—unless you have someone that knows the significance of the data, who can look at a graph you know exactly what it’s telling you, it’s very hard when you’re asking someone in a completely different field to do visualizations. It’s hard to really give it the context that it needs so that you can make the decisions that need to be made.

Jillian

We have a question here again from Andy. Did you want to unmute yourself and ask your question?

Andy

Sure! Given that all our work is really based on the computer interface now, that provides us an opportunity to actually get data around how people work. What software are you using, how long they’re on it, if they’re on Teams meetings all the time, all that kind of stuff. And I know that Microsoft analytics and probably Google analytics and probably every single platform out there has it, but it’s always an issue of access and security, to your earlier point Andrew. Are you seeing any availability or access, especially in creating a streamlined dashboard that you could then give insights on a quarterly or bi-annual basis?

Andrew

Great question, and absolutely. Coming from and starting in the IT community, who has already been tapping that data to understand just how systems are used and you know, it’s a corporate asset. The data belongs to the corporation, and we should be able to understand how people are using the corporate assets. The data stream is one of those really tricky ones where it could easily turn into, well, are they tracking me? And yes, we can tap into some of that data, but you have to be very cautious how you communicate exactly why there are sensors, what the data’s going to be used for, and how it’s going to be used. But it’s early days. Very few people are crossing over and figuring that out, because it’s very Big Brother. So, it’s a tricky one.

Sandra

I think personally that the value in that kind of stuff is still forthcoming. It’s more about understanding relationships of people that work together. If you think back on when you were doing site observation studies, you always ask the question about adjacencies. You’d go out and try to understand who works with whom by just asking the question. And in talking to other people, some that are a little bit further along in their analysis, you don’t have to ask the question. And often there’s a discrepancy. You might think that you need to be next to the marketing department, but in reality, you rarely work with the marketing department because you’re working with other teams, which comes through in that type of data.

We have a couple of customers who are edge cases and are exploring that. We’re saying, ok, what are the relationships or the frequencies of people that work together coming into the office? Are they on the same teams or different teams? We’re looking for patterns to really illustrate potentially what those work relationships are. But again, it’s still very much focused on the office space right now. The independent work is one thing, but I think where the interest really lies is around the collaboration and the collaboration disassociated with the physical space. It’s about saying ok, if I’ve got 2 or 3 people that need to work together, how do we ensure that they are aware of their individual needs, but also their teaming needs, and where work should happen, where it works for all of them. It’s not about mandating days in the office. Maybe if that’s the only option that’s made available, great. But if there are other options, like this particular company considering co-working, then that opens up a whole new door for employees to think about how they want to work together on the days that they choose to be together.

We’re going to do another survey: what is your current go-to data source to understand your future workplace needs?

We know that a lot of the data sources that you used to go to before aren’t really useful anymore. We can’t be looking for benchmarking information from the past because that’s all out the window. So how are you capturing that information today? What are your sources?

We’ve had several conversations with customers around badge data and the value that this brings. A lot of companies think that badge data is useless, for lack of a better word. But the reality is that badge data is, and continues to be, the first source of at least trying to gauge how many people are actually coming in. With badge data, you can probably get about 75% accuracy. Because you’ve got tailgating, you’ve got other things that come up, but that 75% accuracy rate might be pretty good if you don’t have any way of looking at data today or any data source today. It’s a great starting point.

So, if you know that you’ve got only 50% of your people coming in, maybe you tack on another 20% just to be safe. That right away gives you a 30% opportunity. And you’re not really impacting the employees’ experience in any way, you’re just getting rid of space that people are not actually using. And that’s usually where companies start going down that data journey. You start with the highest possible number and then you just continue to drill into the data as more and more questions start to emerge. For example, once you know how many people are in, then you ask, what floors did they go it? Then it’s what spaces did they go to? And so on and so forth. There’s a bit of a journey that happens there.

Poll: What’s your go to source to understand your future workplace needs?

Well, this is interesting. Employee surveys has been a really big one over the pandemic to check in on a number of different factors, primarily their willingness or their desire to return to the office. So that one’s not surprising.

Leadership direction, again, not surprising in terms of turning to the leadership about what the future of the organization is and how they envision how the organization is going to function going forward. That’s going to be a requirement because you want to ensure that you’re aligning with whatever that leadership’s direction is, good or bad. I mean, that’s ultimately what you’re trying to do. However, interestingly enough, from my experience there’s leadership direction based on gut feel, and then there’s leadership direction that’s driven by data. So, when you have data that’s helping the leadership make the decision about what the right direction is, that’s when you actually have the greatest success. If you can go to your leadership team and say, hey, you guys are thinking about doing fully remote, as an example. But the reality is, 40% of our population still want to use the office. How do we address that?

The flip side of that would be a similar argument. That’s when you would turn to your security, your sensor data, your calendar data to get a sense of how many people actually are coming in to be able to gauge where you’re in terms of what the direction is. So, there are a series of validation steps that you need to take. It’s not a one and done.

That’s one of the things that I think is the biggest takeaway of COVID. What we’re seeing is that before the pandemic, many organizations would do their 3-year retrofit projects, they would come in, do a study, get the information, do the plan, and then move forward. Now, there’s a need for ongoing analysis and data because things could be shifting at any point in time. Not only does that mean that you may need to shift your plan, but you want to be using that information as indicators to tell you when something’s happening in the business, rather than waiting until it’s too late. Then you then have to react, instead of getting in front of it.

As Andrew was saying before, if there are other options that you’re considering to ensuring that your organization has agility with regards to space, so when you have a greater number of people coming in, how do you deal with that? Do we just take on the space and let it sit idle for the 80% of the time that we don’t use it? Or do we look to a partnership with, for example, a co-working space to fill in the gaps? These are all part and parcel of this decision that needs to be made around the workplace.

conexus workplace analytics platform screenshots

Andrew

Where does Relogix fit into the picture? I’ll just tee that up here. We are a data company, we’ve been in the business here for 10 years, working with corporate real estate organizations. We’re definitely the leader in what we call workplace analytics, and our platform is called Conexus. What we do is ingest all the meaningful data across facilities management and corporate real estate into the Conexus platform to help our customers make informed real estate decisions. And that means sensor data, badging data, booking data, WFMS data, whatever data a customer might have.

Conexus and our team is about pulling that data together and turning it into meaningful insights. Our sensor platform is in the industry a do it yourself, easy to deploy, high agility, easy to move around solution that allows you to collect really tight data on short notice.

I’ll also point out one really exciting thing we’re working on right now, on the bottom right you’ll see a card that says “Predictive Analytics”. We’ve actually filed recently a new patent in the area of AI machine learning, and it’s our ability to look forward and actually with the data patterns that are unfolding, be able to predict what the future pattern for occupancy will be, based on the data that’s coming in in real time across the portfolio. So actually having the ability to predict and then prescribe, based on new techniques and AI machine learning. So, super cool to be able to predict the future.

Sandra

That’s exciting!

Andrew

We’ll use the last 10 minutes to answer any questions anybody might have.

Jillian

Brad if you’re still with us, did you want to explain your response to the survey, about your data sources? Brad actually mentioned that his go-to source was “all of the above”. So maybe you guys can kind of speak to that and people who have to use multiple sources, use all of the above?

Andrew

All of the above data sources is very unique and there are very few folks out there in the industry that are able to pull together all those data sources. You’ve got to get them all together and put them in one place, but then do the work to transform that into assertions about occupancy and tease out the insights that come from the correlation of all of those data sources. That’s the heavy lifting, for sure, in our industry.

I like to say every organization we work with is like a snowflake. What I mean by that is you walk in the door and you have people on a data journey. Some have very little data and they’re at the beginning of their journey and trying to figure things out, whereas some companies have been at it for 10 years and they have really rich and powerful data. We’re the ones that arrive and try to deal with what we have in front of us, and make sense out of the fidelity of that data and the precision that it provides. So, seeing it across the entire industry and all our customers makes it really powerful to know how we can zoom in and zoom out of the portfolio, just based on the various data sources that are available. But Brad, if you managed to pull it all together, you’re on the data journey and very on the mature end of the pendulum versus a whole lot of the rest of us out here in corporate real estate.

Sandra

To that point too, and probably Brad can attest to this, is the amount of time that it takes to do that. Having been on the other side of the table, and doing that myself, it’s pretty time-intensive to do. The key is to set it up where you have a continuous feed, because the last thing that you want to be doing is spending weeks on end building that out to get to an answer, only to realize that some things changed in the business, your leadership team decided that they’re going to go in a different direction that brings you right back to the drawing board. This has been a very, very common occurrence within the corporate real estate teams.

Jillian

Theresa Chang, I see you have your hand up. Did you have a question you wanted to ask the group?

Theresa

Yes, hi to the team! I find your stuff really interesting but I had one question. What is the influence of furniture suppliers on what is happening in the future? Because obviously, they’re saying things will be more collaborative, and this is good for their pockets of course but it’s not an easy change. Furniture is not that easy to change, and if you’re rightsizing, then you might have the opportunity. But a lot of the discourse about the future of work is sort of related to, I would say, a vested interest. How does that show up in how you are seeing the true research of what happens in corporate real estate?

Andrew

I can lean in on that one a little bit. I guess the reality now is that you can be extremely objective about what furniture settings are actually working for your team and which ones are not. And we’ve done enough of that work and data-driven design that it’s not anecdotal anymore. We can definitely show very clearly which furniture settings are getting the most traction and which buildings on which floors by which groups. And the good news is, we can ideally have some flexibility.

I dreamt of a Furniture-as-a-Service world as a result because everything for me is as-a-service. Could we get the furniture providers to have that agility to swap out the furniture settings that are not working until you find the sweet spot of what’s good and what’s bad? Or, not good and bad, sorry, but what’s working and what’s not working. It’s pretty obvious if the settings are not being used. Then ideally you would want to change that.

You see a lot of capital projects where the work gets done based on what we think is the right strategy and plan, and then all the capital was spent, and it’s difficult at that point to make any changes, because you’ve already made your decisions and you’re stuck with underperforming spaces as a result. And the data shows it and it’s not easy to deal with it at that point.

Sandra

I think what’s interesting too about that is, if you think about the evolution of facilities management, we started out years ago moving furniture when you moved. So if you had a re-organization, you’re dismantling furniture and re-building. And then you kind of realized this is ridiculous, and then we went to box-moves. The furniture is fixed, you just move people around. But you’re always within the facility.

Then we went through the whole activity-based work where you tried to do these different furniture settings, again very much driven by the furniture industry in terms of this idea of having people move around, always within the workplace space. But now, there are these different, very focused co-working spaces that are popping up, like Convene for example, which is collaboration spaces for the most part. So, why not, when there’s a requirement for a meeting space, you go to the space-as-a-service provider where you don’t have to invest in the furniture, but you know that the purpose for going to that space is to have meetings, versus going to a different type of space where the focus is on something completely different. And so, again, it’s a completely different way of thinking about how you use space, but because it transcends what we think of when we think about the workplace being just one central office location or network of office locations.

Jillian

We have another question here from Tawanda. I’ll read off her comment. Her comment was, the government has reduced footprint in prior years as a mandate. Now we have smaller offices and small workspaces. The anxiety is high for employees, as many are not interested in desk sharing. This is the wave of the future, post-pandemic. Also, because of this, there has been a great exodus. Data analysis employment is appealing because we know that this can be worked on from home.

Andrew

Definitely a good point for sure. The way I look at it, the 5 years we worked before COVID, flexible, activity-based working, all that was still a very slow-moving train. What percentage of the world’s portfolio was fully unassigned flexible seating environments? I bet the percentage was less than 5% probably on the whole globe. Guess what? Now the door blows wide open and everyone’s trying to move to unassigned at a rapid pace. And what about the people? They weren’t really totally onboard. Corporate real estate had to sell that dream to the business before and now here we are, and it’s upon us. What about the people?

Sandra

I think the other part to that too is, she’s talking about people not being interested in desk sharing and the fact that years ago, there was this whole thing of increasing density in the offices, which was a way of cramming as many people as you possibly could so that you didn’t have to expand on real estate. This now works a little bit against you because you’re already in tight quarters.

But if you think about it from a different angle, you can have desk sharing in a scenario where you have a 200 square feet per person scenario. The footprint is a separate argument from desk sharing. Desk sharing is just, if we currently have 50% of our people coming in to the office, that means you could have a 2:1 sharing ratio, that doesn’t mean that on the same day two people are sharing a desk. It’s just that based on the behaviours you’re observing, you allocate a certain number of desks that get used by people so that you’re optimizing how your physical space is being used.

I know for certain that there’s confusion in the marketplace around the terminology. You had hotdesking, that sort of blends into desk-sharing and peoples’ perceptions of what that means. And then people get really standoffish about it. And of course, there’s the aspect of COVID germs, which again is very real. It’s not something that’s favourable to most people. But companies that have done it have figured out how to deal with the changing of the hands, if you will, of people that are using desks, and it works. And so, the key is that you don’t want to be following trends. Every company has their own objective, their own way of how they want their businesses to operate, and the clues of how you should be operating really come through your data. If you’re looking at your data, your data’s telling you the direction that you probably should take, if you listen to it. If you choose to go your own direction, then the outcomes are going to be what they will be.

Andrew

Well, thank you very much everybody who’s taken the time out, we value your time, it’s precious. I hope you picked up a few nuggets here along the way. By all means, follow up with Sandra or myself or anyone here at Relogix, we’re happy to chat further and answer your questions.

Sandra

Thank you, everyone!

About the Author

Sandra Panara, Director of Workspace Insights

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