Let’s Get Real Episode 21: Can The Office Compete With The Digital Workplace?
Discussions on the Workplace and Corporate Real Estate Podcast
Some of the highlights of the show include:
- Are the changes we’re seeing to the workplace cyclical, or are we seeing something completely new?
- How can landlords best serve and attract tenants in an atmosphere of uncertainty about the future of work?
- The power has shifted to the people—a smart landlord will start to work with their tenants to create flexibility.
- What should a company do if they have their hands tied with a long-term lease and very little demand for space?
- It may still be too early to be making significant decisions about shedding excess office space.
- How do you manage space with varying compliance rates, inconsistent office use, and day-to-day fluctuations?
- There are patterns to be found—for example, someone’s distance from work correlates with how compliant they are with coming into the office.
- Can the physical workspace compete with the digital workspace?
- Where do you focus to get the best out of employees – what the individuals want, or what is best for the team?
- Coworking has at least one advantage over offices—they provide a space to learn, connect, and network with people you otherwise would not have met.
- At what point does it become more economical to move to a coworking space?
- Sandra Panara on LinkedIn – Director of Workplace Insights at Relogix
- Steve Todd on LinkedIn – Global Head of Workplace at Nasdaq
- Open Sourced Workplace – Community for business owners and workplace professionals to share information, knowledge, insights, and experiences to maximize workplace productivity and employee experience.
- IWG – Global leader in hybrid working
- Liquidspace – Hybrid workspace solutions provider
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, help me welcome my special guest, Steve Todd from NASDAQ. Steve is also the founder of Open Sourced Workplace, a community for business owners and workplace professionals seeking to share knowledge, insights, and experience about work.
Welcome, Steve! I’m very excited to have you on our podcast this week! Why don’t you tell us a little bit about yourself?
First, many thanks for having me on, Sandra. I appreciate the invitation and the opportunity to chat with you. My name’s Steve Todd, I’m Global Head of Workplace at Nasdaq. By way of background, I grew up in Belfast, in Northern Ireland. I spent some time in the UK before moving to the US. My background is all finance, and I moved to Nasdaq in 2011, so a little over 11 years ago, as a CFO responsible for basically managing various businesses.
I got an appetite for real estate though, because that’s one of the areas we looked at and managed, and in 2015 I got the opportunity to move into real estate. In 2016 I led a workplace strategy project within the organization that changed my whole perspective, my trajectory, and where I wanted to spend my time and energy. Listening and hearing and responding to employees’ needs was something that just drew me in. I know many people in our industry feel the same way. The ability to help people and serve other people is what really dragged me into this workplace space, and really understanding what is it that employees need to be their best. Why is it that on day 1 they go into an organization and have all this energy, and yet over time, most of the time that energy gets eroded? How do we reinvigorate that? That’s where my passion grew for workplace.
I also manage the leasing aspect of Nasdaq, so I’m responsible for the portfolio. What that means is connecting the portfolio to the workplace design and data, and really understanding the businesses that operate in each office. What do the people there actually do fundamentally, what are their tasks? And how do you then design for those tasks, for people to be successful? Knitting all those together is the bit that I really love. So that’s a bit about me!
Outside of work I love soccer, I’m a big Manchester United fan for my sins, who’re doing really badly at the moment, but that’s just how it goes! I love cycling, running, and travelling, and I’m sure we’ll touch a little bit on that through the conversation.
Great! So, you’ve been with Nasdaq for a long time. Were you there when we had the market crash back in 2008, 2009?
I was not, I started in 2011. At that time, I was working for the Associated Press, that’s when the whole media industry went through a really rough time.
But still, even being in this industry and having a focus on real estate for 11 years, I’m sure you’ve seen a lot of changes. Would you say that it’s cyclical, or are we seeing something now that we’ve never seen before?
That’s a question I ask myself, and it’s a great question. I talk to my peers and I speak to my brokers—brokers are forever optimists, unless they’re selling. If you’re selling, it’s a terrible market. But I do find it is very cyclical.
I also look at this as a pendulum. There are times when the landlords have the power and there are times when the tenants have the power. At this moment in time, the tenants have the power. That said, that’s diminished power. I think it’s almost at the point where both parties are kind of suffering. Unless you’re buying real estate, only then do you have the ability to drive good deals at the moment. The challenge is, who knows what the real estate needs are for organizations at this time, given how we look at the future of work, how people are going to return to the office. So, there are challenges on both sides.
I almost think it’s a partnership at the moment. It’s about working with your landlords to really understand what the need are for both sides, so it is an equitable arrangement. I have a lot of friends who operate and run real estate companies and we often talk about these things and these times and actually how both parties benefit whenever we’re mutually looking after each other and striving for the same things. People don’t have short memories and we have to ensure what we do is collectively the right thing.
I would agree with that. I’ve seen something a little different as well in some conversations with people in our industry around how we think of the customer. So, if you think of the landlord, obviously the tenant is their customer. But the one piece that I think has never really been truly considered is the people in all of this. You’re either the owner/operator of a building, or you’re the tenant/occupier of a building. But the tenant/occupier has very little power, when there’s no demand. And the demand comes from the customer, which is ultimately the employee.
I think that’s something that we haven’t seen before, where the power is shifted completely over to the people. Companies are mandating people to come back to the office 2, 3 days a week, but people have different plans. They’re not complying with these demands, these mandates. And therefore, what is the tenant to do? What is the landlord to do? You can’t really control what people are ultimately going to do, and we’ve seen that with the attempted mandates and how people are actually responding. Has that been the same experience for you?
Yes, I wanted to touch on that because that’s a really important insight you’ve shared. What I’ve learned from the smart landlords is, one: they’re working with their tenants. Two: they’re putting improved infrastructure into their buildings. And by infrastructure, I don’t mean air quality, I mean amenities into their buildings. They’re taking that excess space and creating flexible space for their tenants. What they’re trying to do is almost create a package that’s more than just a building you’re renting from a landlord. You’re actually looking at a holistic approach to what is, to your point, useful for employees. That provides their tenants flexibility so if things don’t quite work out the way they planned, maybe there’s excess space or there’s not enough, there is that flexibility within the buildings. I think that’s what the really smart landlords are doing at the moment.
I’ve heard that as well. That raises an interesting angle to the discussions that are at play these days—when we think about these attempts of landlords to try to work with the tenants to create flexibility, who’s paying for the furniture, fixturing and equipment in those scenarios? The tenant or landlord?
Another interesting question. At Nasdaq, we like to be the ones that own the relationship with whatever we’re buying. That’s how we like to operate. That’s the way we run, that’s the way our own internal processes are run, and that’s the way we do it. That said, I know other companies that are putting that on the landlord at the moment. Again, smart landlords are actually creating these suites that are already purpose-built so if tenants need to move quickly, the suites are already built out. We’ve been in a position to be able to benefit from that from a couple of our landlords, and it’s a really low-cost way to transition to a new space. This is where the landlord’s investing in their space, creating these flexible units so that if a tenant wants to move in for a longer- or shorter-term lease than is available to them, they can. But as I said, from a Nasdaq perspective, we like to own the relationship, be it with a construction company, be it with a furniture manufacturer: we own that relationship.
Let’s say you’re in a situation where you’re creating these types of spaces—is Nasdaq also looking to share some of those spaces? If you’re creating efficiencies by reducing the amount of space or consolidating the space for the employees, is there a portion of your portfolio that you’re opening up to other organizations to use? Or is it still exclusively Nasdaq space?
There will be areas that we may partition off and sublease to third parties, but they wouldn’t have access to Nasdaq space. Given the type of company we are, with SEC guidelines etc. etc., there are certain things that we have to protect. And therefore, we wouldn’t allow other companies to come in and work in our space with our employees due to those regulations.
I see. My next other question, because I get asked this question a lot, is: because of your CFO background, what would you suggest a company do with a long term lease you’re committed to, and there’s very little demand for space, but your hands are tied because you can’t get out of the lease. What should they do in that situation?
It’s a good question! It’s a tough question. And ultimately, it comes down to what your landlord’s position is. There are many landlords out there, and it all depends on when you signed your lease. If you signed a lease in San Francisco a couple years ago, you’re really going to struggle to find a landlord who’s prepared to work with you. It’s going to be a tough time to sublease space in San Francisco given what the current rates are. I think it is going to be really tough to offload space, unless you have created a workplace that is almost best in class. And when I say best in class, I mean: a potential subtenant looks at this space and knows they can simply move in immediately and work. That’s going to be attractive.
If you’ve got a space that you’ve built out ten years ago, and you’re still under the conditions of a longer-term lease, it’s going to be a challenge. I know because I’ve taken advantage of those situations as well where we’ve looked at a space, it’s been beautifully built out, it looks like a Nasdaq space, and we’ve subleased it, and the appeal of that is all I have to do is run in my technical infrastructure, connect the servers, and we’re good to go. That’s what’s attractive and those are going to be the types of subleases that people are prepared to pay for. Other ones, where I have to invest in space, there’s not a lot of appetite.
There’s going to be real estate that is going to come to the market and whether that comes to the market in 6 months or 12 months, I do believe there’s going to be an avalanche of space in the sublease market, and I think it’s going to be in larger cities. It’ll be a tough time ahead.
I have the same feeling, it’s interesting because it almost feels like we’re in limbo right now. And to some extent, it also feels like companies are hopeful, maybe, or they believe that something is going to change and that there is going to be this return to the office. The date keeps getting pushed—it started out before Christmas or last year, every 3 or 6 months, something would happen and we’d push the date out another few weeks or months. And here we are now, it’s almost June, and we’re still doing that. We can’t say that the pandemic is over, we’ve just adapted and have learned to live with it, and all the implications that are still part of day-to-day living.
But the data is showing very clearly, although even if it’s just for the last 3 months where there was some expectation for return, that we were going to see greater numbers. And we’re not seeing that. In our world, we obviously are inside organizations, we’re tracking occupancy, utilization, dwell time, churn, at the seat level, we can observe badging data, we look at booking data, so even if we’re not looking at people physically in the office, what is the intent? We rarely see organizations that are exceeding 30%. That seems to be the norm, and that has been the case since January. There’s been a couple of dips here and there, but generally speaking, it’s around that mark.
I think the key is, there certainly was an uptake between February and March till now. There’s been a significant increase. But considering we’re at maybe 5 or 10% before January and the fact that we’re still at 30, 35% in comparison to where we were before, there’s still a ways to go.
There’s this feeling that when you talk to people that they’re hesitant about giving up space because what if people do come back? What if things change? What if we have a need for space? Then getting space is going to be more difficult because things might change. So, you just kind of hold and deal with the situation. But I just find it really fascinating that there’s this hesitation on making a change.
Some say, and I agree, that it’s too early to make significant decisions. It’s more of a learning opportunity to look at your data, explore what your people want, all of that, and really understand where or how space will fit into your organization and how you want space to fit into organization. But you have to balance that with what we were saying, about how it’s no longer about what the leadership wants. People are behaving in a completely different way than what leadership wants.
I think all of those factors play into the role of space, going forward. Even as we talk about repurposing of space, I’ve heard this comment many times. Even just this morning I posted something on LinkedIn about this need to repurpose space to meet new demand. Well, what’s the demand? It’s quantifying what is that demand for space.
And if we take your last question, we take what you’ve just said and bring those two together—it’s a really interesting dynamic that people have to solve for. First, I don’t know why people are surprised there’s only 30%—when whoever was supposed to be in the office 5 days a week, we were averaging 60, 65%. So cut that in half, that means there’s compliance consistent with where we were before. So what do you do with that, if you’ve got this long-term lease and this is what you’re looking for, or there’s an opportunity where you have a lease renewal coming up? And to your point, organizations are a little scared to cut their real estate in this off-chance that people do come back later.
Obviously the approach is difficult, and many landlords are not taking the opportunity to take short term contractions or terminations or early terminations, because there isn’t a market to take up that space. Where you have renewals, this is where you can build in optionality. Optionality with whether it’s a short-term renewal, whether it’s the ability to build in contraction rights within a lease renewal to take advantage of the current market rates. There are many ways to take advantage of that that gives leadership assurances that actually, we’re building for the upside but also protecting ourselves from the downside.
That’s where I think leadership would like to be in a sense, if they’re not ready to make a commitment one way or the other. When you were talking about data, that’s absolutely what I’m seeing. What I’m mostly seeing as well, as I’m sure you are, is the fluctuations day-to-day. Lack of consistency is what really makes it a challenge to manage and plan ahead.
What I’ve seen also within the organization and across the globe is different compliance under different structures in different cultures. A real example is, our biggest office is in Sweden and the Swedes are fantastic at following instructions. They will challenge, push back, and they will debate to the end, why something is the way it is. And then everyone agrees, and everyone follows. So there, we have teams coming in 2 days a week, and if you look over the course of each week, it’s consistent, the compliance. And really, what we’re seeing is, there’s 80% utilization of that population is coming to the office for the 2 days, 4 days a week.
Other locations where perhaps there isn’t the same compliance, different cultures, where basically nothing’s said—I’m talking about us British folks and how we like to be. We listen, nod our heads, say, “sounds good”, and then we don’t go, we don’t comply, and we see that basically utilization goes up and down. That’s a headache for leadership, and it’s a headache for my peers who are trying to manage these things. How do you plan for this when there are these huge fluctuations?
And we’re looking at the economy at the moment, at how much real estate costs for organizations. As we start to move into the economy, we start to think about what do the next 12, 18, 24 months look like in this economy? We have this huge asset that costs a lot of money, a lot of cash is being drained, and actually, what’s the ROI on that asset for the organization? How do we free up that cash flow, or how do we free up that asset to fund other things so that business doesn’t get hurt from investment in innovation and development. How does leadership manage those things as well? I think that’s something we have to think about too.
That’s really interesting, I think the inconsistent behaviour is definitely the new problem, we’re certainly seeing it in our data since the onset of the pandemic. The false starts—people start to come back, it starts to look positive, you’re expecting it to continue to climb and then it tanks and then you say oh, why did that happen? And then it starts again, and it tanks again. You get a sort of zig zag pattern in your data.
I think from a planning perspective, the traditional mindset of how you look at the data has to change. I was talking to someone on my team this morning about the occupancy metric. Everybody loves the occupancy metric, it tells you so many different things depending on what source you’re using. If you’re using badging data for example, it gives you an idea roughly of how many people are in your building or on your floor, if you have floor-level badging. If you’re using booking data, again, you’re getting intentional data. It doesn’t mean that people are actually in the office, but at least you get a sense of roughly how many people you’re expecting to come in. if you’re looking at sensor data or people-counter data of some kind, depending on what you’re measuring, it could be how many bums in seats? You can get right down to that level. Occupancy data, from a percentage point of view or a count point of view, is more of a traditional way of looking at things.
Then you move towards organizations mandating a certain number of days in, well, guess what? Your occupancy data can be converted into what is your actual number of days of use of space? Again, whether it’s at the building level or at the space level, or even what the sharing ratio might be, based on how your space is performing today.
But there are other things as well, in the sense of other metrics. Before we pressed record, we were talking about understanding people. For example, there’s commute. When you just look at the data within the 4 walls of your office, you can only go so far. And what we found at Relogix is the value of blending these various data sources together to try to understand the correlation between someone’s commute and how often they use office space.
That suddenly opens up a whole new door because you start to see patterns. Inasmuch as people say well, you don’t want to create personas based on age or tenure or job functions, which is true, but when you look at it at a more general level, you definitely see patterns. Where people live, for example, is a prime example. If you live close to the office, you tend to use the office more than if you live in the suburbs. You don’t come in as often. That’s common across all organizations when you look at their data that way. Especially now, with the impact of COVID. That was true before, but it’s become even more visible now, across most organizations. And so, it’s really interesting when you start to look at these complimentary data sources and the bridge between corporate real estate planning and workforce planning. Because workforce planning is very much part of all of that.
Are you and your team seeing that at Nasdaq as well? How much do you work with your people analytics or HR team?
Not as much as I’d love to. And that’s not because they’re not open to it. They certainly are. It’s more of bringing the two systems together to be able to talk to each other. I love where you’re going in that thread, because the other question that goes through my head based on what you just said about workforce planning and commute to the office is: I’d be curious to know, how does that commute time transfer into turnover within the organization? So an individual who makes a decision to move out of the city where they’re actually able to go and be at the office, how does that impact their actual longevity at the organization? How does that impact their growth within the organization? How does it impact the connections they have within the organization?
I don’t know if you have the ability to pull all of this data, to understand it at the moment, it’d be fascinating to hear more if you do. Because I think these are really important things that organizations want to understand. But I also think employees, individuals, should know this. I know we talked a lot before when I lived in a city, I was in the office 5 days a week. The thought of working from home was a no way. I moved to a 90-minute commute and going into the office 5 days a week was a no way. That’d be too much! For my own self, my own energy levels, my own performance, I just couldn’t do it. So, these are different things I think we’re going to learn in time. I’m not in a position to be able to calculate that at the moment, but it’s absolutely something I’m fascinated by.
And really, if you’re able to take all that and you’re able to bring in salesforce data, how does it impact sales? How does it impact the amount of calls people make? There is this view that if all the salespeople are together in a room, they actually make more calls—is that anecdotal or is it real evidence? I know BCD (Business Development Bank of Canada) did a study on call centers and they found that whenever people were given their breaks together, team performance went up. On their breaks, they all talked about their last call, so they’re all learning from each other. It’s a fascinating study. I’m curious, from a sales perspective, if the same thing happens. I don’t know if you have access to any of that information or insight on that.
Not Salesforce, but I have personally done projects in the past to correlate people analytics type data. And again, you’re sort of at the mercy of what HR is willing to share with you, because there’s highly confidential information. But the thinking was always along the same lines, there were theories for example that people whose managers were located in the same geographic area were more productive than the people whose managers were located elsewhere. Well guess what, that’s not really true. These theories start to evolve because it’s what people think or believe, but when you actually look at the data and try to support that you say ok, we know what the annual review score is, we know where the manager is located because you can pull that from HRIS, and you have occupancy data that tells you whether the manager and the person are in the office at the same time, you can piece those together and very quickly start to prove that well, no, that’s not really true.
It kind of changes the whole approach to how you think about space and how you think about the need for space, more particularly, when you start to understand the team environment, but you understand the attributes of people that are really at the heart of the team.
We hear the same thing for example around collaboration. You’ve probably heard it time and time again, the value of collaboration and face-to-face and all of that. And when you look at generational differences, it’s not even so much the generational differences but just the technology that’s evolving. We have tech now at our disposal, does it matter that you and I are talking this way or in a room talking together? We’re still getting value from it. So why discount one over the other just because it’s something different from what our predecessors were used to, and that was the only way that they actually worked?
It’s fascinating, there are two things to pull out of that. One is, I often ask myself: can the physical workplace compete with the digital workplace? And I can’t find an answer where the physical workplace can. The digital workplace can easily evolve, we can easily migrate from one system to another system, we all have our preferences, we can all change how it works for us. And I struggle to see how the physical workplace deals with that. In terms of human interaction, of course, there are many benefits to people being in person, but it’s something that goes through my head.
Then the first part of what you were saying is from an individual perspective. I think we’re all selfishly looking at what we want, but work is a team sport. We’re part of a team, and our responsibility as an individual is to contribute to that team so the team can meet the goals for the organization. And that’s something that’s been very forefront of my mind as I think about other things like how our teams perform, how I’m performing, how I want to work in the future, and how other people want to work in the future. I think that’s something that needs to be talked about and thought about.
The best solution that I’ve heard so far is teams coming up with their agreements of how they’re going to work in the future. It’s a little bit like a LinkedIn post I posted yesterday about the where, the when, and also then come back with the how and the why. What is the goal for the team? Steve wants to work this way, somebody else wants to work that way, but what’s best for the team? How does the team perform better and how do we do all that? It’s a collective. Everyone has the ability to contribute what they want, what their desire is, and then everyone compromises. When I say compromise, it’s what fits best for everybody so everyone buys into what that looks like. And I think there is an individual bias and an individual selfishness at the moment, and I think that’s something that over time will be ironed out as more and more organizations move to think about these team dynamics and team operational mandates, or manuals, however you want to name them.
It’s interesting, the team thing is something that I’m not completely sold on to be honest. The reason why is because I’ve worked in companies that were global in nature, where the team was dispersed, so you didn’t really have a choice, and the teams were equally effective, but then also working in a city where the entire team was located locally.
You also then hear conversations within the organization around the disparity and inequity within the teams themselves in terms of some being allowed to operate in a way that worked best for them, which often included people working remotely because they had no choice, versus teams where the manager was completely okay with whatever the individuals decided, and everybody was in agreement. And then you had the manager who basically was leading the charge for their team and saying, I think that the best thing for our team is for people to all be onsite Tuesdays, Wednesdays, and Thursdays. And then they would walk away, and you would hear the grumblings of people saying, we don’t have the flexibility to work remotely or however we choose to like other people in the organization.
I think the key is like you said, determining as a team what your objectives are. And thinking about my previous management experiences, you inherit a team that has people with different skillsets, maybe they acquire roles and responsibilities that they’re not keen on, and it’s about understanding what they do like about their job. And what do they dislike about their job? Then it’s about aligning to what they particularly like, because that’s how you get the best performance out of that person.
I see the flexibility aspect as being exactly the same. If I’m the type of person who feels most productive when I’m working independently at home, I’m still contributing to the team because that’s expected of me. And obviously that’s one of my critical success factors, but as an individual, this is how I perform best versus someone else who says, I want to be in the office. Well, that’s cool, you have a space to go to the office, but understanding that we’re going to be communicating virtually if we need to communicate for that hour over the course of the day when we need to work together. I think that’s how you maximize productivity amongst people, by really understanding how people actually operate at their best and allowing people to do that, so that the company can actually delegate.
It’s interesting, throughout this whole pandemic, you’ve seen it as much as I have about how much more productive companies were. Many reported their best earnings ever, when everybody’s working from home. Granted there are probably other factors, I’m sure there were things like people being worried about the future of their job. There was a period where things were very unstable, so you kind of put in more because you were worried about making sure that you still had a job coming out of the pandemic.
I think there’s something to be said about the independence factor. How do you determine how to fill your schedule understanding that you still have a role in terms of contributing to the greater team or the organization as a whole? And there’s a certain level of accountability that comes with that. You can’t mandate to someone to be accountable, you’re either accountable or you’re not.
Yes, and I think it’s a case where most people know what’s expected of them. At an organization like Nasdaq, we all know what we’re supposed to do. And we know what needs to get done and how that gets done. Yes, an individual can contribute to that but I think the team dynamic is what’s important in delivering that. And yes, I can absolutely do my heads-down work sitting at home by myself and do that wherever I want to do it, absolutely. However, there are times when the team needs come together so you need to be able to know when the team’s going to be available. I think there needs to be core times when the team all know when they are available.
It’s reflective of the culture of the team. It isn’t always a best fit for everybody, but I think part of the manager’s responsibility is to create that safe environment where people can say what they really want without fear of repercussions or pointing fingers. Because what’s the point of agreeing to something if everyone’s not able to speak openly? That’s not really an agreement. But I do feel that the team dynamic is going to be a key factor that needs to be discussed.
And then of course, how does that team dynamic play into the larger team? If you take what we do within real estate or workplace teams, the employee is the key driver of what the needs are at the office. So then how do you do what you need to do, but also have the insight and the ability to see what other people need? How do we observe employees who’ve been into the office, how they’re working, where they’re working? How do we collect that information to better provide those services to those that need it?
That goes back to that other point you were making before: we need to repurpose the office into something, we don’t know what that is yet but I’m sure with the data you’re looking at, you can see how space is being used, what type of space is being used, and therefore you’re able to see what would be beneficial to the wider group.
I had a conversation the other day with another company who’s created an “office in a box”, they called it. Basically they’re creating a large conference room that’s been built into an office so teams can go in there and work for a couple days at a time. It’s got breakout space, a conference room, individual spaces, but the purpose of it is to allow a team to come together and sit in a room together to see each other to be with each other. And I just love that concept.
Yes, the whole “on-demand” concept. We talked about the inconsistency of behaviours, how difficult it is for planning—and people who are in the coworking space say, well, the solution is coworking because that enables flexible space when you need it, the “space on demand” idea. What are your thoughts in that regard?
I’m fascinated by the whole coworking space. I really am. One of the things that I want to do as I travel is to go and see different coworking spaces. It’s easy for me sitting in a corporate headquarters to basically tell my executive team, yes, this coworking company’s really good, or that one’s really good. They have the ability to serve our needs in these different locations. But actually, what I’m finding is when I go into different locations and I observe, I work in these spaces: there are different levels, there are different standards, and there are different companies that are ready for enterprise. There are many that are not. And that’s ok. Because they perhaps don’t want the enterprise client.
I’m fascinated by the space. I think the company that’s best positioned to take advantage of this is IWG, simply because of their reach. They have the ability to do so. I’m also fascinated to see what Mark does with LiquidSpace and how he rolls that out as a company. Mark, I have great time for. But I want to go and work in these spaces. I really want to understand what it is and why some are better than the others.
To give you some anecdotal observations, coworking space in large cities is really good. It’s so good! The amenities, the look, the feel, everything about it is really good. In the suburbs where people live, not so good. It’s just not there to fit their needs. It basically is a box where somebody goes in and sits and is just surrounded and you’ve got your own individual space. There are very few that offer teams to come together. But they’re not energizing. They’re not exciting. And the IWG thing that you have to pay for your coffee, buy a coffee from a vending machine, just blows my mind. I just don’t understand it. But anyway. A personal thing for me.
Everywhere I go, I’m just fascinated by how different they are, and I really trying to understand who their client is. When you’re in a space and you talk to the managers, they’ll tell you who their client is, and you start to see why this looks the way it does. As a workplace practitioner responsible for a large organization, you get to know what the look and feel of a Nasdaq office is, what the standards are, what are the important attributes. We’ve measured these and our productivity factors and have taken that and looked at that through a coworking lens. There are many facets of it that jive and there are many facets that don’t.
But at the same time, you have to take a step back and go, well, what is the purpose of this space? Because in a corporate environment, you’re building this specifically for your corporate needs, your clientele. A coworking location is sometimes for a completely different need. I’ve been to ones that are very tech focused, ones that are very legal focused, they look different, they feel different, but they serve a very different purpose and I’m fascinated by this. Love to hear what your insights are, given what you’ve said.
I agree with the comment that you made about how in cities, coworking spaces are great, they’re fully outfitted, easily accessible, they have a lot going for them. In comparison, the ones that are in the suburbs are nowhere near the level that they could be to attract users that do live in the suburbs. I actually have one within walking distance of my home. I keep saying to my husband, I should walk over there one day. It’s actually in the woods. There’s a campfire area outside, and it’s really cool space, but every time I look at the pictures of it, there’s nobody there. So why would I actually go and go work there? But if you’re a nature lover, it’s ok, maybe it’s a place to be. I live in the midst of nature so there’s nothing that drives me there, I can just go in my backyard and experience that.
The thing about coworking that’s fascinating for me is the fact that these locations that are in the city, and it kind of begs the question: you don’t want to do the 90-minute commute to the office, so why would you do the 90-minute commute to a coworking space? That’s the question that everybody is asking. As a company, if I have invested in an office, why would I now move my staff over into a coworking space, other than to address the inconsistency and the flexibility requirements that are now emerging? So that’s the thinking that I have around the value of coworking.
But the other question too is, and this is relevant given your financial background, at what point does cost matter? Right now, location is more just trying to figure out what the preference is. And I don’t think it’s as big of a deal when people are working from home, because it minimizes the cost. It doesn’t cost the company for people to work from home, other than the cost of a laptop, maybe a chair, a desk. But what happens when now, suddenly, people are starting to explore alternative places to work? Coworking spaces, the hotels, the cafes, the restaurants, where employees say well, I don’t necessarily have to go to the office, I can go to these other spaces, and now suddenly I’m incurring a cost which I’m going to expense back to the company because it’s on work time. When does that start to matter in an organization?
Cost always matters, and you know that! But there are so many questions in what you just said because I’ve done a lot of that analysis. Evaluating renewing a lease or providing people with the ability to utilize a coworking space full-time or on an ad hoc basis. And the analysis and conclusions I came to was if you’re simply renewing your lease, it’s cheaper to renew your lease than to move your team to a coworking location, because the coworking location has to build into their cost the capital expenditure that they had to build out the space, and their own lease. So in that situation, every time, it is cheaper to renew.
If you are relocating and you’re putting capital investment into a corporate office, at that moment, it becomes more economical to move to a coworking space. And that’s just what the numbers have told me. What I will say though is, what a coworking provider sees as an enterprise ready solution often isn’t what the enterprise feels is corporate office standards. And there usually is a variance in that. When it comes to understanding the cost-benefit analysis of having an office people are not going into, how do we then actually evaluate moving people to a working location or giving them access to it? Those are real questions that we’re having and we’re discussing today with businesses.
I don’t know what the answer is, and time will tell whether it’s to give them an IWG membership, a global access pass, and monitor that and if we think there’s enough utilization or enough demand then we can look at getting something more permanent. There are other businesses that decide to exit their corporate office. They say, let’s come together, be it monthly, bimonthly, quarterly, for a longer period of time where we will all come together, we’ll create an experience, we’ll come and work for a couple of days, we’ll do other things, we’ll go for a meal, and have it basically be about that human connection. And I think that flexibility, there’s a huge opportunity for coworking.
I think coworking, if they do it correctly, could be the game changer, or it can help organizations in this situation. At the same time though, landlords—this goes back to the smart landlords at the beginning—are creating these spaces. If you’re in a building and a landlord’s created this space and you’re able to move in there with very little capital investment, you’re still not having to exit a building that employees are used to going to. And if you’re able to contract some of the space and lower your costs somewhat, then I think that’s a really attractive appeal for the moment. And you think about the perspective of coworking from when the pandemic first hit, everyone thought this was going to be the end, where actually I think now it could actually be the game changer.
I worked in a coworking space for three and a half years. I had founded my own HR tech start-up a few years ago, so I would go down to WeWork and some of the other boutique-style coworking spaces, and what I found fascinating, coming out of the corporate world and working in an office with the same people every day, was the people that you bump into. What you learn from people just through the storytelling experiences of their background.
So, to me, it relates the real value of coworking, as well as the reasons why people leave organizations. Mostly it’s because there’s no learning opportunity or no room for growth. If you had an opportunity where you could work somewhere where you could rub shoulders with someone who works at a company that you admire, and use that opportunity to learn about how they got into their role, or what was their career experience like, that would be extremely valuable to people.
It’s not just about producing, innovating, producing, being on that hamster wheel. It’s about expanding how you think about work, the future, your career, your role in this society, and in this world. And how you can improve yourself to be the person that you want to be and hopefully make the world better as part of it. That’s really where I see the difference. In an office, you don’t get that same kind of experience.
I’m so glad you said that, because it’s something I completely forgot about. When you were talking, I was flashed back to a specific coworking location in Ft Lauderdale called General Provision. The community manager is the best community manager I’ve ever met. She walked me through the space, introduced me to everybody who was there, and sparked conversations between people who had no connection. That’s what her job was, and she was loving it. And she was so good at it!
To your point, the amount of people I met that day was astounding. What she was also telling me is because she does all that work, everybody in that coworking space all work for each other. They all provide services to each other, and that’s the beauty of it, when that community really comes together. But that’s probably been the one out of a few who really have managed it that way. And they’re really intentional about what the purpose of that coworking space is. As I look at it from an enterprise using that space, there are so many reasons why I would say no, but from a community and connectedness point of view, that’d be the best place I’ve actually visited.
Awesome. Well, we’re almost at time. So why don’t you tell us a little bit about your podcast?
Thank you, I didn’t even mention it in my intro, I’m slipping! So openSourcedWorkplace.com. It’s something that grew out of my workplace passion. When I got into workplace in 2015 and 2016, it was so hard to find information and knowledge and to pick up my own skills. What I wanted to do with opensourcedworkplace.com was to create an opportunity for people to come and find that. I’m creating content all around that, to build that up over a period of time.
And I do the podcast. I haven’t published an episode in a long time, I was doing them during the pandemic, and they were great because things were changing so fast. And they were just short 10-, 20-minute episodes. It was really useful for me to learn, connect with people, and also provide people the opportunity to give opinions as to what was going on. It will be coming back, as I continue my journey into what the “work from anywhere” culture is, how do you do work from anywhere, those are the sort of things I’m looking to explore now and develop and create content around that.
That’s great. Well, Steve, thanks for your time, I’ve really enjoyed this conversation. Any final comments?
What I will say is I’m fascinated by what’s going to happen. I have no idea what’s going to happen, and I think what we all have to do is keep an open mind and not close ourselves off to biases. We have to hear alternative views. There’s no right answer, no two companies are the same, no two teams are the same. We have to ask open questions, and we have to be open to hearing different answers. And that’s why it’s so important to listen to podcasts like yours, and others who are producing content, to get different voices, hear different opinions, hear from different people who are operating in different organizations, and again, keep that open mind. Because there are so many different ways that we can all be successful. I just encourage people to keep an open mind.
Thank you again, Steve, it’s been a pleasure.
Thank you, take care.