Let’s Get Real Ep 7: Co-Working & Workplace Strategy
Discussions on the Workplace and Corporate Real Estate Podcast
Some of the highlights of the show include:
- Managing supply and demand of office space
- Using technology to predict space utilization
- How to decide what leases to renew or end
- Co-working and workplace strategy
- Remote work and corporate culture
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.
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].
With me today I have a special guest, Vik Bangia. Vik, welcome! Before we dive in, why don’t you tell us a little bit about yourself?
My name is Vik Bangia and I’m the CEO of Verum Consulting. We’re a corporate real estate, strategy and operations consulting company. I spend most of my time helping corporate clients outsource their real estate services to some of the larger service providers like CBRE and JLL, Cushman and Wakefield—especially with those clients who have integrated facilities management needs along with their other real estate services needs.
In the strategy and operations world, I’m also a workplace consultant and a business strategist. I help companies of all kinds do various things, from training and development to workplace strategy to public speaking. It’s a pretty wide-ranging set of services that I do as part of my consulting practice.
That’s amazing! I often think about prior to the pandemic when we were looking at customer data in terms of how they were using space, you could see a 25 to 30% reduction without issue. There was always an excess amount of space that companies had within their portfolio that they didn’t really need. Even if they got rid of that 25 to 30%, nobody would really feel the difference, and you didn’t have to do very much to know that. And now when you hear conversations about hybrid—whether it’s trying to allocate a workstyle to someone, or the various working personas and the requirements to support the way in which people work—that’s all associated with a certain amount of space that’s based on understanding their dependency on physical space, whether it’s an office space, a third-party space, or whatever the case may be.
So, thinking about the changes of the workplace going forward, how do you think companies should be looking to manage the supply and demand of space? It’s no longer going to be a 1 to 1, which is the easiest type of space to manage. Now, companies are starting to see some sort of rotation. You don’t really want to restrict people or dictate which days people are going to come in—this takes away from the serendipity and ability for people to collaborate as they need to, because nobody really collaborates on a dictated schedule. Instead, things happen day by day and you figure it out. So, how do you foresee companies being able to manage their space and understand that supply and demand?
That’s going to be a challenge. I think some technological support for scheduling the capacity of a facility is going to be necessary for this to happen, so you don’t have a rush on the office one day and then have it sit empty for 4 more days during a 5-day week.
But that’s where it’s really interesting, because some of the technology that I’ve seen that allows for buildings to learn from utilization and capacity over time can actually predict what peoples’ behaviour will be—what days are busy days in the office, etc. But then it’s also incumbent upon leaders to schedule things for themselves if they’ve got at least some neighborhood space within their facility. They can say, we like to have our teams come in on Tuesday, and another group likes to have that same spot on a Thursday, and they kind of rotate around that. But that is going to be a bit of a challenge.
The other potential way of handling this is by having large congregation-type spaces for collaboration that aren’t necessarily as dense, and can accommodate a larger number of people. In this case you can go to a scheduling system and see that it’s got 40% availability based on the people that have booked it, and then you can still fit in there if you need to.
I do think that this type of software will need to be part and parcel of what an office building provides, whether it’s provided by the landlord or the tenant. I do think there’s going to be a shift and markets are going to have some challenges. There’s going to be a lot of sub-lease space on the market, and that’s going to impact not just landlords. It’s also going to impact service providers—oftentimes if it’s a fully integrated account, it involves facilities and transactions, projects, lease administration and strategic planning, and often they subsidize some of the revenue coming in from facilities from anticipated transaction revenue. If they’ve written the account that way, and all of a sudden, the transaction revenue falls off because of the pandemic, it puts a squeeze on the facilities management operating profits. So, the overall model is going to get hammered for some of these accounts, especially the larger ones.
I think some of those dynamics are going to put some pressure on the industry and probably play out a little bit longer-term than some people think. They think it’s going to happen right away—I don’t think this market runs hot and cold like that. But I think once people start to figure out what they want to do, and they come up with their strategy for disposition of space, it could be challenging maybe 3 to 5 years out.
I agree, it’s too early for companies to be looking to get rid of space, unless there’s an imminent lease. In that case, they may see an opportunity to get rid of the lease now—they don’t necessarily need it, and it’s still iffy what the next 12 months are going to look like, so they can save some money in the interim and then get back in at some point if they choose to.
Just last night I was talking to my husband about the market in general—he’s not in real estate but we always talk about stuff as it relates to what’s happening—and one of the things that we spoke about was a lot of the press around companies that are taking up leases because they’re great deals.
How much pressure is there to take advantage of a great deal, to move into nicer space, newer space, better space? Moving out of the older buildings and going into buildings that are better outfitted from a technology point of view and with better air quality is going to be important with return to work, and potentially with getting a good deal. But you’ve obviously got to commit to it. Or, you could just wait it out. Is there an advantage to committing to something now, based on the fact that you might not get as great a deal in the future? Or should you instead use this time to figure out exactly how much space you actually need before committing to something long-term. Which is the better of the two?
It’s a bit of a gamble. You could be 50% wrong on either end of this, and I see some of that. And as a proponent for the middle of the country, since I live in Minneapolis, I also see that this central part of the US stands to benefit from some of these decisions. Lately people are trying to go from very expensive downtown CBD space on the coast to a more horizontal footprint in the middle of the country.
I wrote an article at the end of last year called “Start Thinking About 2022 Now” that said, you ought to think about what’s going to shift and change a couple years out from now. I was seeing that some tech companies can hire talent in the middle of the country that they can pay less than they’re paying their folks on the coast. Some of the pharma centers up in New Jersey and other places in Boston that can hire talented people, and places like Houston, St Louis, Minneapolis—all of these central US cities stand to benefit.
As an outsourcing specialist, what that ends up looking like to me is—instead of outsourcing the work to India, or outsourcing the work offshore, it’s that same kind of model. Instead of hiring people on the coast where there are expensive employees and expensive real estate and expensive occupancy costs, you hire for talent, but you have talented people located in the middle of the country. You might actually see populations move to lower-cost locations like the mid-central part of the US because they can get the job, they can work remotely, and they can still make proportionately a better living if they can give up Southern California. They have to be able to make some sacrifices too, but they can move to the middle of the country and live a lot better and still have a good job with a good company. I see that being a model that takes shape the more remote work becomes the way we do things.
What are your thoughts about the role of co-working space as part of workplace strategy going forward? Traditionally when we thought about the workplace. it was about the owned or leased portfolio, which you basically manage. Now, all of a sudden, there are these co-working spaces that could become an extension of your portfolio. Do you think corporations will take advantage of co-working spaces? Traditional co-working spaces have been more for entrepreneurs or the self-employed who didn’t necessarily have an office to work from.
I absolutely believe that if co-working is done right, it will be a hit. I actually had that on a presentation slide that I was delivering in some webinars late last year, but I put an asterisk by the word “hit”. I said that co-working space will be a hit if they can get this right. They have to make it a compelling third option to working from home or working from the office. Just like right now, working in the office has to be a compelling option compared to working from home. If it’s not, people will just work from home. Similarly, if that third space is not a compelling option compared to working from home, or doesn’t give you what you get when you go into the office, they won’t be able to do it.
But I think they will. I personally think they can provide the right types of amenities and the right types of connectivity. And if they geographically locate it in places where folks from that company can all still work out of that co-located space, it makes sense. It’s an idea that’s really important and has been well-received with corporate clients. There’s obviously some IT security concerns and other things like that that have to be worked around. There’s also the expense—if you’re going to spend money, would you rather have people in your own space or would you rather pay almost a premium rent for co-working space? That’s to be determined and that’s why the asterisk was always there. But I think it’ll be a hit.
I also think co-working definitely has a place in the future. And I agree, I think figuring out what that compelling reason is going to be is probably the biggest challenge, because it’s such a personal thing.
For example, I’ve been working from home full time since 2007 or so. When I used to work for a corporation, I’d go down to the office 4 to 6 times a year for quarterly meetings or all-hands-on-deck type of meetings. But I often think, now with the pandemic, if I was still working there and there was a co-working space close by, would I actually go to the office? If I’m going to be going there to work by myself I might as well just work at home.
And what’s funny about it is the company that I worked for had an office literally just down the street—I used to go there when my network went down, I’d go there to plug in. And I used to think to myself that I should go and work there sometimes, but I never did. What’s the point? Why drive 10 or 15 minutes to go work there when I can work from home? The team I was working with was scattered across Canada, so you weren’t actually interacting with people in the office either. I was thinking, I can do that from anywhere, I don’t have to actually be physically in the office to do that.
On the flip side, when I first started working from home, I used to make it a point to go and work at Starbucks for a half a day because I wanted to be around people. There was that feeling of loneliness when I first started. But eventually when I got into the groove, that disappeared.
Just knowing and feeling where I wanted to be on a particular day was very empowering. I didn’t have to feel like I was being pressured to be somewhere because somebody’s expecting me and I could make decisions based on either how I was feeling or what I needed to achieve for that particular day. That was a very different mindset from working based on an expectation.
Absolutely. Going way back, I wrote an article called the “Virtual Collapse of Corporate Culture”, right around the time where virtual work and remote work first started. It was about this feeling of disconnectedness I used to have. I’ve been a remote worker for the majority of my career, and when you’re not in the corporate office, you think, what’s going on back there? I don’t know what’s going on, I’m not in the company grapevine, I’m not connected to the latest scuttlebutt in the office—and you feel a little disassociated.
I also talked about corporate culture that you can actually feel while you’re in the office. I still struggle with that today when I work with my clients. I ask them, do you have that sense of corporate culture that used to exist? Because when I first started my career, every employee bled the same colours for the company. When we were all part of the team, there was a lot of cheering going on for successes, there were newsletters that talked about all sorts of stuff the company was doing, there was a sense of identity that everybody had with their company.
Now, everybody’s a freelancer. It feels like they’re committed to the company to a certain extent, but there still seems to be this disconnect, or at least the thought, I work for this company, but I’m not owned by this company. Back when I started, maybe I was a sell-out, maybe I did overcommit, but there just seemed to be a greater sense of that. You were on the team. And you really were on the team, you were a franchised player, you weren’t just a free agent. I think we’re going to see more of that disassociation as we start remote work en masse because everybody’s going to be a sort of gig worker.
There’s also a greater chance that they can get picked off by a competitor because they’re in their offices at home, as opposed to going into the office every day. There’s some advantage to employers to have people go into the office, in terms of preventing their people from getting recruited away. There’s all sorts of challenges there—it’s easier for head-hunters to call you on your cell phone than it is on a company line, for example. This leads some companies to want people in the office.
I totally agree. The future remains to be seen, it’s a TBD.
Oh, I totally believe that. I think we don’t know a lot more than we think. In my posts on LinkedIn, I don’t make a lot of claims about what’s going to happen. I may say, “in my opinion”, “I’m seeing this trend and I’m curious about it”, and I’ll ask other peoples’ opinions about it. I like to say, I don’t have all the answers, but I do know how to ask all the right questions.
When it comes to working with clients, my job isn’t to tell them what to do. My job is to elicit from them what they want to do or what they think they want to do, and then I’ll push back to make sure that their plans are clear, achievable, and realistic. I always use those words. That’s where the art is—it’s in asking the right questions and getting the client to crystallize what they actually want to do. And it’s important that things are done in a very democratic way and in a way that’s aligned to their culture and values. Everything should take into account balances of power, psychological safety, and be done with a bottom-up, systems-thinking, change-management approach. All of those are elements that people have to be aware of.
Well, this has been fantastic. I really appreciate your time and your insights and thank you again for your time today. Any final thoughts?
I think we’re on a journey together, so anybody listening to this podcast, I would love it if they would link in with me, find me on LinkedIn or on Twitter or visit my website. On LinkedIn I publish a lot of content and I do bring that whole community of workplace professionals together, and we have a lot of lively debate about what’s going to happen in the future, and what we’d like to see happen in the future. I’d love for others to join in to that conversation.
Sandra, I really appreciate this opportunity to talk with you, I had a great time!
You’re very welcome. Thanks again, Vik.