How CRE Workplace Strategies Are Evolving

Almost every company is rethinking workplace strategy in the wake of the pandemic—and commercial real estate companies, which are office users in their own right, are no exception. The COVID-health crisis changed the way that people work and think about office space, and CRE wasn’t exempt from the changes. Despite being an office-centric industry, CRE has had to adapt and adopt new office environments and strategies to reflect the needs and demands of employees—which now include everything from health and safety to flexible work schedules and a better work-life balance.

NEW WORKPLACE STRATEGY “The pandemic brought the hybrid workplace concept to scale,” says Peter Miscovich, managing director of Strategy + Innovation at JLL. Like most other industries, commercial real estate companies adopted widespread remote work policies during the pandemic, and those concepts stuck even as the pandemic waned. “We have allowed for a lot of diversity in terms of workplace behavior, and we have offered a lot of flexibility for our people,” adds Miscovich about how JLL has started to adapt its workplace experience.

The pandemic wasn’t the catalyst for hybrid workplaces, as Miscovich says, it merely expanded the concept. JLL began reimaging its office environment back in 2015 with the renovation of its headquarters office. “We have always strived to have a balance between our in-office collaborative, culture and community building to allow for flexibility for our employees,” he says. “Now in 2021, we’re continuing to provide flexibility to our workforce. We have a very strong in-office culture, but we also have flexible work arrangements as a firm.”

TruAmerica Multifamily, an investment firm that focuses on workforce housing, did not stray from its core workplace strategy during the pandemic, but the company did amplify its focus on technology and flexibility. “TruAmerica continues to take an offensive approach while remaining cautiously optimistic. As a result of the pandemic, the timing to increase our firm’s focus on technology has intensified. We are spending time in each business unit reviewing our processes, models and business structures to optimize our pace and quality as the firm continues to grow,” says Dr. Eryn Mack, managing director of culture and organizational effectiveness at TruAmerica Multifamily.

Most companies, however, are still trying to map out a new work environment—but those changes are coming. “Corporate leaders expect to change their office environments—but most are still determining how their future workplace will support the new employee experience at work,” says Michael Casolo, global chief revenue officer for Unispace, an office interior design company. “More than anything, what’s changed is how people use the office. It’s typically no longer a place you go for heads-down work; it’s the place you go to engage with your team and your brand, in ways that simply can’t be replicated on Zoom.”

The nature of CRE lends itself to office use, and most experts agree that the office will continue to be central to the industry. According to data from Kastle Systems, which monitors key card swipes at office buildings across the country, about 60% of commercial real estate company employees have returned to the office, significantly above the overall average of only 39%. However, Miscovich says that geography plays a major role. In San Francisco, only 25% of employees had returned to the office as of October; 30% were back at their desks in New York; and in Dallas and Houston 60% of employees had gone back to the office.

At TruAmerica Multifamily, the work-from-home model is feasible but it didn’t align with the company’s collaborative culture. Ultimately, employees were itching to get back into the office. “Over time it appeared as though our employees found and missed the opportunities to engage in person,” says Mack. “There is no substitute for face-to-face human interaction. The power of face-to-face connectivity is what has strengthened and materialized our firm’s successful culture.”

While the operations are centered on the office, the firm also strives to provide a positive work-life balance. “The company has remained supportive of the work/ life synergy model,” explains Mack. “The work-life synergy model does not create an opposition between work and life, but a blended harmony.”

Established employees might prefer to return to the office, but for new entrants into the workforce, remote work is normal. Casolo, whose company has grown rapidly in the last two years, is finding that some employees have never worked in person. “At Unispace, more than half of our global workforce are new hires since March 2020, because we’re growing so fast—and we’re not the only ones. How can companies effectively shape the experiences of employees who’ve never set foot in the office together?,” he wonders. Certainly thoughtfully designed workspaces are on that list, as well as a culture that Casolo says, “transcends the physical space itself.”

BEST PRACTICES As companies reimagine the workplace, there is a new list of amenities, features and employee needs to consider. In fact, Miscovich says that the checklist has grown from two or three key items to 10 to 12 must-haves. “I don’t think we were prepared for the pandemic in terms of health and safety, and I think the big takeaway as we move forward will be on health and safety and wellness,” he says. “I think that people recognize that a healthy work environment and a sustainable work environment are not just nice to have. They are becoming the new requirement.”

Within, health and safety, indoor air quality is a top request. “Air quality has taken more of a prioritization over other demands given that COVID-19 is an airborne disease. The air quality issue has been important,” says Miscovich, adding that touchless surfaces and good lighting have also been frequent employee requests.

Employees are also tuned to the social and environmental actions of companies, putting ESG front and center. “Environmental sustainability priorities have become greater across our workplace locations,” says Miscovich. “We are also seeing that demand from a client perspective as well.”

Casolo is seeing similar trends in office design. With health and safety at top of mind, employees want more light and access to fresh air built into the layout. “The pandemic highlighted, more than ever, the importance of a healthy, safe workplace. So, we’re seeing more interest not just in short-term considerations like facilitating social distancing, but also long-term, more holistic health considerations like bringing in more natural light and access to fresh air,” he says.

TruAmerica Multifamily also made modifications to the physical space along with employee training to establish health and safety guidelines. “The responsibility to safeguard the health and safety of our colleagues, their families and our communities, resulted in office space modifications and training before employees returned to the office,” says Mack, adding that prospective employees also showed a heightened interest in health and safety. “The modifications and attention to workplace safety that we put in place served as a great recruiting tool as an overwhelming majority of prospects inquired about workplace safety,” she added.

While these are rapid changes in workplace strategy, Miscovich says that they can also be an exciting time. “We are very dedicated to responsible real estate and sustainable workplace practices,” he says. “This is a very exciting period in terms of the choices that people have and how real estate companies like ours can help clients navigate the landscape of choice, including new ways of working, new portfolio optimization opportunities and new building sites. All of the above are now on the table as a result of the pandemic.”

THE TALENT WARS Talent is the reason why companies are so keen to adapt and evolve following the recession. Before the pandemic struck, retaining and attracting talent was a top concern. It drove the emergence of creative, highly amenitized office spaces and alternative work concepts like the hoteling of desks. Now, talent is more valuable than ever, but the tools to attract prospects have changed.

“Employers need to provide employees with the right balance of purpose, quality of life, quality of work, diversity and inclusion, good compensation and opportunities for development,” says Miscovich. Companies that are not meeting this checklist are seeing talent shop for jobs at other companies. This year there has been a record number of workers leaving their jobs in what some have called The Great Resignation.

“The job market is such that talent has the upper hand,” adds Miscovich. “It has been a big wake-up call for employers to rethink their value proposal for their employees and for their people. I think that is going to be our new normal for the foreseeable future.”

Mack has also seen a change in the conversation with prospective job candidates. Prior to the pandemic, compensation was central to the discussion. Now, many of these other factors are being given a similar value. “Compensation is weighted equally to mental health, wellness and the relationship between work and life,” she says. “Our workplace strategy is to continue to learn from our existing employees and respond by creating a space for their voices to both be heard and responded to.”

The firm’s strategy is successful. This year, as many other companies have seen an increase in employee resignations, TruAmerica Multifamily has maintained a 96% retention rate.

Mack believes that culture is at the center of the dilemma. “I believe that most people leave their role because there are so strong disconnects between the employer and the employee, the employee value proposition is threatened,” she explains. “TruAmerica runs interference on poor communication by creating a space to ensure that touch points regarding employee and employer expectations are a standardized approach to performance outcomes.”

TruAmerica falls into that category of companies that are embracing the new normal in office, and they are finding success because of it. According to Miscovich, the organizations that are meeting employee needs are high-performing and attracting talent. “I think that it is fascinating to watch the organizations that have grown in the last nine months to a year are the organizations that are meeting all of those requirements that the employee population is demanding,” he explains.

FORECASTING THE FUTURE Overall, there is no one-size-fits-all solution, and each company is taking a different approach to workplace strategy. “We’re all doing a lot of active listening, while recognizing that there is no one right answer when considering full-time, remote or hybrid,” says Casolo. “You have to get in there and see how people engage now, in order to plan a workplace transformation that truly elevates employee experience. At the enterprise level, different groups will have different answers, so a large company needs to put policies in place that empower local leaders.”

While the future of office use and workplace strategy is still a question mark—even for the very companies executing those strategies—some trends are emerging. First, if the talent wars continue, as Miscovich expects, companies will continue to focus on curating office environments that support employee needs. “We do not see a diminishment of the need for talent in 2022,” he explains. “How do we engage that talent in a way that will be meaningful but that will also support financial performance, business performance and workforce performance.”

Scheduling is going to be central to the future workplace strategy. While that might include a hybrid schedule where employees work both inside and outside of the office, companies should be focused on providing a positive work-life balance. “Employees value their time, who time is spent with, and how their time is spent,” says Mack. “Time has proved to be the most precious gift. In response, workplace evolution will need to ensure that the value of employee contributions are communicated, recognized, cherished and rewarded. If the workplace does not value employee time, employees will spend their time elsewhere.”

While employees are interacting with the office space differently, technology is the biggest change in the office sector. During the pandemic, companies rapidly adopted new technologies, and that trend will continue to flourish in 2022. “The need for technology in the workplace is going to be even greater,” says Miscovich. “We are going to see a lot of investment over the next two to three years in audiovisual technologies in the workplace.” Technology will also help to support hybrid and remote-work schedules, allowing companies to provide the work style that employees want.

While the office is going to continue to change, companies will continue to utilize office space as a central part of their workplace strategy. “The outlook is bright for offices in general. Leasing activity is up substantially, as is employment,” says Casolo. Companies are rethinking and expanding their footprints, and working to create more immersive, experiential environments where employees will thrive. There’s a tremendous opportunity now to test new office design concepts that will help define the post-pandemic workplace experience.”

Still, more change is coming next year. “It is a recalibration of the whole work landscape,” says Miscovich. “The variety and diversity of workplace behaviors will continue to diversify in 2022.”