Excerpt from Tango’s virtual retail summit Moving Forward: Workplace 2.0 on June 24-25, 2020.
Xavier Menendez – Managing Director & Global Practice Lead, Real Estate Solutions, Accenture:
“As I talked to CFOs around the country and globally, this idea that we had to have everybody in a physical environment or physical proximity has been largely debunked. I think number one, we’ve been on this journey to digitize the workplace for over 15, almost 20 years. I don’t suspect that’s going to slow down. In fact, this is only accelerating it. So number one, I think COVID is accelerating the move to digital and debunking the notion that we have to all be physically located together, notwithstanding the realities that we’re social creatures, we like going into offices, we like interacting with people. We get a lot of energy from that. I think the physical environment becomes more optional than it is required in order to be productive at work.
“Secondly, I think COVID is accelerating another trend that we’ve been seeing: one around the centralization of real estate and facilities functions. I won’t take issue, but I’d probably look at the McKinsey maturity model there a little bit differently. I don’t think that the vast majority of our clients and organizations out there have consolidated their real estate functions to the extent that they will be going forward. Number one, because of the maturity of that function, things like lease accounting changes, things like just having better technologies out there like Tango. The demand for per data and data-driven analytics is also facilitated by the notion that we need centralized real estate functions to operate this second largest P&L item more effectively.
“I think thirdly, the watchword is agility. We have been seeing a continuous progression and trend towards trying to bake in more flexibility, more agility to not only portfolios but also operating models, cost structures, visibility to costs, and more importantly, the controls around those costs. We’ll see this trend accelerate as well. Well, I know this is not all about COVID, the impacts of COVID, I think will be long-lasting in the ways in which we operate occupied real estate in particular, but landlords deal with their office real estate portfolios as well.”
Brett Abrams – Global Head of Portfolio Administration, Cushman & Wakefield:
“We’re really at the start of trying to collect data to try to prognosticate what’s going to happen in the future. So, at Cushman, we do something called an experience per square foot survey. But over the last couple of months, we’ve done one on experience per square foot at home. A lot of things Xavier just mentioned are starting to be backed up by data. So it was the worst planned experiment in the world. We wanted to see how these productivity tools work, things like Teams and Zoom and Slack and all the other tools. For the most part, people felt as though they could be productive at home. We have 75% of people saying that they’re effectively focusing and able to collaborate at home. Where we’re seeing the gap, and Xavier talked about being social creatures, is that we’re seeing 50% to 55% people saying they’re missing out on personal connections, they’re missing out on company culture. They don’t necessarily feel the same sense of wellbeing that they felt in January and February.
Well, we see a lot of CFOs and a lot of CEOs talking about the cut of commercial real estate spend because people have been able to be productive. I think what they might be missing is the long-term effect on talent. People still do want those boundaries to be able to go into work, to be able to isolate their day sometimes into an 8:00 to 5:00 or 9:00 to 5:00. Some people enjoy having a commute and having downtime or time to catch up on work. I think those are really important data points, and we don’t know the long-term effects if all of a sudden, you’re starting to slash real estate by 20%, 30%. One of the things I do know is that over the past 10 to 15 years, the workplace landscape has completely changed.
I remember when I started work in the mid-200s, the idea of even having one day to work from home was incredibly dramatic and a terrific benefit. Now obviously most of us are in a place where we’re 100% remote or highly percentage remote. The flexibility certainly feels good, but because we’ve seen that change in commercial real estate, specifically occupier office real estate, where maybe 10, 15 years ago that we were in private offices and then we did some desk sharing and then you’re seeing headquarters that are completely hoteling. Now we’re almost all to remote work. I think there is a question as to where the right balance is going to be on that spectrum because we’ve essentially in the last 15 to 20 years, gone from one end to the other with the same workforce.
The last stat I’ll talk about as we think about what the long-term implications on real estate are is, 70% of the younger generations are having work from home challenges. Many live in the city. They might have roommates, they may not have access to the same technology, private space. They might have kids running around, caregiver responsibilities. Well, it still might be the dream of CEOs, COOs to cut costs on real estate, it may not be the best in the war for talent long-term.”
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