Hybrid real estate strategy: how to optimize CRE for hybrid

More and more companies are beginning to understand that if they really want to optimize hybrid work, they need an optimized hybrid real estate strategy to match. 

The pandemic hastened what was already a growing trend towards hybrid and remote working. But companies must also hasten their ability to understand how well their corporate real estate (CRE) is supporting their bottom line. Otherwise, this pivot to hybrid can create more problems than it solves.

Indeed, without using the right workplace data analytics, any hybrid workplace change strategies will struggle (at best). 

In this article, we explore how companies and CRE professionals can use advanced workplace analytics to create a hybrid real estate strategy that better supports both workers and long-term business goals. We’ll also explore how and why hybrid working complicates real estate strategies—and what to do about it. 

What is ‘hybrid’ in real estate?

Hybrid work, of course, is a dynamic workplace strategy. It combines any amount of in-office work with any amount of remote work. ‘Hybrid’ in the corporate and/or commercial real estate context is therefore any space that a company uses for this type of work. 

The amount of true flexibility that comes from hybrid work will vary. Some companies mandate certain set days in the office, for example, while others allow complete employee choice around when to come in. 

How can companies and CRE investors make the right real estate decisions in a hybrid world? Especially where office use is varied? 

First, they need to recognize three key principles guiding hybrid real estate today.

Key principles guiding hybrid real estate

1. Physical workspaces should serve specific purposes, i.e.: the work that will be done there
2. Space use in a hybrid office continually fluctuates, both daily and seasonally
3. Hybrid employees use the office for different reasons than fully in-office employees, i.e.: to collaborate and socialize

In other words, simple desk and/or head counts alone won’t help you understand your space needs anymore. 

“Just because someone books a desk, that doesn’t mean they actually use it,” says Kathleen Williams, Senior Product Manager at OfficeSpace. “And so to make the right business decisions to run a hybrid office, we need to understand with more certainty who’s really there.” 

Hybrid, remote, and distributed work all mean one thing. Space needs that are drastically more complex than in a traditional office. What does occupancy mean when different workers use different types of workspaces on different days and have different hybrid schedules? 

At the most basic level, developing a hybrid real estate strategy can help companies answer these questions… Assuming the strategy is backed up with the right workplace data analytics. 

It will allow them to optimize their real estate portfolios to better align them with their chosen hybrid work model. No matter what their longer term real estate investing plans may be. 

And it will allow them to make smarter, more cost-effective decisions. Especially when it comes to real estate portfolio management. This is without sacrificing workplace agility in the meantime.

“The more dynamic your workplace is, the greater the need for analytics.”

Kathleen Williams, Senior Product Manager, OfficeSpace

Note: ‘hybrid’ in a residential real estate context

Note that within residential and commercial real estate markets, the term ‘hybrid’ can describe a hybrid model for investing in real estate assets and rental properties. 

Essentially, this is an investment strategy that balances both short-term and long-term buying and selling to maximize total returns.

The term can also apply to a seller strategy in real estate. This is where a seller works with someone who is both a real estate agent and a real estate investor interested in house flipping. 

In either case, we all know that some realtors and entrepreneurs treat the real estate industry like the stock market. They invest to maximize cash flow versus to find a great place to live. While they may develop hybrid strategies to do so, in this article, we’re focusing solely on corporate real estate optimization that supports hybrid offices. 

“Now is the time to take a step back and understand what is key and really important to your physical office space. This is an opportunity to realign what you have in your space to what is actually needed.”  

Johanna Rodriguez, Senior Managing Director of Occupant Experience, Savills

How hybrid work impacts real estate strategies

Hybrid work has changed how many employees and employers alike approach the office.

Namely, we know that one of the many benefits of working remotely is its impact on morale and productivity.

But there’s one thing that employees can’t do when working from home: collaborate with their colleagues face-to-face. 

So when workers do come in, it’s often because they want to work with their colleagues. Or simply spend time with their work friends. 

Many companies see the value in encouraging this type of collaboration. This is why many are also experimenting with incentives to bring people in (free lunches are often the go-to). Providing more visibility into when they can expect to see their colleagues in the office using a visual directory can also help in this regard. 

But while all this in-office collaboration can be great for productivity and the bottom line, it complicates strategic space management. 

Embracing flexibility

First, to implement hybrid working, companies usually introduce shared, flexible seating options. They may also explore flexible working strategies. These can include agile working, activity based working, and working neighborhoods. All of which get employees moving around the office, often using it differently each and every day.     

And OfficeSpace data finds that most employees book desks for either the same or next day. This demonstrates employees’ flexible relationship to the office (in other words, while space planners might love it if employees booked desks months in advance, that’s usually not the case). 

All of this means that hybrid offices can expect to see a mix of low days and peak days. Both of which FMs need to be prepared for. 

It also means that hybrid working now requires CRE professionals to work more closely with facility managers (FMs) than they may have in the past. This is in order to determine a strategy that will actually work ‘on the ground.’

“If people need to go to the office, and if they go there for connection and collaboration, then we need to ensure the office is set up and adopted as a tool to support this work.” 

Mary Carnes, Senior Workplace Solutions Consultant at OfficeSpace

Creating a real estate strategy for hybrid work

Creating a hybrid real estate strategy starts with understanding what ‘hybrid’ really means for your business. Note that even different teams, departments, and/or offices in your organization may all do hybrid a little differently. 

“It really comes down to understanding what your business is, what your priorities are, and then aligning the space type in the office space for that need,” says Johanna Rodriguez, Senior Managing Director of Occupant Experience at Savills. 

As we’ve covered, most companies are now using some amount of hybrid work. 

And according to internal OfficeSpace research, companies are fairly evenly split on whether they’re requiring employees to work a set number of days in the office each week, or whether they let them set their own schedule. 

In this active work environment, companies need to know how employees are actually working day-to-day. And they need space management software to help them build this true picture of office use. Guesstimates won’t cut it anymore. 

“The dimensions of how people are using the office have changed dramatically,” says Williams. “Without advanced workplace analytics tools, leaders won’t have a good idea of how to see what’s actually happening in their workplace, which is where data analytics comes in.” 

The pandemic presented companies with a new opportunity to reassess space, and whether it’s serving their goals. Indeed, for many business leaders, it may have been the first time they put focus on how office space impacts their business.

Thankfully, most good hybrid leadership today understands that true space optimization doesn’t come from forcing people into dedicated desks from 9-to-5.

It comes from using workplace data to see what types of spaces help employees to be most engaged and productive. And then building those spaces in the most efficient way possible. 

Key elements for a solid hybrid real estate strategy

Many factors go into creating a future-proof hybrid real estate strategy. 

Beyond IoT

First, companies need to move beyond simple IoT sensors (although these can still be useful). They should move into a badge system that uses real-time employee badge data. This allows visibility into when and where employees are actually using the office (and not just what they self-report or what desks they book). 

Multiple sources of data

They also need to break down silos. Metrics like desk and room bookings, badge swipes, WiFi logins, employee surveys, and more can all come together to create a fuller picture of office use. 

“My advice to companies is that you can’t rely on just one source of data,” says Williams. “You need to bring your large datasets together to truly solve business problems.” 

The evolution of FMs and hybrid

Building out the right strategy also often calls for evolving the role of facility managers (FMs). This way, they can take more of a stakeholder responsibility when it comes to real estate management and workplace transformation. 

And it means understanding that getting hybrid right, both in your workspaces and your portfolio, is an evolving process. It takes lots of testing and experimentation. 

FMs and CRE professionals will need to take advantage of office scenario planning. This allows them to try out new ideas and office configurations before making them permanent and widespread. Also while carefully tracking the results, of course. 

This is the best way to ensure that by the time it comes to signing new leases or letting leases go, leaders can have full confidence they are making the right decision. And are armed with the right data to back it up. 

Indeed, according to Mary Carnes, Senior Workplace Solutions Consultant at OfficeSpace, creating a strategy for your hybrid workplace is a “process of trying, learning, adjusting, and trying again.” 

“It’s no longer a case that FMs can just assign all their seats and check-in with their VPs a few times a year to make sure they’re in the right place. It’s now more of an ongoing conversation with some of the more senior folks in the organization.” 

Kathleen Williams

Using data in corporate real estate strategy

If a hybrid real estate strategy is key to hybrid readiness, then data is key to making that strategy. 

Yes, companies still need to track their CRE data. This allows them to stay on top of important dates and manage their leases. 

But the amount and quality of data available to CRE professionals is sharply increasing. To truly understand what’s happening (and how they can maximize their budgets), they’ll need to integrate their CRE data with a wider array of data. This allows them to get to the real truth of their space requirements.  

Creating a hybrid real estate strategy is about figuring out which benchmarks you’ll use. This lets you see where there are both opportunities and inefficiencies in your overall portfolio. 

Ultimately, all companies are unique, and their hybrid strategies will be, too. Benchmarking off other companies in your industry won’t work anymore. 

Nor will relying on simple, static numbers like your rent or your current number of seats. 

Instead, when real-time data from a wide variety of sources is combined, CRE professionals can ensure they’re providing offices that are beneficial to both employees, their overall real estate footprint, and the company’s bottom line. 

The benefits of a real estate strategy for hybrid work

Before exploring the benefits of hybrid real estate strategy, it’s also important to consider the risks of not having one. Without a hybrid real estate strategy in place, companies can easily leave money on the table, while creating an environment that hurts employee experience and engagement. It can also overburden the facilities team, so that they’re unable to strategize new ways to improve the office. 

Meanwhile, companies that use real estate analytics to help overcome their hybrid challenges can expect to enjoy the following benefits:

• Cost-savings, thanks in large part to better space management
• Improved talent retention and attraction, since employees want to work for hybrid companies with inviting physical offices
• More face-to-face collaboration in the workplace
• Fewer ghost rooms, since workplaces will have the right number of meeting rooms for the people who need them (along with, ideally, reliable room booking software)
• More sustainability, especially if CREs work to shrink the real estate portfolio (and therefore its associated carbon footprint)
• Improved workplace wellbeing, since spaces can be planned to improve employee experience
• A more inclusive company culture, especially since it can benefit women and people of color who in large part prefer working from home
• Increased workplace agility, which is ultimately the goal with any hybrid real estate strategy

Ultimately, the most successful workplace teams are those whose needs (for space or otherwise) are considered, understood, and met by decision-makers. 

What is the best strategy for corporate real estate? 

The best strategy for corporate real estate is to start by intimately understanding how space is currently in use. This is, of course, along with future possibilities. This requires real-time data from a variety of sources. It also requires a willingness from CRE professionals and other decision-makers to actually follow that data, using it to test out and ultimately implement new space solutions for the office.  

OfficeSpace helps companies use real-time data to create a customized hybrid real estate strategy. Reach out for a free demo. 

Photos: gorodenkoff, Anchiy, alvarez, courtneyk, Anchiy, Edwin Tan