How does your organization get the most out of your office spaces? Where can you save money? And what improvements should you really invest in?
Many organizations are facing these questions as leases come up for renewal, and they settle into flexible work configurations for the long haul. For a perspective on this, we spoke recently with Neil Murray, CEO of work dynamics at JLL, where his team advises many Fortune 1000 companies on their office locations and handles their configuration and facilities management. Here are excerpts from that conversation, edited for clarity and space:
We’re hearing from organizations that have leases coming up for renewal now and their offices are relatively empty. They anticipate a flexible work arrangement, but don’t know where it’s going to settle. Some workers don’t seem to want office space, but maybe they’ll resent it if dedicated space is taken away from them…
It’s super complex.
How are you advising people in this situation?
First of all, it’s evolving. If you asked me this six months ago, I probably would have given you a different answer.
I would say there’s a ‘why’ to all this. You get clients who say ‘I want my people back. How do I get them back?’ And the first question is why? What are you missing? What are you lacking? What are you concerned about? Because that’s the fundamental question.
You get the other end of the spectrum—which we see less of—which is, ‘I’m going 100% remote and I don’t want to own my office space. Can you help me deal with it?’ The shift has been towards, ‘We want people back,’ to the point where in the last three months alone, 40% of our clients have come out with mandates of at least three days a week in the office.
The problem with the three-days-a-week thing and the flexibility thing is, can you shed space when you’re still packed on Tuesday, Wednesday, and Thursday? You’re also thinking about talent in different ways. Where do you need space and where is your future talent coming from?
Our research says that the single most important amenity that attracts people back to the workplace is other people. That may seem obvious, but in the various experiments we’ve done, we’ve tried everything on behalf of our clients. Overwhelming evidence says people are really enjoying other human beings and the connection with them. The challenge with that is if you give total flexibility to employees, they miss one another. The advice I generally give to our clients is, please be prescriptive if you want people back. Bring teams back together as opposed to allowing them to choose when, because that human connection is what will fuel.
If you bring in teams three days a week, is there any way to optimize your space?
In 2020—we’re a public company, so you can read this—our revenues with the offices empty stayed pretty solid in my part of the business. That immediately begs the question, why? Why is there not enough flexibility? Why are these fixed costs? The truth is they’re fixed costs because the services dimensions have never been occupancy-dependent. You had a janitorial contract, a security contract, an access contract, HVAC, etc.
We have introduced dynamic scheduling for everything we do now based on occupancy. We started doing it with postage-stamp-size sensors in the simplest form under a desk that says if someone was there. Or if nobody has been there, let’s not clean it. So you start to shift the janitorial, which is a big cost, by the way. Then you start to get predictive about what space is used, when you can be more directive about where you put people. From a sustainability perspective, it’s about being able to turn off an entire floor by filling a building up more intentionally.
It sounds like that’s not an answer to the real-estate footprint, but it’s an answer to overhead cost…
In terms of footprint, our clients want less space, but better space. I’m going to be much more intentional that the office is a manifestation of my brand, of my purpose, of my identity, of my culture, as opposed to a factor of production. It’s no longer seen as a factor of production. So yes, I’m going to see how I can consolidate departments and certain geographies, consolidate space, cut leases. But the leases I do have, I want better premium space. That’s been reflected on the other side of our business where we’re breaking records on high-watermark rents in most cities in the United States now. Average rents not so much because if you’re in the wrong part of town, in a 1950s building… There’s this flight to quality, everybody pursuing high-quality space.
What makes premium space?
The sustainability credentials of space are hugely important. It goes back to, ‘Is this a manifestation of who I want to be as a firm?’ We’re seeing real deltas emerging in BREEAM- or LEED-certified space. So high-quality, sustainably built, well-run space. In terms of amenities, it’s all the things you would expect. It’s air quality, quality of light in the space, which is a problem in some previously built buildings. I wouldn’t recommend a particular set of amenities, just quality of space, location, sustainability of it.
Bear in mind a lot of people are making the transition from home. So the notion of it being commute-worthy, much more collaboration space, much more warmth, is a theme. I don’t mean that from a temperature perspective. People are used to working in home environments and they’ve gone back to very sterile, cold spaces. That doesn’t work for them. So warmer, more welcoming spaces.