Chase Garbarino is the Co-Founder and CEO of HqO.
The end to the global pandemic is in sight as the world anxiously awaits the public distribution of a vaccine. While many public office landlords have managed to continue to collect rents, there is still an ongoing concern that offices could face long-term, lagging effects in the form of rent defaults and increased vacancy. If owners and property teams don’t quickly adjust to the new technologies and overall modernization of the industry — which were exacerbated by the pandemic — they’ll risk losing market share in the future.
As part of the modernization of the industry, the drastic rise in hybrid work models poses an interesting problem statement for the office sector: Because employees can now work from literally anywhere, what do they really expect from their employers, and how can landlords be stronger partners for their tenants to deliver an enticing office experience?
What Office Employees Really Want
Not surprisingly, technological innovations come with new competitive expectations. By this point in time, building occupants have already gotten a taste of what’s possible for CRE: more flexible work models, steady communication, unique technology-enabled perks and an overall increased focus on user-centric experiences that empower tenants by giving them choice. Even long after the majority of the population is vaccinated, we will never truly go back to “normal.” Unlike the vision of workers’ days being spent in their sweats on their couches, I believe the new normal will still be in offices — but with elevated experiences.
According to Deloitte’s 2021 Commercial Real Estate Outlook, CRE leaders need to go digital. In the modern landscape, businesses need more technology to manage their day-to-day operations and connect people both inside and outside the office. Additionally, 53% of survey respondents considered digital tenant experience a core competency, meaning that “rapid digital transformation will likely be needed to build operational resilience, maintain a strong financial position, develop and retain talent, and create an enabling culture.”
The prevalence of younger generations in today’s workforce also indicates a need for tech-enabled offices. The Pew Research Center states that nearly half of the working population is millennials. With digital natives making up the majority of the workforce — and now with technological advancements making it easier than ever to appeal to their personal consumer habits — they are positioned to be the main considerations behind how and where we work.
In fact, tech-enabled office experiences are so important that much of today’s workforce prefers their related benefits over pay. Glassdoor found that 89% of millennials would choose better benefits over a high salary even before the pandemic, a number that is sure to rise as they continue to seek out employers that align with their values. These benefits include workplace flexibility and diverse office experiences and policies that follow an employee-centric mindset — all of which we are now enabling through modern technology.
Rethinking Flexibility’s Impact On The Physical Office
Because today’s workforce is so aligned with a company’s flexibility, landlords — as trusted partners to employers — have an opportunity to tailor their spaces for flexibility through software and technology.
In order to achieve this, we first need to rethink the post-pandemic work models we see today. Before Covid-19 forced the office sector to work from the safety of their homes, hybrid work models weren’t mainstream. Tenants and employees who previously opted into alternate arrangements between remote and in-office work weren’t considered special “hybrid workers.” Rather, they were just doing their jobs in a way that was tailored to their individual needs. This was their norm, and long after the pandemic’s effects subside, flexibility will normalize once again.
Currently, the industry has been looking at return-to-office strategies as offering three solutions for tenants: fully remote, hybrid or fully in-office work models. In reality, the most successful strategies don’t count the days that employees and their tenants come into the building. Instead, they see workplace flexibility on a single scale that represents how much time people are spending in the office based on building engagement.
Much like websites, office buildings can be measured by engagement metrics. Meaningful insights such as how often people visit the building, how long is the duration of their stay, what rooms do they use, what services and building features do they engage with and other granular data can let landlords know how their buildings are actually being used. After all, even if an employee comes into the office every week, their schedule doesn’t guarantee long-term commitment or customer satisfaction.
If you’re going to attract a pool of talent that so highly values flexible work offerings and workplace benefits, the most important thing you can do is learn what they want to get out of the building itself — and figure out how to program for their needs — in order to get them to invest their time. It’s no longer a discussion of how many days people should be allowed to spend in the physical office, but rather a discussion on how to make their time in the office more valuable so that they are inclined to come in.
In order to make the physical workplace just as valuable as the home workplace — thus increasing the chance of engagement and satisfaction with office buildings — landlords need to establish diverse, customized experiences for a workforce that is now driven by choice. In short, achieving long-term commitment means getting more sophisticated about product engagement strategies.
The future of work is all about enhancing experiences, with employees at the center of every major office real estate decision. Those who immediately tune into their tenants’ needs will triumph over the recent disruption to the market. Those who focus on counting the days tenants use the office instead of creating value for building occupants will miss out on a chance to understand the future value drivers of CRE.