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5 AUG 2020

In the post-COVID market, we’re all real estate companies

In the midst of a rapidly evolving office and workplace environment, COVID-19 has presented sudden disruptions and is already precipitating major transformations in the office real estate industry, leaving many owners questioning how to move forward to best service their current and future occupiers. A major question going forward is how companies will embrace flexible schedules and more extensive work-from-home policies, as well as pressure to move some or all operations out of dense urban centers and the potential short- and long-term impact on property values.

“New trends are appearing at an accelerating pace,” says Maureen Ehrenberg, RICS Americas Board Member, “and industry leaders need to acknowledge these trends and incorporate them into their near- and long-term strategies.”

With more than 25 years of industry experience, Maureen Ehrenberg is currently the CEO and Co-Founder of Blue Skyre BEI, a technology enabled provider of strategic real estate services for the built environment. She was most recently the Global Head of Real Estate Operations and Strategic Services for We Work. Ehrenberg has a deep range of experience in developing products and services for corporate real estate, facilities and investment real estate leaders and professionals to optimize service performance and enhance portfolios. In particular, she has a long track record of finding innovative, proactive built environment solutions and breakthrough technology applications for companies that are not primarily real estate companies to optimize their processes and operations and enhance the value of their leased or owned portfolios.

The trend for some time now has been to optimize every square foot of office space. Activity-based and open-plan offices, for example, have allowed companies to reduce their footprint and increase the efficiency of their leasing budgets. The pandemic now is creating a change of strategy, certainly, with companies at least for now looking to minimize employee proximity, but the value of space efficiency is still key.

Maureen Ehrenberg, CEO and Co-Founder of Blue Skyre BEI

“The most successful and resilient industries during the pandemic have been agile and responsive in the face of shifting trends, and the flexibility of a company to deliver results for new and changing priorities is what will ensure its success in this new environment.”

The flexibility rate for each company, however, is highly dependent on the business model and sector of the company. Other factors, such as the connectivity of its real estate team with the core busines, the flow of business space, current usage dynamics and accessibility to pragmatic technologies, will also be major factors in determining next steps.

A current challenge is that there is still a great deal of debate on what really are the “best practices.”

Though there is not one specific model that works for all portfolios, many companies are now really looking to experienced real estate service providers and asset management professionals to provide guidance and share insights and practical, actionable recommendations.

“It is more important than ever to have the right real estate leaders within occupier companies,” says Ehrenberg. “At a time when space usage is a primary business and workforce concern due to this public health crisis, you need people who can knowledgeably assess an existing portfolio and present a coherent strategy for what actions can be taken to mitigate unprecedented risks, empower an at-risk workforce and make smart space investments in a time of uncertainty.”

Ehrenberg’s extensive industry experience and her consultative approach to working with clients has enabled her to provide key insight on how businesses can begin to look at their portfolios differently in order to keep up with the changing landscape and new demands on organizations from stakeholders.

“There is a drive in the industry, especially now, to change the model and move office innovation to the forefront of corporate strategy. For example, companies are seeing it is essential to evaluate the efficacy of a less centralized workforce. The pandemic may also present an opportunity to test new opportunities through short-term leases in smaller markets or suburbs as they wait for the economy to stabilize and accommodate workers who are seeking more convenience and flexibility.”

There is a drive in the industry, especially now, to change the model and move office innovation to the forefront of corporate strategy. For example, companies are seeing it is essential to evaluate the efficacy of a less centralized workforce. The pandemic may also present an opportunity to test new opportunities through short-term leases in smaller markets or suburbs as they wait for the economy to stabilize and accommodate workers who are seeking more convenience and flexibility.

There is no one proper model to follow when it comes to managing a portfolio. It is based on the sector the business is in, the ecological footprint, the region of the world the assets are located, and what is actually going on inside the piece of real estate. It takes experience and expertise to create that bespoke solution and execute the operations effectively.

Many businesses are looking to return to work soon. Owners are looking to keep occupants safe and instill confidence in order to retain tenants. Tenants, meanwhile, want employees to be enabled to practice safe distancing measures without their companies having to double the size of their leased portfolios. To deal with this, organizations are exploring shifts and alternative work solutions such as co-working to supplement flagship offices, either through existing coworking service providers or through leasing pre-existing industrial flex spaces that they can retrofit to fit the needs of their workforce.

“Co-working is useful because it allows people to go to work and use space as a service on an incremental basis,” says Ehrenberg. “It is not uncommon now for companies to be rethinking some of their existing offices in order to disperse and diversify their portfolio. They are developing some large, existing spaces into quasi-co-working spaces and looking to partners or property managers to assist with managing and offering their extra square-footage to other tenants in the building for co-working flex space. A shared economy office model.”

More than business empowerment, companies also recognize that there are environmental and societal implications to their office decisions, and especially in a post-pandemic world. Employees and the wider public will want to see transparency and best practices to ensure safe working environments, and they want health, wellbeing and workplace experience to be front of mind in property strategy.

As an RICS Americas Board Member, Ehrenberg believes RICS is uniquely positioned to act as an intersection for real estate professionals from the development, asset and occupier spaces to create impactful discussions as best practices and successful strategies begin to be understood and the market gains clarity. Collaboration within the built environment is more important than ever before, the convergence of property, technology and workplace will progress and the ecosystem to accelerate transformation requires more discussion and open conversation to begin to work together to prepare for shifts and new challenges.

“When you look at the global economy, many built environment trends are shared throughout different sectors,” says Ehrenberg. “Real estate connects industries in more ways than one can imagine. Having a global body at the center of that business universe is going to be crucial for the recovery.”