Developing a return-to-office plan amidst the tumult of current events can feel like creating a choreography to a song where the beat is unpredictable and always changing.
A return-to-office (RTO) strategy that proves successful in the long-term must deftly navigate the short-term. The steps forward require a process that weighs the state of several preconditions: Market conditions, landlord position, business outlook, labor longevity and workplace strategy.
As the RTO dance continues, Part 4 of this series focuses on the following question: How should occupiers manage their portfolios over the next 18 months?
Implement a Decisioning Framework
Deploying a tiered structure through which an entire portfolio is evaluated is a crucial first step and will set the direction for the rest of the assessments that need to be made for the portfolio.
The first phase of the decisioning framework does not need to be complicated. In fact, simple is best. A recommended approach is to have just two categories by which all the assets are first filtered through: Tier 1 and Tier 2.
Tier 1 locations include all sites considered “mission critical”. These are long-term and highly strategic assets and should be renewed for either short or long-term leases. Tier 2 encompasses everything outside of the automatic renewals and will require further evaluation, outlined in the next three sections of the decisioning process.
Engage the Market to Determine Optimal Short-term Strategy
The next phase of the framework, which employs different lenses for evaluation, will add clarity to these locations and help drill down to the optimal short-term strategy.
Asses all Tier 2 locations against the following:
- Market conditions: how are the locations performing against the current market?
- Landlord position: are they experiencing stability of cashflow or rising vacancies?
- Business outlook: how long does the company intend on occupying the location? Is it a “maintain” or “grow” location?
- Labor longevity: is the right labor for the business’ function in that market?
- Workplace strategy: how is space being used and occupied?
Exploring these considerations help determine next steps for most Tier 2 locations in a portfolio. For some, alternate options may need to be explored.
Explore Alternate Short-term Options
For companies making decisions about their short-term strategies, other options must be explored, including subleasing, pre-built and flex.
After evaluating the Tier 2 assessment criteria, it will become clear which Tier 2 should be renewed. It will also become clear which locations are redundant and can be shuffled from the mix. If the contract cannot be ended, subleasing unused space is an effective way to reduce potential loss.
For companies that do need additional space, but do not want to enter traditional leases during the uncertainty of the short-term, pre-built and flex are strong alternate options. Pre-built offers the ease of a turn-key space, while flex solutions deliver an abundance of benefits for companies that want to remain agile or that have fluctuating head counts.
Gather Data, Test and Assess
Short-term solutions are effective for just that: short-term. Ultimately, data is required to make effective long-term decisions for Tier 2 assets.
Conditions such as office utilization, business requirements and a defined workforce and people strategy will help determine what the longer-term solution looks like within a portfolio.
Stay tuned for the final part in the RTO series, which will provide deeper insights on how to gather and assess the data to test and pivot.