As lockdowns are eased and the dust begins to settle on one of the most disruptive and extraordinary few months in our history, businesses can begin to take stock and decide what this new, post-Covid landscape means for them.
On the face of things, it may soon appear as if little has changed; New Zealand and Australia have been two of the most successful countries in the world at minimising the spread of coronavirus and with sporting fixtures resuming, beaches opening and gatherings once again permitted, one might be forgiven for thinking all will soon be back to normal.
However, as we have discussed in previous articles, the pandemic will have significant ramifications for the world of work. Firstly, and most obviously, there will be a financial impact; the COVID 19 pandemic is estimated to cause a $34.2 billion reduction in Australia’s GDP over the next 12 months, while New Zealand is expecting to take a 6% hit to the economy. Most firms will be looking at ways to reduce costs over the coming years, and alongside staff costs, real estate is a natural place to start looking.
Beyond the financial implications of Covid-19 though, the enforced period of lockdown has demonstrated just how flexible many industries can be when it comes to space. From financial institutions to charities, businesses in almost every sector found new ways to work, in many cases literally overnight.
There is a rare harmony between management and staff requirements in these two consequences: senior managers will be looking to make cost savings while staff may well be attracted by the more flexible approach to work they have experienced during the course of the pandemic.
At Meta 5, our work has involved helping some of the world’s best-known brands relocate offices and redesign their workplace culture to accommodate new ways of working. With so many companies now likely to significantly alter the way they work, we wanted to share our thoughts on a strategy that will help office tenants rethink the way they utilise their space in this post-COVID working environment.
Download the complete Meta5 Post-Covid Office Tenants Response Strategy Guide here:
Stage 1 – Short-term (0 – 6 months)
For many businesses, the most urgent priority will be to assess and understand the impact that Covid-19 has had on their finances, and to develop a strategy to minimise the long-term consequences.
One immediate option is to discuss a short-term rent relief package with landlords. This could come in the form of a restructure, with deferred payments, so the landlord does not lose out long-term, but extra cash flow is released for the tenant. If staff continue to work remotely, the opportunity may also exist to reduce extra costs such as car-parking fees, while an analysis of other saving opportunities, such as sub-leasing of office space should also be undertaken.
If a lease is due for renewal in the next 12 months, now may also be a good time to restructure the terms of your agreement with your landlord, or to consider alternative spaces that may be more cost-effective and better suited to the way you envisage working in the future, if time allows.
As for personnel, it is possible many will be reluctant to return to the office full time and leave the flexibility and balance that working from home afforded them, especially if they feel they have been as effective from their home office as they are in work. Of course, for many the opposite will be true, but giving staff the opportunity to air their feelings about the period of enforced home working, and how they might like to work in the future will both increase employee engagement and inform decision-makers about how flexible working policies may be constructed.
In summary, key activities to consider in the short term are:
- Requesting immediate rent relief
- Reviewing the current lease
- Analysing other cost-saving opportunities
- Conducting a workplace survey to gauge attitudes around remote working and perceived productivity.
- Reviewing flexible working policies
Stage 2 Mid-term: Re-imagining the future (4 – 12 months)
Four months down the line, it is likely that organisations will have a clearer picture of how the pandemic has affected them financially and the changes they might need to make to accommodate this. There may also be some clearer answers to questions around workplace culture as well. Are employees as productive working from home? Has their job satisfaction improved? And does the current technology setup effectively support this new way of working?
For many businesses, this is a golden opportunity to rethink how they want to work in the future. What if flexible working was more than just a ‘nice to have’, but was a key component of our workplace strategy? What would a blended working model actually look like? And how do we want to measure employee performance going forward?
All these questions relate just as much to employees’ aspirations and key drivers as they do to considerations around cost and efficiency. This is no coincidence. Understanding what employees are likely to want from their workplace over the coming years, and aligning business objectives to these will allow management teams to emerge from the Covid-19 crisis with a more modern, human-focused workplace strategy that will help retain staff and increase motivation.
This strategy can then inform more practical questions around real estate requirements. Scenario planning processes can help businesses decide how to structure their real estate portfolios to best support the business and facilitate new ways of working. There may well be financial benefits to this; if flexible and activity-based working policies are introduced, many organisations could well see their office footprint reduced by between 30-50%.
Finally, companies should perform an audit of their current technology, and decide whether the tools they currently have will enable this new way of working. Investment might be needed at this stage, though making the right decisions now will enable a swift, smooth transition into the new way of working.
In summary, the key activities to review at Stage 2 are:
- Optimise your portfolio thorough lease review and renegotiations
- Understand how your organisation and employees want to work in a post
- COVID-19 workspace
- Real estate scenario planning
- Develop a workplace strategy and accommodation strategy tailored to your projected business needs
- Review and develop your technology strategy
Stage 3 Long-term: Transform and Optimise
Information gathering and decision making around a new workplace strategy will typically take between 12 – 18 months, longer for some larger organisations. But once the scenario planning and workplace strategy development are complete, it’s time for businesses to begin the implementation phase.
Foremost among these will be securing the property that will enable the new workplace vision to materialise. Therefore a detailed design and property brief should be drawn up to provide the basis to source new tenancy options or to renegotiate current leases. A detailed brief allows for thorough due diligence, and gives tenants more leverage when it comes to negotiations.
Even if current leases don’t expire for two or three more years, we’d recommend starting the search as soon as a detailed property brief has been created. The earlier the process begins, the more advantage lies with the tenant, as knowing the different options available will give more leverage in any lease negotiations.
In the meantime, cultural workplace changes such as more flexible working can be introduced slowly, as the space allows, in order that the transition to a new way of working does not come all at once. Management should plan carefully which changes to implement in which order, and give a set timeframe for each.
The same is true for any new technologies that may be introduced, which should be introduced with an appropriate transition period, and with relevant training, resources to ensure a smooth transition.
In summary, key outcomes for Stage 3 are:
- Develop a design brief and spatial requirements to reflect your future way of working
- Implementation of a change management procedure
- Lease options considered, including a scoping of the market for alternative opportunities
How Meta 5 can Help
Our services combine tenant advice, workplace strategy, change management, and technology consultancy, so we are ideally placed to help organisations manage the transition to the post-Covid working landscape.
We are experienced at helping tenants review and renegotiate lease terms, and can also help source new real estate opportunities in line with your goals.
We have helped some of the world’s best-known brands make successful transitions to activity-based working and other, more flexible models with our workplace strategy services. Crucial to the success is a thorough change management process, including engagement with staff and leadership groups utilising tools such as surveys, engagement workshops and assessment tools, all areas we have expertise in designing and implementing.
Our technology consultancy services will help you to understand your current and projected future requirements, and we can make recommendations based on these needs.
y integrating these diverse but essential services, we are able to offer a holistic, fluid and timely transition into the new way of working that the Covid-19 pandemic will bring for so many businesses. To find out more about how we might be able to help, contact us here.