Forecasting CRE portfolio requirements starts with balancing art, science, and gut.

I love forecasting. Trying to predict the future is a great way to try and better understand the things that matter today. Corporate Real Estate is a particularly hard area to try and forecast because the degree of variables impacting future state is incredibly diverse. Today it is even more difficult as COVID-19 has thrown all previous CRE models into disarray and broken what were believed to be fundamental assumptions (e.g. ability to work from home).

CRE (the corporate side, not the commercial one) does not control its own destiny. The type and amount of space needed is driven by (but not limited to):

• Business strategy and growth
• Technology and mobility capabilities
• HR and Talent acquisition and retention strategy
• Local market conditions
• Work delivery culture
• Risk assessment of running out of office space
• Business resiliency strategy

There are two ways to build a forecast for real estate needs: 1) deal with each location as needed taking a one-off approach to design, or 2) create a global workplace strategy guiding location designs. The first may feel simpler because it creates flexibility to deal with each project and business team as needed. But the reality is that it leads to inconsistent outcomes. The second approach feels more complicated because you need to account for everything upfront and get buy-in. But if you do it, then each project is straightforward to develop and implement.

Accurate forecasts are about limiting the number of uncontrolled variables and accurately predicting how future situations, given certain parameters, will play out. In real estate, the single best way to accomplish that is by laying out a clear blueprint for how workplaces are planned. This blueprint should account for the above variables while maintaining a degree of local flexibility to account for unknowns. Building this blueprint is a key piece of real estate art. It’s not easy and will look very different from one organization to the next.

If the forecast is going to be based on a “figure it out as you go model,” then be ready to predict a lower degree of impact but also a higher degree of uncertainty. This model will have a tremendous dependency on the individuals involved in planning each project and their unique preferences for what a workplace should be. Your forecast will end up being as much a predictor of how individuals will act as it will be a real estate forecast.