It is a fascinating time in the world of corporate real estate. Every company is more focused on its real estate than they have ever been before. Whether they are rolling out RTO, wondering why their RTO is not bringing people back, basking in their flexible model, considering an RTO, or simply looking at the sunk financials associated with their vacant spaces, there are lots of reasons for C-suite leaders to have one eye on their Real Estate and Workplace models.
Marry those in-house reasons with the current macroeconomic conditions (looming (potential) inflation from tariffs, uncertain market conditions, AI causing boards to question headcount levels, and economic uncertainty causing all leaders to question headcount levels). Together, real estate has never been more under a comprehensive and global spotlight.
Yet, change is happening more slowly than would be expected. Part of this is due to how much and how rapidly core real estate strategies have shifted. The biggest real estate names are still struggling to come to grips with flexible working, coworking, shortened lease terms, and uncertain office market conditions. If they are struggling, then most people are struggling.
But change is going to happen. The more pressure that piles onto organizations to do something about their real estate, the shorter the time spans real estate leaders will have to come up with their solutions. There are too many dollars at stake to simply keep doing the same thing for another two years. CFOs will eventually force the issue.
I have a lot of sympathy for real estate leaders given all the above circumstances that are almost entirely outside of their control or sphere of influence. They are in a position where they have to react to so many different situations all at once – many of which demand opposite solutions.
Consider RTO mandates. The math behind most RTOs require real estate teams to hold a desk for most employees covered by the RTO (meaning as much or more real estate than is currently in place). However, their data shows occupancy much below those levels. If they take that data to senior leaders, it can often be seen as them questioning the RTO which is always a politically sensitive issue. Alternatively, if senior leaders tell real estate to build based on their occupancy levels, it can be seen as tacitly undermining the RTO that is in place. It is a classic lose-lose scenario. Yet, someone must come up with a solution through this or no one will be happy.
Pressure over millions of years creates diamonds. Pressure over a few years increases the attention on real estate strategies. The question is whether that pressure will turn workplaces into diamonds or whether it will crush the experience in the name of quickly cutting costs. Leaving decisions until late probably is not how to craft a workplace diamond.