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At a completely different scale, large organizations have been using this time to take a close look at their entire real estate portfolios. This long term planning, when paired with the workplace strategies and standards approach discussed above, can have very positive benefits over a relatively short time frame. Acquisitions and consolidations at the corporate level have been common over the past few years, so that firms such as Reuters and Thomson looked to combine their complementary market capabilities to produce a firm better able to withstand recent economic difficulties.
At that point, the entire portfolios of both firms became the focus of study by a large team that included several architecture firms and a real estate consultant. Each location was examined for efficiency, redundancy, location advantages, lease expirations, and of course, cost per square foot in relation to the de-escalation occurring in the marketplace.
After this type of study, a large portion of the portfolio will remain as "stay in place" rather than moving to consolidate. However, even in the locations that will remain, incremental change will be instituted. A set menu of interventions of varying degrees of expense and complexity have been worked through, involving upgrading furniture to more current standards, introducing or upgrading technology, and rebranding public areas.
The United Nations capital master plan provides another good example of how a close examination of overall real estate needs can be advantageous. While the inspiration for a comprehensive overhaul and consolidation of real estate was motivated more by the long-term need for renovating classic modern facilities built between the 1940s and the 1970s, the path traveled was the same. The planning team developed more fluid and streamlined standards, allowing the flexibility in planning necessary to effectively accommodate the constantly changing requirements of an organization that is tied to the worldwide political stage.
Flatter standards also allowed the institution to create a more modern, less hierarchical organization that is itself more in line with the functional requirements of a flexible and nimble entity. The massive transformation occurring in an organization that will be moving and changing over 6 million square feet of space in its portfolio required years of planning that has had to be flexible enough to take advantage of the real estate opportunities afforded by low rents and an abundance of available space.
Rapid churn presents another kind of opportunity: the opportunity to rebrand or strengthen an organization's brand. With consolidation and change, there is always opportunity to send strong, positive messages to workers, clients and visitors about corporate mission and goals and the aspirations that are motivating them. One of the most obvious goals for changing companies has been an embrace of sustainable design, both for social responsibility and cost savings made possible over the lifetime of a lease or building.
Before 2006, roughly 30 percent of Perkins+Will clients were interested in LEED certification, or in sustainable design in general. That statistic has completely reversed itself in a relatively short time frame, coinciding with the worst of the economic downturn, so that now at least 80 percent of the firm's work involves some level of LEED certification, and all of it involves sustainable features.
Part of this trend started as a result of the precipitous rise of energy costs. However, as the cost of oil has at least partially come down and stabilized, the trend towards sustainability has remained strong. Technological advances have sometimes brought payback durations down to well within lease durations. That fact, along with available tax benefits, has created some economic incentives for energy efficiency.
But corporations and institutions increasingly want to be perceived as good citizens, doing their part to combat global warming, cut pollution, and preserve the environment. There is also the advantage of creating more healthy environments for their workers, through cleaner air and access to daylight, which research demonstrates has psychological benefits.
There are a variety of opinions on whether we are in the trough of the real estate market and if so, how long that trough will last. This kind of uncertainty motivates the facility decision maker to take a measured approach to any decisions that require long-term commitments of resources. There is no better time to take a three-month internal look at the organization — how the workplace can operate more productively, what portfolio strategies make the most sense, and what culture the organization embraces — prior to making major real estate decisions. This will best position the facility manager to make the most informed decisions in these most uncertain of times. The advantages of the "plan before you act" approach are clear: Whether one is facing real estate decisions for a companies or making choices about one's own financial portfolio, trying to time the market never works. What does work is sound research, an established plan and a clarity of vision.
Joan Blumenfeld, FAIA, LEED AP, is principal and interior design director of Perkins+Will's New York office. She has worked for a wide range of prominent corporate, non-profit, government, and education clients. She can be reached at firstname.lastname@example.org.
Paul Eagle, LEED AP, is principal and managing director of Perkins+Will's New York office and a leader of the firm's planning + strategies discipline. His work assists organizations in tying their business objectives to physical space. He can be reached at email@example.com.
Using the Recession to Embrace Organizational Change
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