The office is about to change forever w/ David cairns, CBRE Forward
Updated: Apr 4, 2021
If CoVid has taught us anything, it's that we can get work done anywhere. If not the place where work has to get done, what purpose will the office have post pandemic? Will companies still want a physical space where their team can meet.
Here's the recap...In today's episode, we chatted with David Cairns who runs the CBRE Forward program. Helping CBRE and corporate real estate strategize and plan for the future of work. David shared his insights into the trends he's seeing with future office space. Will companies return to an office, what will be the size of the office, will companies trade a central HQ for distributed micro-offices, and what will be the future purpose of an office. This was a fantastic perspective from the real estate vs remote company side.
Full Transcript Below...
If work can be done anywhere 🌎, why have we been doing it at an office? 🏢
Office work began years ago with computers the size of a room, typewriters, fax machines, and server rooms. We had to work from an office, because that's where the hardware or network was. The location wasn't based on choice but proximity to the hardware needed to do the job. With the advent of 'the cloud' that has been less and less the case. All we really need is a device and a stable internet connection. Meaning the office no longer is the place where we need to do work, nor where it may be the most productive place to get work done. So that begs the question....
What is the future purpose of offices?
If we no longer believe work has to get done at an office, or that the best work is necessarily done from an office why keep an office? We can think about what else the office offered for a possible glimpse. Craft coffee, beer taps, ping pong tables, an orange grove (at the Google Israel office), and similar amenities obviously provide no value to getting work done. So this can help us better understand, the potential value of an office is really on the collaboration and engagement with colleagues. Playing ping pong or drinking a craft beer after work. These 'perks' have been offered to entice or reward employees for coming into the office. If employees do better work at home is there any value to craft coffee and ping pong tables?
So the future of the office will be guided by purpose. Maybe that's collaborating with whiteboard walls. Maybe it's a ping pong tournament with your teams. Perhaps something else completely, but the office will be redesigned to fit a purpose.
The future of the office is based on choice 🗳️
David shared a story of a recent showing with a client. Two founders viewed a potential future office space with a completely different expectation. One hoped, that people would rarely be in that space. While the other hoped most of the time employees would be in the office. This is what will separate companies that win or lose at the #futureofwork. Providing the choice to their team to work wherever they want. We're already seeing companies like Reddit, Shopify, and others moving in this direction. Want to work in an office for a few hours a couple days a week? Great!. You'd rather work at a local co-working space or cafe? Great! How about working from a home office? That's great too! The companies that provide their team this choice to work where they wish will be able to retain and attract talent. Why? Because regardless of the number of days, employees will never be forced back into an office again.
The design of the office will change based on purpose 🎨
The physical design of offices spaces will change based on its new purpose. If that future purpose is team building, no longer will there be a need for 4 person meeting rooms, phone booths, or similar. These will be replaced with couches, better kitchen setups, and similar to allow teams to spend more time with each other. If the purpose is collaboration, perhaps regular walls are replaced by whiteboard walls or glass walls where mockups and ideas can be scribbled all over.
Each company will have a different purpose for offices, so no office will look the same. Another determining point may be the lifetime of current leases. Companies tied into long term leases will more likely overhaul the current design to maximize the desired output. While companies near the end of their leases, may decide to totally opt-out of the office space.
Supply vs demand. Not just for economics 📈
One big potential David and we see is around flex spaces and micro or hyper local co-working spaces. Many companies have seen employees migrate out of urban areas. Whether towards the suburbs or totally rural areas. Meaning a central HQ in the middle of the city, may lose its purpose. Providing local workspaces where employee can work when they want can provide that purpose to the office, as well as, less of a commute. Companies are already looking for this opportunity, but there's a lack of a marketplace. On one side, a lack of a marketplace where local workspaces can advertise available desks to brining in more traffic. On the other side, providing the companies and their employees an easy way to search and book space where and when needed. There are quite a few startups working on this issue, and this may be one of the big opportunities to push the decentralized office set up further.
Some global powerhouses like Standard Chartered Bank are embracing this opportunity. Providing their team the ability to work from the most convenient co-working space they'd like.
Is repurposing underused space the real game changer?
Perhaps the real game changer in the future of offices will be repurposing underused spaces. Bars, restaurants, libraries and more. The past few years, there have been a few startups that tried this, but saw limited success. Perhaps due to few amenities or other reasons that failed in the past. However, if the future office is redesigned, perhaps this spurns these types of spaces to refurbish themselves. Offering more amenities and a more comfortable design to attract remote workers.
Employee happiness will beat the bottom line 🏦 🥊
Companies that redesign the purpose and physical design of an office to make employees happier and more successful will beat those that do so to save money. In the short term, companies may need to spend money redesigning current spaces. That redesign to align with a new purpose will lead to employees being happier coming into that space when they want to. Companies that simply want to cut costs at the expense of the employee experience will simply lose out.
Scott: [00:00:50] Hi everyone. Thank you for tuning into today's episode of Leading from Afar. I'm Scott Markovits with my cohost, Tevi Hirschhorn. Tevi, how's it going today?
Tevi: [00:01:01] Doing good, Scott, how are you?
Scott: [00:01:02] Doing well, thank you. Today we're going to continue our series on the hybrid remote model and the future of offices. We're excited today to be joined by David Cairns. David runs a special program that's part of the CBRE. Which is the largest commercial real estate company, I believe in the world. CBRE Forward is his program is focusing on the future of work. And how offices play a part in that if they do. So we'll dive into that through the conversation. So the way we normally start David is, to introduce yourself. Maybe tell us a little bit more about CBRE and tell us a little bit more about the Forward program, please.
David: [00:01:36] Yeah, sure. No problem. I'm Dave Cairns. I'm based in Toronto, Canada, and I do work for CBRE. And as you mentioned, we are the largest and I would argue the most sophisticated commercial real estate service firm in the world. I think we're at the pointy end of the spear, on the future of work. As an example, we just made a 35% investment in industrious, which is one of the leading workspaces as a service operator out there.
I think that's a big indication of where we believe in the future of work. And it is a choice-led, more flexible, and more service-oriented approach to leveraging commercial real estate. Yeah, I'm very proud to work at CBRE. I am an office leasing broker. I predominantly focus on helping high-growth companies. Whether it'd be Series A startup companies or the likes of some of the larger tech firms like Salesforce, Indeed.com. I have a very holistic approach to helping companies with real estate requirements. Not just in Toronto, but in a lot of major markets around the world. I also have a really close connection to the flex office sector. Working with a number of providers in that sector.
I'm a big believer in its future, as well. And its relevancy in a more decentralized or hybrid world where remote is part of very much a part of the future of work. With respect to CBRE Forward, CBRE Forward started as a platform to showcase the most innovative companies in Canada. Recently it's migrated to a platform where we talk about targeted growth strategies with respect to real estate, for high-growth companies.
And it's also become a place where we're talking about the future of work. We actually have an interview series, as well, called moving forward. With a similar vein and intention as you guys have with this podcast. So that's me in a nutshell.
I post a lot of content on LinkedIn all on the future of the office. So please check me out there.
Tevi: [00:03:29] Yeah, sure. We'll include that in the show notes. So thank you for sharing. You touched a bit on CBRE and your role in the future of work. What is your personal belief in the future of work? And now that so many companies have moved remote where do you think they're going to be picking up after the pandemic is over. And how does CBRE fit into that future?
David: [00:03:49] Yeah. So my belief is that the way we were using offices leading up to this pandemic was archaic and based on a world that no longer has really a lot of relevancy. So with that, I think that a light has been shown the fact that the future of work is about choice. For the end-user or the employee basically.
I think it's going to be very complicated. Because it's not easy to create a workplace strategy. To maintain and grow your culture in a way where you're considering the individual needs of people within your organization and how they want to work. But I just fundamentally believe there's really no turning back.
So with respect to office space, I think we lived in a world where all aspects of what we did were, for the most part, done from the office. I'll give you a perfect example. I used to go to my office and perform most of my job from my phone sitting at a desk at CBRE.
I could do that from anywhere. It's just not something that is required and it almost doesn't make sense. Why am I going to this place five days a week to perform a job that I'm largely doing from my phone and actually has a lot of remote functionality to it? In that, I'm talking to customers that are not actually physically proximate to where I am.
So that's a style of working that I think doesn't make sense. And most companies around the world now see that very clearly. They also see that they can measure the performance of their people from their actual output. Not like by peering out of their office and seeing a bunch of heads looking at a computer screen.
So that just fundamentally turns on its head, what you would use an office for. At CBRE, we're really focused on trying to help companies understand what those activity-based reasons for working are. Helping uncover what they are. And those could be still heads-down tasks, right?
It's not just about collaboration, but I think we're going to be moving into an era where typing emails at a computer screen is no longer the reason we use offices. We're going to be far more purpose-oriented in the reasons we do it. It probably means for most companies that they're going to be doing it a little bit less.
And that will range. Maybe some companies will be in the office four or five days a week, but I think it's pretty clear that there are a wide number of examples out there where this hybrid way of doing things is going to be more of a two, three, or four-day equation. And then, a complete rethinking or reimagining of what that space looks like. What it's designed to actually do for the end-user, and how are we going to manage the demand through the week for that space?
With people now not migrating there along with the same commuting patterns or trajectories.
Scott: [00:06:48] Interesting. One of the last points that you had mentioned, about the purpose of the office. From the companies that you're working with, what are you hearing so far? Tevi and I both are in agreement that the purpose of an office will no longer be about getting work done.
It'll have nothing to do with work versus it will be the place where you do team building and you do collaboration. So a place you can drop in. Spend a couple of hours, have a coffee with your colleagues. The return of the ping pong tables being something that helps with team engagement.
For that team building that collaboration and then you go home to do the actual work. For the companies that you're speaking with and from the experience that you have, what are you seeing? What are you feeling is the future of the office?
David: [00:07:25] So it's funny that you bring up this idea of not working. It's one that I share that view. I think it's going to look different case by case. But I actually wasn't on a tour with a client this preliminary tour looking for a post-vaccine office, a couple of weeks ago.
And funny enough, one of the founders actually said, "I really hope that when we kick this office off, not a lot of work will get done in this office."
There was actually a little bit of a debate between two of the founders. One of the other founders was saying I actually hope some work gets done.
But I really resonated with what the one founder was saying because I think it really connects with what you're describing. Which is yeah, an office is really there to build or maintain or grow relationships with colleagues. And some of that will be actual work where you'll benefit from taking an asynchronously developed project to a point where it becomes synchronous. And you're in the same room and you're really expanding on things that you've done away from one another. But really I'm in the same boat as you. I believe that going into an office should really be about connecting with people. A lot of how the best work gets done is through having trusting teams and trusting relationships.
When I think back on how I've grown my career, being in the office, the benefits that I had actually were all around those kinds of things. And most of those activities, you couldn't correlate to a productivity outcome. Do you know what I mean? Like more of this intangible growth of relationships over time.
So I'm definitely aligned with you on that. I know a lot of my customers are as well. But I think we, we also, I think a lot of these customers are also very focused on this activity-based way of working. Great companies have been performing lots of employee surveying over the last year. Trying to understand not only how many days do they want to be there, but what are the activities that are best performed at work?
It's so unique company to company. But I think it's going to range between all these different styles. It was a collaboration like whether it's just purely to hang out or also to perform specific collaboration-based tasks. Or all kinds of more deep and thoughtful work. That you know yeah you can do from home. But if you really created an amazing environment, that's a hundred times better than being at home. There are probably reasons why people would actually want to migrate to an office to go and do some really thoughtful heads-down contemplated work. And then I think there still is a need for some assigned or unassigned seating within these offices. Even though I think there's a migration to like there needing to be a purpose to be there.
And maybe that purpose is not to work, but there's some kind of like purposes, not just because. There still does seem to be some percentage of employees within every organization that I'm talking to, that just don't have great work-from-home setups. Even if their company were to give them money to spend on a chair or whatever. They've got a Manhattan view at their apartment and they just would prefer to work from an office.
So I think on a given day there was a significant number of staff sitting at a desk typing emails. That number is going to go way down. There still will be some kind of need for it. And then I think every single company is a hell of a lot more focused on space utilization than they ever were.
I think they all recognize that the optimization of the way they were using their space, was like 50% of whatever its possible output could have been. So I think that there's also a big focus on how utilization can be better solved. To save money, to make less of an impact on the environment, whatever the case may be.
I think companies are really focused on that, as well.
Scott: [00:11:05] The purpose is going to have to match with the design. So there's a new purpose of why we're going to the office. The design of the office has to change. The old open office layout with endless desks never worked. All the data says that it doesn't work. If this is going to be a version three, a redesign.
What does that version three of the office look like?
David: [00:11:25] I think before I make any comments again, it's just there's no one want to answer to this question, obviously. But I can give you an example. I'm working with a company right now that prior to COVID felt that once they raised a Series A financing round, that they would need something like 10,000 - 12,000 square feet of space.
Now they feel that they need somewhere between 6,000 - 8,000 square feet of space. Under the presumption that there will not be ever the same amount of occupancy on a given day. So for one. Space requirements seem to be shrinking. That's one thing. And then, where before they would have had quite a lot of open desks in the space, that's thrown out the window.
And I think the idea with this particular company is that they see a need for all three or four team-based collaboration rooms. Where a team of let's call it 5 or 10 people within the organization need to come together and do particular things on a given day. I think they understand that there might be pods within their organization that need space to collaborate with one another. Like not everyone in the company is focused on the same activities.
So there's this intentional thought process behind creating larger team-based rooms. Whereas I think before you would have seen a mostly open concept. Phone booths. And then, more like four-person meeting rooms. I'm seeing this company have less of a focus on the four-person meeting room and maybe larger team-based rooms.
They're really focused on enhancing the kitchen area or lounge space. Like various forms of lounge space throughout. So whether or not all these spaces are enclosed or think of them as little lounge alcoves that are far more intentional with the furniture settings. They're intended to evoke a specific feeling or a particular style of working.
I'm seeing a lot of that thought process, as well. To your point earlier, I think that companies are really looking at their office as being a place where their people really can build on their relationships with one another. These days that they get together, will be cherished days. Because they won't be happening with the same amount of frequency.
So I think a lot of the office may be open plan still. But it will be curated with a lot more intentionality in terms of what that specific space is really intended for. I don't know how familiar you guys are with Convene out of New York City.
But if you ever walk into a Convene, they're a flex office space provider and also an event and meeting space provider. They have both of those products that they offer on an on-demand basis. When you walk into a Convene, what you are intended to be doing, thinking, and feeling from any given space within their footprint.
In other words, everything about it is extremely intentional. Whether it's the furniture or the service that's provided by Convene as the hospitality operator. That's where we're headed. Far more intentionality, but it still might be an open plan. Just done differently.
Tevi: [00:14:30] I'm not familiar with Convene, but how does that compare with WeWork?
David: [00:14:35] Convene would definitely be different from a number of perspectives. One, they're more focused on events and meetings and then flex workspace for larger teams. WeWork was always known to have a really high-density model. They were putting a lot of people into this space with less of a focus on amenities.
If you were to walk into where WeWork, it would probably be no more than 10 or 15% of the floor that was dedicated to meeting space, collaboration space, cafes. With Convene, they charge more.
As opposed to this focus on a lot of people inside of the space. So that's probably the best way of correlating.
Tevi: [00:15:17] Got it. Makes sense. So you mentioned how companies are rethinking how much space they need and how they're going to be more intentional about the space that they have. Do you think companies will try to get a little bit more distributed? Are they going to stick with one central HQ or might they break up into smaller satellite offices in the future?
David: [00:15:38] That's a great question. I think in the short term, we're going to see with the majority of companies that they actually shrink their HQ. And still, they don't actually get a distributed office strategy right out of the gate. They focus more on just work from home and a smaller HQ.
I think the reason for this is more than the product side, the supply side. The office world just isn't ready. In other words, the marketplaces that can allow for an end-user to load up their phone and find a workspace for the day in some sort of niche, co-working space, or spaces like the one that I'm in right now. That technology and the supply of what's available, haven’t really reached the critical scale that I think it will in the next three to five years. There's a lot of talks actually on LinkedIn right now about how there are tons of flexible office space options out there in major cities around the world.
The challenge for organizations is that they can't easily access and search for it. And so we need to see the growth of the market makers and there are a number of them out there. I'm advising one of them is Toronto-based, called Flex Day. They're trying to do a number of different things.
They're helping co-working companies with their own rent issues. If you have a hot desk in a co-working space that doesn't get rented, you never get that revenue back. It's like a nightly hotel rental. So they're always looking for providers that can help them with the demand for their own space.
And then on the flip side though what's gonna be possible. I think, in the next couple of years for companies of all shapes and sizes is that they can log into Flex Day, pay a monthly membership to be part of Flex Day. And then give employees, let's call it 10 credits a month, or however many they choose based on the working style of the organization to allow those employees to actually load up Flex Day on a Tuesday.
And be like, "Ok, I'm seeing a client in the junction, which is where I live in Toronto. I need a flexible office space to go to after this meeting that I'm having." Boom! I load it up and use one of my credits. Or I'm working remotely, but I don't want to work in my house. I go to a place near my house.
So most companies just aren't aware, or it's not even something that's easily facilitated. So I think it's just going to be smaller HQ and home for the next little while until the market changes.
Does that make sense?
Tevi: [00:17:59] That sounds really cool. Are people working on that tech?
David: [00:18:04] Oh, yeah, for sure. There are some really amazing companies out there. Flex Days is one of them. Another company called Up Flex is another. Liquid space. There's a whole host of companies out there that are essentially trying to be the market makers for this work from anywhere movement that's going on.
I don't know if you guys have heard some of the recent news. Companies like Standard Charter Bank have negotiated a deal feel with IWG, which is the parent company of Regis and Spaces. Whereby they're 85,000 employees that are going to be able to access, 3,300 or more IWG locations.
Those examples are a leading indicator of a movement towards working from anywhere. And I think that the more companies that announce their desire to do this, whether it's Spotify, Revolut Standard Charter. The list really is starting to grow and grow with more of the companies making these announcements.
I think you'll see more landlords recognizing that they need this kind of footprint within their portfolios. In turn, I think that we'll see a leader emerge in the market-making category. Like the equivalent of Airbnb just to simplify it. I think we'll start to see a couple of leaders come out in that category. What companies will be able to do to help their employees work from really anywhere?
Scott: [00:19:25] Interesting. The idea with the flex space and David please, correct me if I'm wrong. Is it still requires either the flex company to build and design a flexible space or potentially to sublease a space that exists out there?
One of the thoughts that I've had for maybe the biggest opportunity is, the ability to repurpose unused space. So bars that are closed during the day. Libraries that aren't used. How does potentially repurposing this unused space affect the future of office space?
David: [00:19:59] Yeah. So it's interesting. There were a few players that were out there trying to do this. Flex day in Toronto was actually one of them. Where they were going to restauranteurs and saying, "Hey, we can help you generate some revenue from the hours of 9-5." there was another company based out of New York City that WeWork acquired. Forgetting their name.
For some reason, getting in there with the actual restaurants and the libraries and whatever, the wind seemed to get blown out of those sails. Flex Day moved on from it. I don't know that the company that WeWork acquired is operational anymore.
But what I do think will emerge, is basically what I would call retail storefront facing flex office space offerings. There's quite a number of operators out there that are trying to bring this type of concept to the street front to the neighborhood.
The idea of it is like a bridge between the office that I'm in right now, that I've rented for one year, and a Starbucks, right? Like Starbucks, the place you go to and hope to have a seat. And you'd worked there for as long as someone will let you.
There's a growing category of flex. An office where it's at the street front level, you can pay for it by the minute, by the hour and use it, truly in an on-demand way. I think that category will also really grow over the next decade as part of the flex office movement. I don't know, but it'll be, it will be interesting to see if there are players that continue to try and help figure out that that space utilization issue. I just noticed it lost a little bit of its wind recently.
Scott: [00:21:32] To the recent point. I have a good friend here in Israel who had a similar business of using bars that weren't used during the day repurposing them. Similarly, he got some traction, but it seems like those perhaps are before its time. Obviously now through COVID the idea of maybe being there wasn't as many people looking to work remotely. Or that if you had the option to work from a bar, which wasn't designed, have beautiful couches, and craft coffee, or go work at a WeWork space, you'd probably tend to go for the WeWork space. But maybe now as we're moving forward and the opportunity to repurpose some of these spaces. Design them a little bit more beautiful.
David: [00:22:05] One of my favorite people in commercial real estate, his name is Dror Poleg. If you don't follow Dror and you're listening to this, follow Dror. He made a quote, which I'll try to paraphrase. He said something like, "the internet is not going to stop people from living and working in cities. Just like it didn't stop them from listening to music or watching movies. But it will dramatically change where and how people work in cities and live."
So what I think is just really going to fundamentally change is that even if you can walk to your company's headquarters, within 15 or 20 minutes. Like in Toronto, we have an entertainment district that is literally a 15 to 20-minute walk to the financial core. I personally think we'll see more of these flex spaces pop up at the street front. Pop up at the base of condominiums.
Also find their way into office projects that are in more local neighborhoods. And people are going to want to work potentially outside of their home. If they've got like a 500 square foot apartment or whatever it is, or they just want to change the scenery. But I don't think there's necessarily talking about how people will live and work in different ways. I don't believe that people will go to their company's headquarters with the same level of frequency. Even if it's a 20-minute walk away. Because they're not going to feel that obligation. They're not going to feel that, "Oh God. What if my employer thinks if I'm not there five days a week that I'm not really doing my job. Like that's starting to be thrown completely out the window.
But, it doesn't mean that people don't want to leave their house and work in different spaces. It doesn't necessarily mean it’s the company's headquarters all the time.
Tevi: [00:23:44] Yeah, I guess I could see a future where there's a phone booth or something on every corner like they used to be. But now there's no phone in there. There's just an internet connection. Mini wifi or something. Pop into, wherever they want. That could be really interesting.
David: [00:23:58] I find it wild. Offices were created because of technology. We created typewriters and all of this technology that required physical proximity and a lot of space. But now ironically technology where it brought us together, it's actually not creating dispersion.
And I think that's something that the real estate industry really needs to acknowledge as a fundamental truth. We should not resist the fact that the same technology that justified building a million office towers may now completely decentralize the way that we all interact. And make communication increasingly more asynchronous. That's how the building needs to be contemplated. That's how the office space needs to be contemplated as this cherished, sacred space to perform something specific.
And it doesn't have to be work. I might come down to the office because Amazon's paying for a spa that I get to go to. There's gotta be more intentionality around why we're going to offices is the bottom line. Whatever it is.
Tevi: [00:24:58] So I guess to that end, you're in the commercial real estate business, has the pandemic helped or hurt CBRE?
David: [00:25:03] Look, revenues are down for the office, right? Whoever's in the industrial world right now is doing just fine. That's been booming through the pandemic, but obviously, retail and office have definitely been hit. As a broker myself, we've been doing a lot of transactions.
But the transactions are short in duration. They could kick the can down the road kind of deal that most companies are doing. But I really do feel for the real estate brokers out there that don't have larger enterprise clients and had mostly been working with let's say small and medium-sized businesses.
Those companies are all trying to sublet their space. Many of them are dramatically downsizing their real estate requirements. It's been tough. I think in the long run, you can't stop this freight train. This is an inflection point in the way that humanity works. And inflection points are unavoidable.
Will there be a bigger gap between winners and losers in the world of commercial real estate over the next decade? I absolutely think the answer to that question is yes. I think it's going to be more competitive as a real estate broker to make a living. I think that there will be certain buildings and certain landlords that's just don't perform and don't move into the next generation. How they need to be thinking about their product and more importantly, their service. The service that they actually provide, not only to the company that's renting the office space but to be end-users of that building that walked through the door.
I think the gap between winners and losers is going to be greater, but for those that lean into the future, I think that the moneymaking potential will be huge. Absolutely huge. but there's just nothing, you can't deny You can't deny these realities, right? You can't deny the inherent benefit of less commuting, right?
People commuting less is just better for the environment. Companies are going to be focused on that. Companies are going to be focused on trying to save money because they recognize that less office space is ultimately required for their workforce to remain productive.
I think it would be naive to say don't exist if you're in the world of commercial real estate and servicing it or supplying it.
Scott: [00:27:12] The team and the companies that you've been working with that are actually looking at the future of the offices and how it's going to be re redesigned. Is it going to be a redesigned office that is going to be used five days a week? The kind of old 9-5, or is it that place where people come in for two days a week or three days a week or something more flexible? Not that full-time 9-5, five days a week.
David: [00:27:37] You just lobbed one in there for me. The answer is definitely not 9-5, five days a week. In fact, I think Salesforce was quoted as saying 9-5 life is over. There are some companies that I think are going to be the minority that go back to this old way of working nine to 9-5.
Honestly, whether they end up dying a slow or fast death, they're going to die some form of death. Because why would anybody want to go back to an archaic way of working that literally just makes no sense? So yeah, anyone that I'm working with and I pride myself in working with, forward-thinking employee-centric organizations, they are all planning for fewer days in the office.
And they are planning for a complete redesign. For some organizations, they may elect to actually get in there and redesign their existing layouts because they've got long-term lease obligations and they feel that the space, from a size point of view and a location point of view, works. It's just the layout that doesn't work.
Some organizations will do that. But I think many will wait until they no longer have a lease obligation completely rethink the way that they do things. I think it's going to equate to downsizing in a lot of cases. It will equate to decentralization in some cases, for those that are able to facilitate. A work from anywhere strategy when the market hasn't got itself to a point where it's just more seamless. But any way you slice it, it's fewer days in the office. It's likely less office space and it's redesigned office space.
Tevi: [00:29:14] Awesome. So I guess the last question for you, David is with the downsizing and distributed nature of offices coming, who wins more? Company finances or employee productivity
David: [00:29:27] So your question is, is the balance sheet of the organization, the ultimate winner, or is the employee the ultimate winner? Is that what you're asking? Yeah, that's a good question. I think it really boils down to the culture of the organization, right? I'm sure there are some companies out there that are just looking at this as a cash-grabbing opportunity to downsize.
And aren't really actually thinking about their people, but then there are others that are laser-focused on it. Spotify is a great example. They've told their staff that they can literally work from anywhere. And they will support that in one way, shape or form. Inclusive of co-working memberships for those that don't want to come back to an office, but want some kind of productivity space outside. They'll give people money for improving their work from home set up. They still are going to have offices in their main hubs, blah, blah, blah. Those kinds of organizations are really thinking about their people.
They're not even suggesting that they'll reduce salaries if people move from those key markets. So that's an example of a very employee-centric organization that I think will save money, but isn't doing it for the cost savings. And then there's going to be others that are purely looking to downsize to save money.
Scott: [00:30:45] I'm interested in the ones that are very employee-centric. How do they, if they're even interested in, reallocate that money saved on the office? Let's say each employee costs $1,500 a month for the coffee, for the food, and for space. Do you repurpose some of that money that is going to be saved by no more office?
Companies are going to take that forward-thinking saying, "wow, we've saved a whole heck of a lot of money, can we put some of this money back on those incentives?" what was used to bring people into an office and still incentivize them in some way staying from home.
David: [00:31:22] Absolutely. Look, real estate is the second-largest cost for every organization, essentially. But it still pales in comparison to the cost of salaries. So, hopefully, a lot of companies are just thinking about a reallocation of those funds. Not necessarily trying to take every dollar and add it to the bottom line
Scott: [00:31:44] Awesome. It was great to hear, especially for someone in the corporate real estate space, the forward-thinking that's already going on. Within that arena of how to repurpose, redesign and rethink the future of the office. The future of corporate space. So we greatly appreciate the time spent and all the great information shared.
We'll be sure to include your LinkedIn profile and other profiles in the show notes. Tevi any last questions?
Tevi: [00:32:08] No, thank you so much, David. It was great to meet you.
David: [00:32:10] Yeah, thank you, guys. Really appreciate the conversation.
Scott: [00:32:13] Until the next episode, have a great day.