By Kevin Klier

The concept of real estate optimization is hardly new. While its definition varies somewhat, most real estate professionals agree that at its core, optimization is all about maximizing the efficiency and productivity of a commercial property – in effect, creating a space that contributes to, rather than detracts from, a company’s bottom line.

While real estate optimization traditionally has been about fitting more people into less space, that notion has changed over the past decade as businesses increasingly have recognized the importance the workplace experience plays in employee productivity, satisfaction and retention.



This year real estate optimization will take on even greater significance. Changes in reporting requirements mean that businesses must report the cost of their lease (and thus the full extent of their real estate-related debt) on their balance sheets, rather than in the footnotes of financial reports. Because this rule change will provide investors with even greater visibility into the companies in which they have a stake, businesses face greater pressure than ever to demonstrate the way in which real estate is working for them … and to make changes when the numbers suggest their plans are off the mark.

To meet these often-competing needs, businesses increasingly are turning to technology. Sensors, for example, can now enable a company to measure the occupancy and usage of its real estate, demonstrating conclusively whether it is being used effectively. This approach has led many businesses to reassess spaces that often go unused, such as board rooms or larger conference rooms. When paired with a modular design, such spaces can be quickly and easily reconfigured to meet day-to-day needs, increasing their functionality and ultimately making for a more effective use of existing space.

Sensor-based technology can also play a key role in allowing companies to test the effectiveness of a new space design or even a new furniture installation before committing to implementing it companywide. This is particularly important for businesses that have multiple locations.

Increasingly, such workplace data is playing a key role in both mid- and long-range corporate planning. Businesses are better able to plan for future growth if they can also factor in real data about space needs and effective use beyond current occupancy. Similarly, companywide renovations or even future acquisitions can be informed by occupancy and usage data, ultimately resulting in cost savings.

While technology can provide immediate insights into the use and effectiveness of a company’s workspace, it can also empower employees to do their best work in the kind of space that is best-suited for that work. Although sensors track work activity and not specific employees, they nevertheless provide managers with greater insights into the ways in which work teams are accomplishing specific tasks. That data subsequently can be leveraged to adjust the workspace in a way that better supports both the workers and the work product now, while permitting configurations to shift as needs change.

Creating this agile workplace takes real estate optimization to a significantly deeper level. Because it is no longer static, such workplaces become living, breathing entities that support and reflect the individuals who work there, as well as their work product.

This becomes especially important when you consider the attitude toward work exhibited by millennials and Generation Z. Generally, these younger workers, who now dominate the workforce, care more deeply about the setting in which they work, how work fits with their personal lives and whether employers are involved in their communities or other “worthy activities” versus strictly material rewards (salaries, bonuses, job titles).

Because these workers want more than simply “a job,” they look for workplaces that suit their lifestyles. They want surroundings that offer everything from quiet spaces where they can lounge comfortably, sip coffee and concentrate on their laptops to team spaces that allow them to interact and brainstorm ideas with fellow workers. As a result, desks and cubicles have given way to open spaces, distraction-free zones, lounges and on-site cafes. Increasingly, companies are also demanding their workers have ready access to health and fitness facilities, a variety of restaurants, entertainment and even cultural activities.

Quality of light is also playing a key role in real estate optimization. Recognizing that employees’ access to natural light can boost well-being and reduce stress (not to mention serving as another enticement to attract and retain workers), companies are moving enclosed spaces – file rooms, copy rooms – to the interior core and positioning open space and even private offices and meeting rooms around the perimeter of each floor.

Bottom line? True real estate optimization must take into account the health of the overall building, because it will impact the health of the workers who occupy it. And ultimately, it is both the physical and mental health of those workers that can spell the difference between corporate success and failure.

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