3 ways the right real estate can improve business resilience

In an era of constant transformation and economic uncertainty, businesses are seeking adaptability in order to withstand the unexpected. Here, JLL Global Head of Research, Work Dynamics, Dr Marie Puybaraud, explains why real estate, sitting at the heart of how businesses get work done, has a major role to play in improving resilience.

January 18, 2023

We live in an era of constant transformation, with organizations worldwide facing complex and ever-changing circumstances amid geopolitical and economic uncertainty.

Faced with such challenges, companies will often seek flexibility, but in truth, adaptability is crucial. Dealing with the unexpected means being willing to pivot and change course when needed – and this means cultivating resilience and an innovative mindset among both the leadership and the workforce.

Real estate has a major role to play here. It’s often said that real estate is the second highest cost on the balance sheet after people. Still, it’s also at the core of how businesses get work done, influencing corporate culture, encouraging collaboration and promoting health and well-being.

We’ve seen buildings become a critical enabler of successful organizations, especially in attracting and retaining talent. In a recent survey, we found 50% of office workers have left their job since the start of the pandemic. People working remotely three to four days a week are the most volatile; 74% have left their job in the past two-and-a-half years, and 79% said they could do so in the coming months.

While your workforce is hugely important, your real estate can improve business resilience in the following three ways:

1. Financial resilience

Hybrid working has changed the way we use office spaces. Evaluating your real estate portfolio and lease commitments to ensure it has the right spaces in the right location and with the right services and amenities can help identify operational inefficiencies and reduce running costs.

For many of our clients, we’re finding this doesn’t necessarily mean less overall square footage, but rather using spaces differently and increasing the quality of the space. Of the 1,000 corporate real estate (CRE) decision-makers we surveyed, 77% agreed that investing in quality is a greater priority than expanding the total footprint.

Lease renegotiations and sale-and-lease-back strategies can help diversify and increase portfolio flexibility. In some cases, short-term leases, mostly likely through co-working and flexible space providers, can provide the agility required to adapt to and withstand short-term economic shocks.

Energy bills are another big issue at present. Combining existing and new data sources with built environment knowledge helps dial down unnecessary energy use. In California, NOME Capital Partners successfully cut energy use by 45% in a multi-tenanted building using artificial intelligence (AI) and algorithms to run heating, ventilation, and air conditioning (HVAC) more efficiently. We’ve seen that 46% of companies plan to expedite investment in operating facilities in a carbon-efficient manner over the next 3 years, and another 41% will keep this investment steady.


2. Technological resilience

The pandemic demonstrated our extreme reliance on technological infrastructure in and out of the workplace and how fragile business continuity can be if technology fails to deliver.

Establishing good metrics and embedding technologies to measure building data points are vital to dynamic decision-making in the new world of work. Yet, our research suggests that only 13% of organizations currently make use of real-time analytics for business decision-making. However, 56% of companies plan to adopt technology for predictive facility management in the near future to improve performance and the overall lifecycle of their assets.

Adopting these technologies can have significant benefits. In a total economic impact study undertaken by Forrester Consulting, one intelligence-driven facilities management platform has been shown to deliver 238% ROI by uniting operations, asset and work order management, maintenance and analytics for smarter facilities management.

As the use of space becomes more dynamic and portfolio composition more complex, companies are turning to data and AI to help reduce costs, optimize portfolio decisions and enable work from anywhere. For example:

· Workforce technologies support companies in their transition from managing employees to enabling employees.

· Work technologies support companies moving from attendance-based to outcome-based.

· Workplace technologies help CRE operators create a healthy, dynamic and engaging work environment that’s energy efficient and automated.

· Portfolio management technologies use new sources of data to design and optimize workplaces.

Without sustained investment in technology and data, companies will find it more challenging to achieve performance and resilience goals. Technology implementation is still at an early stage, but CRE will need to double down on intelligent technology investment by 2025.

3. Workforce resilience

There’s no going back to the way things were. Our research shows 60% of office workers want to work in a “hybrid style”, and 55% are already doing so, meaning companies need to have strategies in place that will help retain employees while keeping them happy and productive.

Quality of life is now ranked as the number one employee priority, with health and well-being a close second, according to JLL research. In fact, 59% of employees now expect to work for a company that takes care of the health of their people.

By creating a safe, supportive environment, your people can better adapt to adverse situations, retain motivation and maintain high performance. What’s more, improving workforce resilience by enhancing physical and mental health and well-being is the number one strategic priority for the real estate function between now and 2025, with almost half of the decision-makers in our global Future of Work survey saying they plan to expedite investment to support this.

In short, business resilience relies on a resilient workforce and a robust physical infrastructure combined with rugged technological platforms: a fusion of people, place and technology. It also means successfully navigating emerging dynamic working patterns against a backdrop of constant change - which is easier said than done. But when we embrace change, we find new ways of doing things.

Building a diversified and flexible portfolio enables organizations to future-proof their real estate and respond to significant disruptions. The imperative now is to shift from survival mode and find ways to adapt and transform our buildings to better support resilience, now and in future, so we can handle whatever comes our way.