Coronavirus Impact on Real Estate: What Comes Next is a Great Solution
Even as the US finds itself in one of the most expensive housing markets in decades, corporate real estate prices are expected to take a major downturn in value over the next year and beyond, with market analysts at PwC estimating that the overall real estate market will drop 5-10%. As the covid-19 pandemic continues to shutter businesses and work from home or hybrid scheduling models remain in place, the cumulative effect drives the value of corporate real estate down—further slowing any economic recovery.
However, emerging smart technology can help businesses maximize their real estate ROI. By utilizing workplace analytics, corporate real estate teams are empowered to maximize the potential of their workplace. Workplace occupancy sensors can provide real-time data and API to help business owners and office managers better utilize their facilities, protect their workforce, and even decide if it’s time to downsize—all supported by reliable, anonymous data sets.
How Covid Changed the Workplace
The Covid-19 pandemic brought about the swiftest and most complete overhaul of the way the international business community works since the industrial revolution. Within the space of a few weeks, social distancing orders and mandatory closures caused millions of managers and workers alike to rethink their entire workflow and expenditures, among countless other logistical issues. Now, almost two years since the virus was first identified, many of those changes appear to be quickly defining “the new normal” for businesses.
According to a recent Gallup poll, an estimated 25% of American workers continue to work either mostly or entirely from home, with other studies showing that over half of workers would like to work from home at least three days a week. The shift to (and relative success of) work from home or hybrid scheduling has gone from pandemic necessity to enticing work offer, for some companies. However, this can translate to problems for businesses with substantial overhead costs in a shared workspace.
For instance, in a company of 100 people, even 25% percent of employees working from home results in massive spendings in utilities like heating or lighting, which cost the same regardless of whether the building is now at 75% capacity. With corporate real estate remaining one of the top expenditures of any business, the result is often paying huge amounts to heat, light, and clean a property that has been devalued by the market anyway.
Simply put, underutilization of the workspace results in the low ROI that all property owners fear—the expense of the property isn’t returning enough of a profit to justify it’s place in the business plan. Many business owners and facilities managers may suspect that their workplace wasn’t properly optimized even before the major disruptions brought on by covid. Now, however, increased digitization of the workplace and the evolution of smart technology can provide the kind of metrics needed to maximize your workplace’s ROI.
Finding the Real Value of Your Commercial Real Estate
A simple way to calculate your current ROI is to add up all expenses related to your workspace (rent, utilities, maintenance, cleaning, etc.) and weigh the total against your net income. The resulting ratio gives you a rough estimate of the kind of profit you make from related property expenses. The goal of every business owner with overhead costs in real estate should be to keep that ratio above 1:1. Essentially, for every dollar you spend on your property, you’d like to be making at least a dollar in return to justify the expense.
Room occupancy sensors provide a map of which physical areas of the building might be sabotaging your ROI through underutilization. By providing real-time data of which parts of your workspace are occupied at a given time, managers can more effectively tackle problems like “ghost meetings” wherein conference rooms or meeting spaces go unused due to poor planning or communication. By providing a live heat map as to which meeting spaces are occupied, and even how many occupants are in attendance, meetings can be planned for maximum efficiency in regards to room size and availability.
This is just one example of the kinds of real-world applications for workplace data that can save business owners money in the long run, and move the needle on ROI. Workspace occupancy sensor data can display heat maps and live feeds of information like daily occupancy numbers, preferred walking paths, and space utilization over time. These data points are collected securely and anonymously to provide the kinds of reliable metrics that allow for intelligent and personalized cost-saving measures around the office. Occupancy sensors can reveal the exact percentage of unoccupied areas of the building that are still being heated, or how much time an employee may spend searching for an unoccupied workspace in a shared work setting—or even that a large building is untenable with a work from home schedule, and downsizing might be necessary. All of these factors greatly affect the real value of your workspace and its contribution to your business’ and employees’ well-being.