HOW AND WHEN TO MOVE FORWARD WITH TRANSACTIONS?
Many occupiers are asking where and when to pick-up with the implementation of transactions now that we are transitioning back to a new way of working. In our previous article, we noted the way businesses occupy real estate portfolios in the “new normal” could change dramatically. Actions that were planned or started pre-COVID-19 now have questions around their relevancy.
Whether it is remote work, the reconfiguration of your office, future workplace standards, distributed work patterns or questions of onshoring or relocation, every project should be analyzed for its fit relative to implementation as well as its alignment to the business.
FOUR FILTERS TO ASSESS CHANGE LEVELS
Our teams have identified four primary considerations for you to assess how to move ahead.
Transaction Analysis Scorecard
- Business Fit – The first criteria to examine is whether the business has shifted its operations and occupancy needs. Will the business rely more heavily on a distributed or remote work strategy? Has the business downsized or pivoted to a new model? Advising on these issues and asking provocative questions is the first thing you should do with your business partners. If the results point to a change, pause and re-evaluate the scope of the project and re-think the options.
- Risk – After assessing the impact of changes to the business and workplace, you should undergo a risk assessment that focuses on business continuity and the degree of change that will impact the project. Depending on the risk associated with business disruption, you will have amended the scope and timing of the project and ultimately looked for alternatives. An important area to address is the stage of a project and the status relative to the alignment of the business needs. If the project is near completion and the business requirements have changed, you should prioritize developing a remediation plan with your businesses to assess the impacts of proceeding with completion of the project. This should include analysis of the required workplace and specific space changes, capital and operating expenditure impacts, project change-orders and post-completion changes.
- Finance – Re-evaluate the status of financial goals and budgets for all projects. Confirm with your finance leadership and the business units that the projects’ previously determined levels for capital and operating expense requirements have not changed. If the budgetary goals have changed, you should go through a scope assessment to determine the degree of change required in order to continue with a project. This can range from minor scope adjustments to total project restructuring.
- Location – Now that work and the place where work gets done could shift, you should assess the viability of the proposed location for the project. If in the pre-execution phase, you should consider changing location requirements due to the evolution of your company’s people strategy and the locations you are seeking to access talent. If there is uncertainty relative to the longer occupancy strategies, you should analyze your current or proposed lease and assess whether you have adequate flexibility to move forward.
GO VS. NO-GO
If at the end of answering the questions for any of the four filters, the project should be re-evaluated for alternative options. Listed is a set of options to consider relative to the speed to implement, complexity and cost.
- Stay / Restructure – Analyze the impacts of a short-term extension or restructuring of your lease until you can gain alignment from the business. Landlords may be more willing to consider short-term solutions given the current climate.
- Resize – Due to occupancy requirements or capital and operating expenditure constraints, consider downsizing and redesigning the space to accommodate varied needs. This can present delays due to timing and project restructuring
- Consolidate – Examine backfill and options in other existing owned or leased locations if similar space and use types. This could also present significant capital expenditure and operating cost saving opportunities and be the most expedient
- New location – Assess the market as you may want to consider alternative locations. Given emerging favorable conditions for occupiers, this may present opportune timing.
- Flexible workspace – If capital expenditure and timing are constraints, an immediate option is to examine serviced office, co-working and other flexible workspace alternatives. This option affords you the opportunity to choose a short-term solution until you can position the next project, or utilize longer term.
- Remote work – Colliers recent workplace study incorporating feedback from over 4,000 respondents indicates that over 80% of employees would like to work from home at least one day per week and more than 40% would like to several days per week. In many case, business continuity and productivity levels have been maintained during this remote working period. This option is the lowest cost, while allowing for further evaluation on how to prioritize solutions for the business
LAUNCH TIMING IMPACTS
If you determine that the project has a green light, you should also assess the timing constraints and workload of your team related to the projects restarting. You should consider three possible options when considering the launch of each project:
- Continue as defined – Ensure all business partners and project team members are coordinated in the launch
- Prioritize and fast-track – There may be instances where due to the delay your require a fast-track approach. Perform a timing and dependency analysis of all tasks to ensure there are no bottlenecks preventing a pull-ahead of the project
- Delay start date – Where projects should be delayed, ensure that you will have the right resources, service providers and capital expenditure allocations for the revised project dates.
About the Author:
Chris Zlocki is part of the global executive leadership team for Colliers’ Occupier Services. He oversees consulting areas including portfolio strategy, workplace advisory, flexible workspace, supply chain solutions and workforce analytics. As the Head of Client Experience, Chris also leads efforts to grow client relationships and expand service offerings for our enterprise clients.