Typically, organizations construct new or update space for their employees as a capital investment. While intended to serve the purpose for the long-term, the reality is as organizations evolve, the space remains stagnant. Then a decade or more later, funds are used again to completely redesign the space. As a result, the space does not serving the corporation effectively. It’s time to break the norm, implement strategies and design spaces that live and breathe in sync with the organization—spaces that are upgradable and adaptable to match the ever-changing organization. With this model, internal environments are created with the mindset of providing a service. In this way, companies can evaluate the use of the space and easily make changes and enhancements to this asset to better meet the organization’s needs.
What is space as a service?
The common definition of space as a service is the change in the real estate model from asset ownership to monetization of access and services that include physical space. Yet, space as a service is more than just about real estate. It is a model that facilitates a change in management’s beliefs about the design and use of real estate to one that proactively enhances productivity and experiences within a company’s real estate portfolio.
A common question about space as a service is how does real estate create higher profitability by providing more service, experience and access, instead of focusing on a product packaged for ownership? The answer is by changing the service model to focus on more personal, flexible and tech-centric solutions. In fact, space as a service often includes technology disruptions to an existing market. Primary examples include Amazon in the bookstore/retail space, Airbnb in the hotel space and WeWork in the temporary/flexible office space.
The increased speed of business, propelled by ever-changing advancements in technology and compounded by expectations from Wall Street, dramatically impacts the workplace. Technology includes smaller and more powerful personal devices, cloud computing, the Internet of Things, sensors, smart buildings and artificial intelligence. The cost center capital model of changing a work space once a decade based on market benchmarking, past experiences, typical rules relating to ratios and relationships, organizational programing and design formulations is outdated. Organizations that want to thrive in this environment must change their mindsets and strategies to incorporate spatial solutions in a space as a service model to provide constant evolution and progress.
The new model means delivering spatial solutions that proactively meet employees’ needs over time to support dynamic changing business. This is accomplished by taking into consideration internal cultural aspects as well as external factors related to the company, sometimes without employees recognizing or even realizing they needed these changes. These include the corporate real estate strategy, labor markets and human preferences.
Corporate real estate strategy
The first aspect of space as a service related to the cultural environment involves real estate strategy. Key components of this strategy include:
Maximizing utilization of space. Ensure owned and leased assets are in use and eliminate or reduce underperforming or unused space.
Ensuring a smart investment. Any space acquisition, lease or design update is executed to enhance the business with a positive net present value and clear return of investment.
Speed to market of the space. Portfolio modifications are performed quickly to limit disruptions and increase the strategy benefits immediately.
Decreased liability. All facilities are designed to safeguard users’ health, safety and welfare.
Flexibility to adjust to changing business needs, including mergers and acquisitions. In a constantly fluctuating environment, multiple organizations may need to manage assets together to improve efficiencies.
Upkeep and maintenance. Routine and large-scale building-related maintenance tasks are performed on a regular schedule to extend the life of the space.
Corporate real estate (CRE) executives are under pressure to reduce real estate costs during a design or redesign of a workplace. At the same time, they are tasked with increasing employee productivity. A 2015 survey on global corporate real estate trends by Jones Lang LaSalle determined that over 90 percent of companies expect their CRE executives to improve workplace, business and people productivity. At the same time, the study found that 77 percent of CRE executives face pressure from their senior management to reduce real estate and related costs.
One solution is for CRE executives to incorporate activity-based work to enhance productivity and the use of the workspace. “The Once Alternative Workplaces Strategies” Fifth Biennial Global Benchmarking Study 2018 discovered that the endorsement of alternative workplace programs by executives increased from seven percent in 2009 to 17 percent in 2017. These programs are defined by the study as “the combination of non-traditional work practices, settings and locations that supplement or replace traditional offices.” Without these approaches, a workspace may become stiff and stagnant. Yet, when these elements are incorporated into a workspace, the space can support and enrich the workplace culture by providing employees with the tools to innovate and tackle problems with creative solutions.