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Telecommuting: Impact on Commercial Real Estate

February 1, 2013

By Barbara Hamlin, NAR Commercial Communications Manager

How is telecommuting going to impact commercial real estate in the coming years? Numerous research studies show it’s on the rise, and the changes will present some new opportunities for commercial brokers.

Consider some facts on this growing trend; and the possible value that brokers can add to client transactions. Many companies are looking at space requirements, and there’s considerable pressure on facilities managers to develop the most efficient space and minimize occupancy costs.

Everyone will not be telecommuting, but a significant number of companies are downsizing their physical space. Years ago, companies started offering “hoteling” – shared office space for employees who come to work periodically but work from the road or a home office much of the time.

Employers know their employees want more flexible schedules. Accommodating them is important for retention, and it’s easier today with the plethora of mobile communication tools that can be used from almost anywhere.

The statistical evidence reported at TeleworkResearchNetwork.com also demonstrates the pluses of telecommuting. From fewer traffic accidents and deaths and less highway maintenance costs to considerably less consumption of gasoline and employees gaining 2.5 weeks’ worth of annual time – otherwise spent commuting – it’s no wonder employees overwhelming want to telecommute part of the time.1

How can commercial practitioners position themselves regarding telecommuting?

Richard Muhlebach, CPM, CRE, an expert on lease negotiation doing business in Washington state, knows there are several reasons that the expertise of commercial real estate brokers will be needed to reposition buildings. If a building is no longer competitive he suggests thinking about adaptive use to maintain the economic life of the building.

“An older office building in the central business district may have floor plans too small for most tenants to operate in efficiently, but these buildings may be in great locations with space that could be converted to apartments, condominiums or a hotel,” Muhlebach advised. In other situations buildings may need to be targeted to another office user market, he added.

The members of the Orange County Commercial Real Estate Women (CREW) group wanted to know more about telecommuting trends, and they invited Kate Lister, founder of the Telework Research Network and author and expert on telecommuting to be their March luncheon speaker. After the meeting, she offered the following ideas for commercial professionals.

  • Familiarize yourself with flexible work spaces in your market and who has space within a given area.
  • Get to know architects and designers that have repurposed space and begin to collaborate on a specific space with stakeholders such as a client, planner, architect, banker and building owner.
  • Strategy: Work to renegotiate longer leases with mutual benefits for both parties. Tactics may include repurposing to make space more pleasant, more convenient and with more features.
  • Consider partnering with software suppliers to help clients know the utilization to determine how much space is really needed, and them help maximize that space.

Those themes were echoed by commercial brokers and industry experts. A Map Real Estate Inc. tenant rep for twenty-five years in the Chicago market, Michael Pink said, “After negotiating more than 750 leases, I know it’s more critical than ever to consider every possible angle to add value for my clients.” He looks for building flexibility and space that can be multi-purposed.

“Look at the building; if there are several tenants, ask about sharing conference room space and having accordion walls, put all file storage in one room and negotiate for better lighting and nice lobby finishes,” he advises. When working with building owners, consider partnering with “smart building” experts to help make the real estate more efficient. Using business intelligence software provides information about real building utilization.

These tools pull building data from multiple systems such as scheduling applications, security badge data, occupancy detection systems, network transaction data, and more to capture and analyze how space is actually being utilized.

PeopleCube CEO, John Anderson, works with many facilities managers and knows data helps in lease renewal options. “Knowing that companies are under pressure to reduce costs, brokers can look for ways to help owners retain tenants,” Anderson suggests. He adds, “By helping clients track and analyze their space utilization, and leverage that information to make recommendations on how to re-purpose space, the value of the agent to the client increases greatly and leads to accelerated lease renewals.”

Finally, address changes occurring in the market and how to best position yourself. Muhlebach points to the need for continuing education, being state of the art with technology and having a better understanding of the needs of clients and trends in their client's industries. “We have to re-evaluate our business models periodically,” says Muhlebach. “We may lose occupancy of some office space with telecommuting, but there will be new industries needing space – technology and bio tech incubators and environmental companies may be next,” he said.

1 Source:Telework Research Network