Obsolescence Leads to Opportunity

In the real estate industry a common trigger for change can be as simple as uttering the statement, "We are in a bad facility and it's hurting our business". Upon deconstruction of the statement, a larger question surfaces; how does an obsolete, old, stodgy piece of real estate hurt the business (let's say for a business with some scale, such as a regional office or headquarters)?

There are lots of ways really.

  • The larger company image can be tarnished (especially to customers or prospective talent coming to visit)
  • These facilities are often misaligned with the business mission (Headquarters located in rural or small town America is getting tougher to justify for talent attraction and retention)
  • Employee satisfaction is impacted (e.g., adjacencies not considered between work groups)
  • Rampant workflow logjams and inefficiencies which do not promote an innovation culture
  • These facilities are typically less energy efficient which leads to higher maintenance costs and suspect budgets just to keep up
  • Pods of subcultures emerge (this is no way to team, interact and collaborate because of an inefficient floor plan design)
  • Lower productivity (ah, a tough one to quantify, nevertheless all too real)
  • Security and/or safety issues abound

Even worse, if the facility is in a poor location, the company is unable to effectively compete in a global economy. Let's explore that further.

  • A location some distance from commercial airport can be costly. Connectivity for customers hurts the topline and management time is lost because of poor access
  • The talent pool is shallow; organizations cannot access millennials or the diverse employee demographics essential to business vitality and growth
  • The larger business climate is impacted - can't do area versus a can do; also a tough one to quantify but heads of operations know what I mean (taxes, utilities, poor infrastructure, are painful to manage)
  • Like-industry presence may be low and this affects employees who wonder, “what about my next job if does not work out here?”
  • Local quality of life, quality of place, services and amenities. These days if you can't have fun for the employees nearby, it's difficult (if not impossible) to be an employer of choice
  • Declining/ageing population, slow or no growth economy. If a community does not grow with the company, does that lead to constraints on business acquisitions and scalability‎ of new products? I think so.
  • A public sector that cares about the private sector (and vice versa) - poor PPP leads to a PP situation! :)
The list can be even longer and it seems overwhelming as we flesh out the pros and cons for doing nothing or exploring your options both near (across the street) and far (across your portfolio). With that said, there is a strong likelihood that with proper planning and foresight, maybe some investment and a little luck every item above could be juxtaposed and mitigated and all of sudden your company has become an opportunity-minded employer of choice.

Robert Hess
Executive Managing Director, GCS

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