Large companies plan their real estate way in advance – large companies know what it takes to plan an office relocation, negotiate a lease, design, and build out an office. But, most companies, those companies that have 100 employees or less, make real estate decisions once every five or ten years. Those companies are having to ask questions about their real estate that they have never had to contemplate before.
So, what are the six real estate questions every small business is asking:
1. Do we need an office?
2. Are we in the right building?
3. How should the office be designed?
4. Do employees want to be in the office?
5. Do we have the right amount of space?
6. How will flexible working impact our office needs?
This is causing a lot of introspection and reflection for small and medium-sized business owners.
The media provides updates on what large flagship companies like Google, Facebook, Twitter, Dropbox, Microsoft are doing with their real estate, but we have to remember that the real estate market is made up of so many more small and medium-sized companies. They have different needs and often don’t have the internal support to answer these questions themselves.
A company’s mission or vision can’t change on short-term happenings and the pandemic is a short-term happening. Changes will obviously be made, but for businesses to be successful, they must remain true to their values, and for most, that is bringing teams together in an office environment.
We all operate at different fear levels. Some of us operate at a fear level of 1 and some at a 10. But, as time passes, we adjust, we learn how to behave, how to remain safe, we develop new habits, and as vaccines are distributed, fear levels, for many, drop and there will be a strong desire to return to highly social interactive environments.
“Hub and spoke models are being researched and some companies are running experiments but there is not a lot of evidence showing the strategy is currently being deployed at scale. However, as the world opens, this is a strategy that will grow over time”, Jon said.
Gen X is changing the housing market. According to the National Association of Realtors, around 38% of today’s homebuyers are millennials. As I walk my neighborhood each weekend, I see long lines for open houses. I know I moved to the suburbs for additional space and a garden. In this environment, when everyone is working remotely, the additional space for an office has a large appeal. The ability to move around a community without having to use public transportation.
But this also means cities are being vacated. Therefore, hub and spoke models can be widely deployed for larger companies.
“Looking at what happened after Sept 11th, a lot of families exited New York City in the months that followed. It took two or three years, but people did start moving back and living in New York City.
After Sept 11th, tenants didn’t want to occupy anything higher than the 10th floor for 18 months. It was a trauma; we are currently living through an extended trauma and it will take longer to recover.” Jon Schultz.
In anything in life, we are malleable to the situation, but we get used to every situation and learn how to live with it, even if we don’t like it. We are learning how to live with this situation.
Oynx have focused on staying on the path we have always been on. We have been investing in technologies that support tenants/customers, touchless technologies, air filtration, delivering food to the building, work keeping tenants happy, safe and healthy.
“I have been trying to improve my golf game during the pandemic. To get better, I know I have to practice and because it is something that allows me to socialize safely, I have had the opportunity to practice, and I have got better. We have been practicing working remotely for an extended period of time and we have got better at it”, Jon Schultz.
Software and hardware technology have evolved rapidly over the last decade in almost every industry. We can look at how Zillow and Opendoor have disrupted the home buying and selling process. Smart home technologies have disrupted the traditional home appliance market, but corporate real estate seems to be slow to adapt or change.
“Change is hard and especially within a company. Picking up a new piece of technology or software for yourself is a personal choice to make a change, make a change for me. But, within a company, a corporate decision to change software or hardware and telling employees to change the way they do something when they are used to doing it a specific way, that’s friction at the max” Jon Schultz.
“Any change is resistance. And it is how much resistance from a bunch of people do you have to get through to make a change relevant for your company. When you're changing yourself, it is you. When you have to change people and it is not on their volition, that’s a much longer process” Jon Schultz.
“Change in the real estate industry has been slow, and yes, we’ve been behind the curve, but that’s not the truth anymore. Over the last seven years, I am proud of our industry, the real estate industry has taken to what the future needs to be for us to be relevant. The real estate industry is a $15-16 Trillion market, we have to change, or someone is going to coming in and change the world around us and we would end up sitting on the sidelines”, Jon Schultz.
The biggest change that will be beneficial for the real estate industry is the cloud. This unfortunate virus has pushed everyone to have to be in the cloud, both small and medium-sized companies. If we didn’t have this painful transition to the cloud over the last seven years, we would not be able to manage the current working from home.
The pandemic may have helped us in the long-term and accelerated transition to newer technologies like 5G and AI.
The pandemic has also accelerated and focused minds on allowing tenants to feel safe and secure when they enter every building. “Health and safety are the most important amenities every property owner needs to provide”, said Jon Schultz.
Like most start-ups, whose product or service may not be what they initially set out to create, properties evolve and will always need to evolve to remain relevant, but they may not be what they began their life as.
When trauma hits, everyone is in survival mode - fight or flight. But I think we are also thriving, at Onyx, this is a new experience we are going through. We are all human. We all care about each other, and we all care about how we get through this, we are communicating, working hard serving our tenants, who are our customers, and working at something that is bigger than us. We want to be part of the solution and not part of the problem.
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This article was written by Steve Todd, Founder of Open Sourced Workplace and taken from an OSW Daily interview with Jonathan Schultz, Co-Founder Onyx Equities. You can watch this and other interviews by clicking here.
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