Should You Consider Relocating?
The sudden change in workplace dynamics has accelerated the remote work trend; and is likely to impact long-term real estate strategy as a whole. While it is almost certain that most businesses will adopt more flexible remote work policies and new density guidelines, there is no doubt that traditional office environments will continue to exist. But, office environments and workplace strategies will certainly experience a shift.
Vestian’s real estate strategy and site selection experts, Joe Sprouls, Vice Chairman; and Jeremy Done, Managing Director; sit down to discuss how the current market is presenting a prime opportunity for corporate relocation.
Why should an organization consider corporate relocation? What are the benefits of relocating to a secondary market?
There are many, but we see the three benefits of relocation being:
- Labor cost and efficiencies – Opportunity to realign, restructure and centralize like kind functions, eliminate redundancies and improve operational efficiencies, with a focus on markets with deep labor catchment pools and lower cost talent
- Real Estate Costs – Cost reduction opportunities driven by footprint optimization and consolidation, combined with lower rents and pass through expenses.
- Incentives – Tax and payroll incentives at the local and state level and upfront frictional cost reimbursements can offet start up and longer-term relocation expenses.
What primary factors should be considered before relocating corporate offices?
There are two key factors decision makers need to consider:
- Is the relocation occurring as a result of business continuity requirements in the customer’s local market?
- Is there a broader strategy focused on workforce planning and efficiencies, which could entail consideration of secondary markets relocations?
Which organizations are best suited for this strategy? Does one size fit all?
Each organization’s business goals will inform the optimal relocation strategy. Some companies will only require near-term local solutions. Larger, more complex organizations with multiple business lines will require a more comprehensive approach encompassing both labor and real estate solutions
Are there any industries or business types that would not benefit from changing their corporate location?
All businesses in most industries should regularly evaluate their footprint; at the very least from a disaster recovery and business continuity perspective.
How are the current climate and remote work affecting this approach?
Remote work arrangements have been fairly well accepted and utilized by businesses to reduce real estate expense and to provide flexibility to employees who can work remotely to perform their jobs. The environment today and tomorrow will favor an increase in remote working arrangements. Advances in communication technology will allow work in any location, which will provide opportunities to realign the workforce in lower cost locations, with less hard footprint.
- IT and advanced applications will permit work to be performed without the constraints of geographic parameters.
- End-to-end processes will become more automated and executable from “home,” so required skill sets will be supported by lower-cost real estate solutions. Virtual collaboration tools will permit independent time management with less oversight and overhead.
- High-cost residential real estate, escalating state and local taxes, aging infrastructure, strained services, and increasing public pension fund liabilities will drive businesses to lower cost states with superior quality of life supports and robust labor catchment pools.
- The era of long-term CBD leases at prime rents will vanish for the foreseeable future. Front office tenants will have the leverage to negotiate short-term leases with multiple renewal options. Knowledge workers that are location-bound now in high-cost markets will experience more remote work opportunities and split urban/ suburban campuses to satisfy business continuity requirements.
Interested in speaking with our relocation experts?Get in Touch
Joseph W SproulsVice Chairman email@example.com
Joe Sprouls is a highly recognized commercial real estate executive who has held senior leadership roles with some of the world’s leading financial institutions. Most recently, Mr. Sprouls was Executive Vice President and head of MetLife Global Corporate Services. Prior to MetLife, Sprouls was Managing Director, Real Estate Investments, and Global Head of Citigroup Realty Services. In these roles, Mr. Sprouls was responsible for all company occupied real estate worldwide. Over the past 20 years, Mr. Sprouls has led teams responsible for the migration of thousands of jobs from high cost to lower cost locations, contributing over 150 million dollars of annual savings.
Jeremy Done has spent 20 years redefining real estate strategies for global best in class organizations such as for Ryder, Jiffy Lube, and Credit Suisse. Most recently, as the Head of Real Estate Strategy for the Americas at Credit Suisse, Mr. Done led the integrated CRE delivery team and served as business partner liaison with all internal cross-functional executive teams to drive run rate reduction initiatives for a 3.8 million RSF portfolio with an annual occupancy budget of $250M. Mr. Done has led and supported multiple HQ strategies while also stabilizing entire office, retail, and industrial portfolios that total 45 million in annual hard savings.