A balance between risk and return has come into sharp focus for those using commercial real estate investments to build passive income and long-term wealth. After the pandemic, economic uncertainty has been on the horizon; hence the concept of "flight to quality" is becoming more apparent. Organizations spend significant resources on their prime assets, likely their highest expenditure. There are opportunities to develop efficiencies within the processes, boosting net income by optimizing the overall workspace.
Through space optimization, businesses can modernise the workspaces and leverage outputs at their full potential. Optimization of workspace supports your employees in increasing work efficiency by providing them with a comfortable and productive work environment.
Flight to quality is a term used to describe the huge focus on optimizing the existing high-quality workspaces and eliminating the low-quality spaces from the portfolio when there is economic volatility.
The prime assets of your organization, the main buildings, and offices, do not tend to lose their value during an economic recession. At such times the value of assets often increases at a similar rate to inflation. This becomes a safe and profitable investment opportunity for any organization.
The flight to quality movement creates a shift in the commercial real estate industry by decreasing the costs of low-quality spaces and increasing the costs of prime assets. According to reports from 2022, the quality commercial estates pricing has increased by about 6.6%, and low-quality estates are becoming 1.1% cheaper.
This movement focuses on ensuring that the prime location offices are equipped with appropriate and premium designs and amenities, a return-to-office vibe, and a positive employee experience-creating environment. The prime offices are based in urban hubs and possess thousands of employees, and these assets are the crucial opportunity for optimizing the in-office venture for every employee. These offices also need a low-risk optimization to ensure employee experiences stay at their best and the investment is worth every dollar.
While leaders are working on optimizing their workspace, the organization's most underutilized yet beneficial strategy is experiments. It might be difficult to know what changes will have the greatest impact and be profitable for you during uncertain situations. But by using the experiments, companies can develop a low-cost prototype and test them with the employees by taking feedback. Employees are key in deciding new workplace standards in an erratic and vibrant occupancy.
For example, you can create a small space like a cafeteria that matches your renovation plans rather than completely renovating the entire commercial building. After that, take feedback from your employees and make decisions accordingly.
This kind of setup allows organizations to test various designs, layouts, and amenities without making any large investments. This experiment will help your organization identify the best-suited and compelling spaces.
Utilizing this low-cost, low-risk way to gather information and data helps organizations make informed decisions.
“Experiments are compelling in the workplace. We work hand-in-hand with our largest customers to power their experiments and give them the ability to make fact-based decisions. These experiments are at the foundation of their ability to create a new office environment better suited for the experience their employees expect, all while achieving the financial goals of the organization."
“Not only do leaders get a true understanding of their workplace trends in a safe environment, but they also are given tools to make powerful decisions that improve their workplace.”
To start your new venture in experimenting and optimizing your organization's flight to quality, connect with Studio DB for an expert solution.
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