Case in point: the technology company NVIDIA. Mike DeMuro, NVIDIA’s vice president of real estate and site services, concedes that the organization wasn’t a fan of remote work prepandemic. That’s one of the reasons— growth and talent needs being the other two main drivers—the company’s real estate footprint swelled to roughly 80 locations around the world, totaling about 5 million square feet. NVIDIA takes a hybrid approach to its real estate assets, owning some space while leasing others. It has a main headquarters in Santa Clara, California, and a few other major regional locations, but the majority of its offices are small spaces outside of major cities that house between 100 and 500 people.
Rather than thinking in terms of expanding or contracting space, however, DeMuro says now the philosophy is about getting the most out of NVIDIA’s current space. “It used to be that if you had 250 people in a space for 300, you’d have to get more space because you were growing,” says DeMuro. “It’s not about that now.”
In fact, it’s almost the opposite. Instead of finding space to accommodate 300 people, companies can maximize the use of a 150-person space by “hoteling” staff, an industry term for providing shared spaces with no designated offices or desks because workers come in on a rotating schedule. Similarly, companies can look to condense space in areas where they have more than one office, opening up the opportunity to cut lease costs.
But this kind of retrofitting of space isn’t just about saving money, says Dan Pulver, a senior client partner in Korn Ferry’s Real Estate and Infrastructure practice. It’s about adjusting to a new way of working where offices act as collaborative environments where teams can come together for a day-long project sprint and then disband for another team to hold a client presentation the next day. “The trend will impact the tail end of the portfolio,” says Pulver. “There will be a less compelling reason to hold onto small service offices in nonstrategic locations.”
More bluntly, companies will expand and contract in locations based on what talent finds desirable, which explains why MetLife and others are projecting steady and continuing growth in corporate real estate over time. As DeMuro says, “In five years, our portfolio will be bigger than it is now but smaller than it would have been because work from home allows for optimization.”