Federal Real Property Portfolio Optimization...2015/02/11 · Houston Miam i Tampa Chicago Atl ant Charlotte Rale igh Suburban DCWashington, NJ North NJ Central New York San Antonio

Federal Real Property Portfolio OptimizationLowering Costs and Improving PerformanceRoundtable Policy Discussion

“Opportunities for Taxpayer Savings: Federally Leased Office Space in the National Capitol Region”February 11, 2015

James M. ReidySenior Managing Director

Savills Studley

Federal Real Property Portfolio Optimization > 1

…the Dynamic Alignment of an organization’s work patterns with the work environment to enable peak performance and reduce costs.1

Portfolio Optimization Starts with…

Different work patterns and environments require a workplace strategy that allows for differentiated solutions based on a common approach.


Workplace Strategy…

…IS:A business case-driven acknowledgment of, and functional and financial response to, 21st century workforce needs and behaviors:

…IS NOT:• Adesignsolution,butwill result in one

• Ateleworkprogram,butmay incorporate telework capabilities and benefits as a competency

• Ablankethotelingprogram,butmay incorporate hoteling elements as appropriate to the organization and its workforce composition

Collaboration Mobility Cost/Budget Realities

Differentiated Roles

Traveler Teamer Independent Resident


Staff and Space Misaligned

Today’s workforce uses workspace in a way that is often at odds with traditionally planned and assigned workplaces.

Leases are legal obligations and rent still needs to be paid even when budgets are cut or revenue is reduced.

Funding shortfalls negatively impact training, equipment, and staff – affecting mission capabilities.

Collaboration is how work is completed today. Staff are no longer tied to desks by phone lines and LAN cables.

Field Work

Collaboration Teleworking from home

Teleworking on travel

Underutilized Office Space

CAUSEEFFECT


Workplace Strategy ‘Combined Arms’ Approach: Real Estate:• AssessingOccupancyAgreementcommitmentsandcomparing

costs to prevailing Market Rates

• Quantifyingcurrentutilizationrates

• IdentifyingSpecialPurposeSpacerequirementsperorganizational unit, location, region

• Identifyingopportunitiesintenant-favorablemarketsonbuildings

• UsingtheMarkettosolvemanyissues

Human Capital/Change Management:• Defineworkforcecomposition

• Executive/manager/staffsponsorship/participation

• Unionsupport

• Performancemanagement

• Focusonaccountability

• Engagementandcommitmenttomission

Mobile Technology Infrastructure:• Enable mobile work

• Securityconsiderationsandconnectivityissues

• Datatosupportinsightfulanalysis

Real Estate

Human Capital / Change

Management

Mobile Technology

Infrastructure


Business Case Assessment for Workplace Strategy

Today’s Workforce Is Mobile

35%–50% of Offices Are Under-Utilized5

The Annual Workstation Cost Is

$10K–$15K/FTE5

We spend more time in collaborative work spaces, in the field, on TDY, and teleworking and less time at individual workstations. The result is a measurable percentage of costly under- and even un-utilized workspace.

GSA states that “…the average utilization for workspace in the U.S. and in Europe between the hours of 8:00 AM and 5:00 PM is 35 to 50 percent…”

This same report also states that “…the cost of accommodating the average Federal associate typically runs $10,000–$15,000 annually per person.”

Benefits of a Workplace Assessment

• Identifiesopportunities:

– Reduce real property footprint and operating costs

– IncreaseutilizationandachieveUSFGoals

– Redirect funding from unnecessary rent to mission support

• Enables$5Mto$7.5Mcostreductionsper1,000FTEsat50%averagedaily utilization5

• AlignstheWorkplacewiththewayemployeesarealreadyworking:collaboratively and where they need to be


Real Estate Assessment

CaseStudy:Identifiedthe“RealmofthePossible:”reduceRealPropertyoperatingcostsbyover40%nationally for a Federal law enforcement agency

5 3

6

872

1

4

$10.000% 20% 40% 60% 80% 100%

$20.00

$30.00

$40.00

$50.00

$ /

SF

$60.00

$70.00

Note:• Allleases<50%utilization

• Largestlease+$20/SFovermarket

Note:• Retainedgeographicpresence

• Leaseeliminationanddownsizing=+40%reduction

• Savingscanbeappliedtodirectmissionsupport

Potential LA Metro Consolidation PlanTargetRate:$30–$40/SF

TargetUtilization:85%–95%

7

3985 6

1

4

2

Keep Lease – Add FTE Downsize Lease Eliminate Lease


Workforce Composition

Assessing the composition of worker types is key to defining the footprint and cost reduction opportunities within a given portfolio: National, Regional, Cityscape.

Traveler

Teamer

Independent

Resident

Spends the majority of time outside the office, (e.g., traveling, attending off-site meetings in customer locations)

Spends the majority of time in the office, primarily at a desk, where other employees need to access them face-to-face on a daily basis

Spends the majority of time collaborating formally and informally with co-workers

Spends the majority of time primarily at a desk, with limited face-to-face interactions with clients or co-workers

Workforce Distribution Law Enforcement AgencyEvery 1,000 Staff = 460 Workstations

RESIDENT1.00WSAllow.*=100WS/1,000

INDEPENDENT0.50WSAllow.*=50WS/1,000

TEAMER0.70WSAllow.*=210WS/1,000

TRAVELER0.20WSAllow.*=100WS/1,000

*WS Allow = Workstation Planning Allowance

OPPORTUNITIES:118KSFFootprintReduction/1,000FTE* (-53%)

$8.1MCostReduction/1,000FTE**(-54%)

Human Capital/Change Management Focus:• Assesstheworkforcecomposition,

• Emphasisonperformance-basedmanagement

• ReduceRisktoMission

Change Management Is Critical to Success

*Assumes220USF/Personaveragex540unneededworkstations **Assumes$15K/workstationx540unneededworkstations5

10%10%

30%50%


Myth Busting: Too Costly

Leveraging daily office occupancy can produce footprint and cost reductions and mitigate budget reductions by re-directing funds to mission support

Without moving a single wall or changing a stick of furniture.

Iftheaveragedailyoccupancyis60% then you can achieve:



Staff: Workstation Leverage Ratio

•Effectivelyachieve 145 USF/ staff*

•30%+ space and rent reduction

1.5:1 Staff: Workstation Leverage Ratio



2.0:1 Staff: Workstation Leverage Ratio



3.0:1*Assumesbaselineof220UsableSquareFootagePerPerson(USF/P)withinanAgency


Company Profile:Overview

• Foundedin1855

• 600locationsglobally

• 25officesintheU.S.withover600professionals

• Provideservicesto:

– Corporations

– Nonprofits

– Law Firms

– Government Agencies

– InstitutionsofHigherEducation

Single-Focused Firm Committed to Its Clients

• Over27,000professionalscommittedtoprovidinginnovativerealestate advisory services

Boston

DenverDenverTech Center

West LA

Orange County

San Diego

Downtown LA

Silicon Valley

San Francisco

Philadelphia

Dallas

Houston

Miami

Tampa

Chicago

Atlanta

CharlotteRaleigh

SuburbanDC Washington, DC

NJ NorthNew YorkNJ Central

San Antonio

Austin

Savills Studley Offices

Market Experience

Point of Contact

James Michael Reidy FRICSSenior Managing Director Savills Studley 1201 F Street, NW • Suite 500 • Washington, DC 20004 (202) 624-8510 [email protected]


References:1. Savage,AE(2005)WorkplaceStrategy:Whatitisandwhyyoushouldcare.

TheJournalofCorporateRealEstate.Volume7,No.3

2. Office of Management and Budget Policy Directive, M-12-12; http://www.whitehouse.gov/blog/2013/03/14/freezing-footprint

3. WhiteHouse/OMB/FederalRealPropertyCouncil-DrivingFederalPerformance:ManagePropertyEffectively;http://www.performance.gov/content/reduce-federal-footprint#overview

4. https://c.ymcdn.com/sites/fbiaa.site-ym.com/resource/resmgr/docs/voices_from_the_field_-_fbia.pdf

5. “WorkplaceUtilizationandAllocationBenchmarkReport,”July2011 http://www.gsa.gov/graphics/ogp/Workspace_Utilization_Banchmark_July_2012.pdf

Documents

Federal Real Property Portfolio Optimization...2015/02/11 · Houston Miam i Tampa Chicago Atl ant Charlotte Rale igh Suburban DCWashington, NJ North NJ Central New York San Antonio