A recent CHRO Association webinar covered why more HR leaders are getting involved in corporate real estate strategy and how CHROs can tackle this newer addition to their portfolio.
Why does real estate end up with the CHRO?
For Holly Tyson at Cushman & Wakefield, owning a real estate strategy simply meant becoming fluent in the business. “I work at a real estate company. If I can’t speak the language that they are speaking, I’m not going to be able to impact, influence, and make decisions on their behalf,” Tyson said.
At Arrow Electronics, the real estate and indirect procurement roles, combined and functionally known as Enterprise Resource & Planning Office (“ERPO”), was added to Gretchen Zech’s portfolio because the HR function was known internally for its sophisticated analytics and financially oriented mindset. “Our CEO saw our value, and wanted to drive a similar kind of impact in the real estate (and broader ERPO) portfolio,” said Zech.
Nicole Daggs, who inherited real estate alongside corporate safety, sees it as a natural outgrowth of the employee experience – a traditional HR priority. “The employee experience happens from the time someone walks in the door,” she said.
Why it matters: Lease decisions are now a critical part of workforce planning. During the pandemic, leases ran just 1–2 years, but now they span 7–10 years. In top buildings in London, New York and Tokyo, it can be difficult to secure leases under 15 years, Tyson noted. So, getting real estate decisions right becomes even more essential.
Practical Strategies for CHROs:
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Speak the CFO’s language. All the panelists said hard real estate gets most of their attention. Tyson connects workplace issues to financial outcomes: engagement drives turnover, turnover drives cost, and cost hits EBITDA. Fluency is what earns HR a real voice in portfolio decisions, so consider sharing scorecards with the CFO and executive committee to hold all players accountable.
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Read the lease closely. Rights of first refusal on adjacent floors and tenant improvement concessions can matter more than headline rent, which may be $100 per square foot while the effective cost is closer to $50.
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Measure occupancy and employee engagement before and after moves. Cushman surveys employees before and a year after relocation.
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Give employees advance notice. NextEra gave an 18 months’ warning before moving critical operations inland.
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Prepare for employee pushback. Owning facilities can make HR the target for broken HVAC and gym complaints. Even brand-new facilities with “all the bells and whistles” can garner negative employee feedback, so look for ways to ease employee friction. NextEra added QR codes so employees can report issues quickly. Arrow Electronics leverages an online platform for service issue ticketing, and the ERPO team oversees an outsourced global facilities management firm to resolve physical plant facilities issues.
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Inspire rather than issue a mandate. Employees comply with mandates “until someone else gives them another opportunity,” Tyson said. Give people a real reason to gather, so they don’t commute in only to sit on video calls, said Daggs.
Lastly, let the data guide decisions. Data is increasingly driving the business case. “The more we can utilize data and information to make decisions coldly and execute them warmly, I think it helps to keep everybody on the same page,” Tyson said.
NextEra used rising employee demand amid higher grocery and gas prices to justify expanding on-campus dining. It also developed 1CRE, a searchable database consolidating its real estate data. Arrow maps year-round employee engagement surveys, including 90-day new-hire feedback, by location. And Cushman & Wakefield uses metrics such as occupancy costs relative to revenue to decide on office location and layout.