It’s no longer possible to put off decisions around your organization’s space needs and location. Many long-term office leases signed before the pandemic are coming due over the next five years. But before making a major move, you need to determine both your workspace and your workplace strategy.
Workspace vs. workplace
Workspace and workplace work hand in hand, according to Plante Moran Realpoint’s real estate professionals.
Workspace is the physical design and layout of your office. It tells a story. It reflects your brand, helps attract and retain top talent, and supports your business. Workspace is determined by the type of organization you have, your culture, your dominant work model (hybrid, in person, or remote), and your staff’s work style needs (focused, collaborative, social, and learning).
Workplace, on the other hand, is about implementing the workspace model to meet your organization’s space needs. It accounts for square footage decisions and location. How much office space do you need in today’s world? Where will that space be located? The answers to those questions have widespread impacts on your organization.
Workspace considerations for the modern office
Workspace is often the first component to address in a real estate decision because the strategy is rooted in function and brand. The function should follow your organization’s needs — supporting your work model, the different ways people work, and your culture and brand.
“Organizations need to be deliberate in their approach to accommodating varying staff preferences and weighing out the risks and rewards of different work models,” says Alicia Washeleski, principal at Plante Moran Realpoint. Washeleski regularly leads space planning exercises for clients who are trying to determine their space needs.
Some job functions may benefit from a remote-heavy hybrid environment (such as call centers at an insurance agency), whereas other roles requiring mentorship or complexity would be better conducted primarily in person (like law firms). For those organizations in the middle of the spectrum, some research suggests that preferences for in-person vs. hybrid work fall along generational lines, with younger and older staff preferring to be in person while middle generations prioritize the flexibility of a hybrid workweek.
“Making a hybrid or in-person work model attractive will only work if you transform your traditional workspaces into flexible, compelling, and caring environments that reflect your brand,” says Rick Pifer, a principal at Plante Moran Realpoint who specializes in real estate strategy.
Flexibility in workspaces
Flexibility in workstyles needs to be reflected in the flexibility of the space.
“Today’s workspace must entice staff with a variety of different scenarios,” says Pifer. “Give staff the choice and power to declare where to sit, every week, day, or even hour — whether that’s logging into a Zoom or Microsoft Teams call in a private office, or collaborating at the café where they can sit with a coffee and snack and work. If your workspace includes spaces for the four ways we work —including focused work, collaboration, socialization, and learning — you should be good to go.”
Creating compelling office spaces
“Office spaces should be a destination rather than an obligation,” Washeleski says. “The modern workforce is demanding that the office experience be as inviting as possible.”
That’s why many office users are choosing to invest in smaller office spaces in A+ buildings. These “trophy” buildings are defined by their ample amenities, prime location, and modern design and construction. From gourmet cafes and wellness centers to rooftop gardens and art installations, these spaces are designed to cater to the needs and preferences of their occupants.
Showing care through environments
Having space that reflects your care for staff’s health and wellness is just as important as creating a compelling space. “The next generation of sustainability and caring for staff is about fitness as a lifestyle, the sustainable food movement, mental rejuvenation, and increasing performance through natural means,” says Pifer.
Workplace and real estate portfolio strategy decisions
Once the workspace strategy is decided, leaders must shift their focus to questions related to workplace. How much space do you need to support your workforce? Where will that space be located?
Throughout the pandemic, a reasonable strategy for many was to postpone any long-term real estate portfolio decisions. Some chose to “blend and extend” existing leases, some put their space up for sublease, and others hung onto this excess “shadow space” as they worked through their overall workspace strategy. These delay tactics could end up having a positive outcome. “Organizations with strong credit and stable cash flow will have more opportunities to lower occupancy costs, create better space, and provide better amenities within the next five-plus years,” says Pifer.
As can be expected, some real estate occupancy savings could be a direct result of the excess of available space in the market reducing rental rates and making generous rent abatements more common. According to CoStar Group’s Q1 2025 United States Office National Report, office vacancy hit a record 13.9% in Q1 2025. New leasing volume has remained around 95 million square feet for the past six quarters, approximately 15% below the average from 2015 to 2019. Despite office asking rents remaining stable for four years, aggressive discounts for leases on existing inventory, especially subleases, could drive rental rates down.
Of all property types, trophy properties and buildings built in the current decade have seen and will likely continue to have positive net absorption — and with them elevated rental rates. Fortunately, if you’re in the market for a trophy building, some of that cost can be mitigated by downsizing into a smaller space, resulting in the same or lower occupancy costs if you can avoid racking up the price with extensive tenant improvements. If cost is a bigger concern, many options exist in the sublease market, where availability is historically high and turnkey space is often available at a discount of 35% or more, according to CoStar Group.
But how much space should you shed? Answering these three questions will help you determine how much office space you need, says Pifer:
- How many days are you expecting staff in the office?
- Are you providing dedicated space or free addressing?
- Do you have the upfront cash for tenant improvements to be amortized?
Downsizing for many middle-market organizations may also mean consolidating locations, driving portfolio-wide real estate costs down further.
“Pre-pandemic, your organization may have had a headquarters building acting as a regional hub in a prime location, with smaller offices in surrounding areas,” says Pifer. “Depending on your utilization, one location in a prime area may serve the needs of your entire workforce.”
The key, says Pifer, is to find the “right amount of space in the right location.” He recommends having a real estate consultant help analyze your office portfolio based on office location, sizes, utilization, staff demographics and commutes, amenity options, and total occupancy costs. Armed with that data, your consultant can help you think through a real estate strategy that (1) solves for leases expiring in the near term and (2) considers potential new office targets.
Business leaders should not delay. According to Pifer, the process of developing a real estate portfolio strategy around square footage and location should start at least three years in advance of any lease expiration.
Welcome to the future of work
Office space users today are interested in transforming the office into a collaboration-enhancing destination that supports the needs of both the business and the staff, emphasizing flexibility, compelling design, and a focus on staff well-being.
With hybrid work models here to stay and lease expirations looming, business leaders also need to address workplace decisions around square footage and location through careful consideration and a data-driven approach, particularly in the context of the current real estate market dynamics.
Determining the best path forward is becoming more urgent as lease expirations approach. For help thinking through your workspace and workplace strategies, navigating an upcoming lease expiration, and assessing your real estate portfolio, contact Plante Moran Realpoint’s real estate consultants today.
