The role of the office has evolved. Its purpose is no longer just a place to work; it is now integral to employee experience, company culture, and organizational identity. This shift in focus has forced HR leaders to become more involved than ever in their companies' real estate decisions.
According to a survey by commercial real estate firm CBRE, nearly a quarter (24%) of real estate professionals reported directly to a human resources leader last year, up 14% from the previous year. “Even in companies without a direct line of reporting to a CHRO, we're seeing greater collaboration between HR and real estate,” adds Georgina Fraser, head of CBRE's human resources consulting practice.
Corporate real estate is increasingly recognised as not just a business cost but a driver of core business, supporting talent attraction and retention and improving productivity. This means corporate real estate has developed a “natural alignment with HR, whose raison d'être is to look after people”, adds Fraser.
Silicon Valley roots
Peter Miskovic, global future of work leader and executive managing director at real estate services firm JLL, believes this shift dates back to the 2010s, when companies like Google and Facebook (now Meta) established suburban campuses for their employees. “As Silicon Valley tech companies placed greater emphasis on the role of the workplace as a talent acquisition tool, HR became more involved in workplace strategy,” he says.
Corporate real estate has developed a natural alliance with human resources
As with many workplace trends, the pandemic has played a key role in accelerating this one. “Since 2020, HR has had to lead the way in establishing hybrid work, workplace health and safety, and the return to the office,” Miskovic adds. “As a result, corporate real estate teams have had to work more closely with HR leadership.”
This is in stark contrast to what Miscovic experienced earlier in his career, when corporate real estate departments almost exclusively reported to the CFO, COO, chief administrative officer, or chief procurement officer. “Real estate decisions used to be focused on making it cost-effective for the business,” he explains. “Location didn't matter as much because employees were expected to move to wherever the company was, but those considerations have shifted to be more favorable to employees.”
The rise of hybrid work, in particular, has forced many organizations to change their approach to workspace utilization and design, as they focus on making the office a “destination” where employees want to travel, rather than just a place to work. This means CHROs are now at the forefront of shaping their organization's workplace strategy.
The balance between people and place
One person who is familiar with balancing HR and workplace priorities is Sharon Doherty, chief people officer at Lloyds Banking Group, who oversees 60,000 employees and 1,000 buildings, including the bank's branches and head office.
Doherty's first involvement with corporate building construction and design came when he was Director of People and Transformation at Heathrow Airport from 2002 to 2007. During this period he was heavily involved in the construction of the airport's Terminal 5 building.
It's knowledge from this experience that Doherty has carried with her throughout her career. “It feels weird, more than unusual, that location isn't part of my purview,” she says. “People and location are the two biggest cost centers for any business, so they're both really important.”
You can't just delegate – you have to be prepared to put your helmet on and get to work.
The main difference between the two mandates is the amount of forward-looking planning required for each business function: An organization’s talent strategy may be redesigned every three years with annual review and adjustments, whereas corporate real estate requires a longer-term vision.
“This is a five- to 10-year challenge,” Doherty explains. “The pace is different, so you need people who can think long term.”
Health and safety, maintenance and sustainability are all key considerations when designing a corporate real estate strategy. These aspects can involve greater technical complexity and, if problems arise, those overseeing these issues may be held personally liable.
“As a frontline manager, you're managing a large budget while balancing business-critical issues, so you can't get that wrong,” Dougherty adds. “You're also managing a huge cost centre across the balance sheet that you wouldn't normally manage with HR costs.”
HR leaders who want to manage their company's real estate need to be financially smart and interested in areas outside of their usual role, such as sustainability and construction. “You can't just delegate,” says Doherty. “You have to put your hard hat on and be prepared to get serious about it.”
Natural fit
But despite these differences, there are plenty of commonalities that make corporate real estate a great field for HR leaders to work in, if they’re up for the challenge. “It’s important that HR professionals see this as an opportunity,” says Doherty.
Some elements are “sweet spots” for HR directors, such as the ability to design attractive workspaces that enable new ways of working. This kind of thinking can be seen in Lloyds Bank's recently opened Leeds Wellington Place office, which features a games area, workplace hub and treadmill desks.
HR involvement can help make the built environment more inclusive through quiet zones for neurodiverse employees, gender-neutral restrooms, Braille signage on doors, hearing loops in conference rooms, prayer spaces, or adding wellbeing rooms for parents returning to work. All of these considerations will be more familiar to HR executives.
Dougherty was chief people and placement officer at her previous job, Finastra, and says she “had to fight” to add both aspects to her role when she moved to Lloyds. “Before I joined, there was a view that placement should fall under the purview of the chief operating officer,” she explains.
It's still unusual for companies to combine these two roles, but for Doherty, combining people and place makes sense: “To me, attracting, retaining and making people productive is such a big part of the talent proposition – too important to leave it to someone else.” A growing number of HR leaders think the same way.