Strategic ReportOf ce Relocation

prepared for the UCEM

International Real Estate ChallengeJanuary 2016

3191 words

To whom it may concern,

RE3 has been instructed to source new offi ce space for the University College of Estate Management(UCEM) with a number of specifi c requirements and priorities. The purpose of this Strategic briefis based upon information supplied to us by the client, which we have assumed to be correct andcomprehensive. RE3 solutions report contains a brief summary of the client’s wishes and what weare here to offer and the necessity of the client on which our consultancy has been based. The briefwill outline a space standard and space budget analysis. With the total number of square metersdesired, we will conduct a department relationship analysis and provide an adjacency diagram tovisualise the new departmental organization

As the new CEO of this dynamic corporation, the RE3, I take pride to submit this strategic report tothe Real Estate Commitee of the UCEM. As RE3 we took great pleasure working with the College,with their phylosophy and their mission. We hope that we have interpreted in the right way thereal expectation of the client for their future growth as they will become an internationally knowncompany.

In the purpose to serve the real needs of the UCEM, please contact us with any questions concernedour brief. We look forward to meeting with the advisory committee again to continue the discussionto select the best for the new UCEM headquarters.

Your Sincerely,

Robert HefferonCEO - RE3

January, the 6th 2016

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Executive Summary

1 - Introduction 1.1 - Client Ethos 1.2 - Current situation

2 - Adjacency Diagram

3 - Innovative Workplace Design 3.1 - Smart Open Spaces 3.2 - Activity Spaces 3.3 - Biophilia in the Workspace - Case Study: The Sacramento Municipal Utility District

4 - Building a New Identity 4.1 - Brand Identity 4.2 - Building Location 4.3 - Sustainable Identity 4.4 - Improved External Collaboration 4.5 - Sharing Knowledge 4.6 - Collaborative Spaces

5 - Sustainability 5.1 - Effi cient Sustainability 5.2 - Suffi cient Sustainability

6 - Space Budget Assumptions 6.1 - Staff categories and occupancy 6.2 - Public Spaces 6.3 - Expansion 6.4 - Space Budget Spreadsheet

7 - Cost Effi ciency 7.1 - Cost Saving Aspects 7.2 - Space Sharing

8 - Conclusion & Recommendations

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Table of content

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Executive SummaryRE3 Solutions is seeking a more effi cient offi ce in an iconic building for the UCEM new EUheadquarters, which gives that mind set that UCEM is one of the largest online universities in theworld. As a Real Estate Institution, UCEM’s location and the offi ce building itself are equally importantbecause they represent the image of the university. The new offi ce will represent as the Global HUBof UCEM and shall feature innovative workplace, sustainability design, external linkages, and costeffi ciency. UCEM is relocating not only to increase the productivity and effi ciency, but also enhanceits working environment by applying open modern spaces and green elements into the new offi ce.Having consider the UCEM’s requirements, RE3 Solutions Inc believes there are fi ve pillars to focuson the new offi ce:

Innovative Workplace

Improved External Networking

Image/Identity

Sustainability

Cost Effi ciency

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1 - Introduction

1.1 - Client Ethos

1.2 - Current situation

The University College of Estate Management (UCEM) is an educational organization establishedin 1919 to provide educational programmes to those interested in a career in the built environment.As a result of technological advances UCEM now provides online courses worldwide and it aspiresto become, in 2019, the world’s leading provider of vocational online education.

Their motto is “Rich heritage, international reputation“ as the College of Estate Management is theleading provider of supported online learning for Real Estate and Construction professionals. Theyhave been playing a key role in the property world for more than 90 years. At any one time they haveover 3,000 students from over 100 countries benefi ting from their degrees - all taught by tutors withextensive industry experience.

They offer many property-related topics at undergraduate and postgraduate level, as well asproviding professional development courses and tailor-made corporate training solutions. Theiractive research programme contributes to knowledge across the profession, benefi ting businesses,practitioners and policymakers alike.The College sets the international benchmark for excellence inonline real estate and construction education.

This strategic brief highlights the priorities, objectives and standards that UCEM requires to achieveits organizational goals. We have been instructed by the UCEM to research suitable offi ce locationsfor headquarters relocation prior to April 2017. RE3 solutions research describes the nature, size,features and character of the offi ce space that will guide the building selection, location selectionand design process.

As a consequence of its growth and aspirations the client isseeking to relocate its operational headquarters from ReadingUniversity building in the U.K to a new location in Europe to offerthe highest quality, value education and also minimize the realestate and operational costs. In order to do this the organizationrequires a space that is not a cost centre but a profi t centre andalso enables its employees to innovate, collaborate effectivelyand allows them to do a variety of activities.

The current location of UCEM fails to meet the needs of theorganization. A lack of employee interaction and interdepartmentalcollaboration are consequences of the functionally obsoletedesign features of the 1970’s building. One of the most relevantissues of the current headquarters is the distribution of thedepartments.The space occupied in the building does not allow for the different departments to actively interactand collaborate with each other. The new building represents an opportunity to rekindle collaborativeworking methods, enhance the organizational culture, to reduce carbon footprint and to act asustainability policy in respect of the environment.

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2 - Most Interdepartmental Relationship

Principal’s Offi ce

Commercial & BusinessOperation

Finance & resources

EducationStudent Services

Vice principal commercial &business

operation (marketing)

HR

R&D

Vice principal student experience(inquiry, student focus)

Business developmentdepartment

Vice principal fi nance andresources (fi nance building)

Strong relationLess strong relation Head of admission and student

registration

Technical Service(Media service IT services)

Program administratormanager

Interdepartmental collaboration will be critical to achieving UCEM’s priorities. The strategic placementof departments will act as a coordination device that boosts employee interaction, cooperation,and departmental integration within the company. UCEM operations are contained within fourmain departments: Education, Student Services, Finance, Commercial and Business operation,Finance . Above these departments are the Principal, Vice Principal and the Board of Trustees. Thefollowing diagram presents the direct relationships between departments. In the following section,our analysis draws upon this diagram to ascertain UCEM space requirements and the connectivityof departments. The diagram is based on an analysis of all the information the client has providedus with.

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3 - Innovative Workplace Design

3.1 - Smart Open Spaces

The client has requested a friendly and natural space and a productive environment for its employees.UCEM wants their staff members to feel comfortable and happy in their workplace and for morale andproductivity to be at an all time high. The new workplace design and layout is to push the boundariesof the conventional open space offi ce design and incorporate new and innovative aspects suchas smart spaces, club room, quiet and private rooms, activity spaces, cafe spaces and any otherspaces that promote interaction, conversation, collaboration and create an exciting and productiveenvironment.

The client has also called forfl exibility in these workplacesthat will allow employees tobe collaborative and workacross multiple businesslines. Consequently, wewill suggest the newbuilding fi rstly enhancesworking environmentsecondly promotes workingatmosphere.

An example from the Linkedin

working space in Toronto

An example from the Open Space in Siemens in Sidney

Aligning with UCEM’s desire, we suggest having somemore “open spaces” and “smart spaces” in the newbuilding. Moving from cellular desks to open spaceswill obviously decrease physical distance among allthe departments, so that employees will fi nd it easy tointeract with each other, and optimistically, come upwith more effi cient cooperation.

To be specifi c, we suggest having unconventional clubrooms or hub rooms, facilitated with comfort sofas, “fatboys”, unfi xed tables, moveable walls and multiple-usehigh technology aids (e.g. well-working WI-FI, internalvideo system and remote conference call). Activityspaces will be located throughout the fl oor space toaccommodate the remote tutors when they come in tothe offi ce.

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3.2 - Activity Spaces

In order to promote working atmosphere, we suggest having some activity-based rooms to supportteam building and increases employee morale. From this concern, multiple-use and dynamic roomsare highly recommended to UCEM. Feasibly, these rooms could be facilitated with foldable tables,stackable chairs, and high-tech aids, such as multiple-use video systems, good audio equipment,and even 3D facilities. These rooms can not only be used for exams, lectures, meetings, but alsofor gaming and parties.

In addition, we also recommend the new building is facilitated with gym and cafeteria, sinceconnecting leisure and work can result in a new perspective and better employee performance.

Top: there is the game spacing in Tel Aviv offi ce of AVG

Top: some ricreational area in the Rotterdam offi ce of

Yahoo. Even in this image we can see how, in our previous

study, we try to connect the employees with some sort of

green space.

Bottom: the brainstorming space could be equipped with

some couches to ease the employees. This in particular

are located in the Microsoft open space in Los Angeles.

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3.3 - Biophilia in the Workspace

We can provide ideas and proposals on new standards in this area and change the way employeesexperience their work space and working life. A term coined by the biologist Edward .O. Wilson,Biophilia relates to the human interaction with nature and how it improves our wellbeing. Wilsonstates that “people feel better when they are connected with nature”. Incorporating Biophilia andhuman access to nature into our built environment can greatly improve our health and happiness ata large scale.

Aspects of Biophilia in the offi ce workplace can include• Natural Light through fl oor to ceiling windows• Plants• Green spaces• Natural Materials such as wooden door handles and Fossil Stone walls

This example of space design

would be perfect for a hot desking

space for the remote tutors that

only come to the building on

occasions and can be used by

staff members if they want to

get away from their desks at any

time of the day.

An example of fl oor to ceiling external glazing that lets in

the natural light which improves employee satisfaction

An example of the use of the Biophilia in the

workplace in Ascend in Bangkok

All these materials can be touched and bring nature into the workplace creating a unique environmentwhere the spaces are calmer, less stressful and more productive that can increase employeesatisfaction and effi ciency.

As well as improving employee productivity, Biophilic design gives the company a very unique imageand identity, not just a visual image but a new identity as an innovative and forward thinking companythat showcase their desire to be more environmentally friendly. The indoor environment whereemployees work and spend most of their lives at plays a huge role in their ability to concentrate andperform.

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Case Study:Employee Productivity at Sacramento Municipal Utility District

In 2003 a study conducted by Heschong-Mahone Group on employee productivity at SacramentoMunicipal Utility District yielded some interesting performance results. The report concludedthat employees with a view or a connection with nature handled calls 6-7% faster than that ofemployees confi ded to cellular cubicles with no connection to nature. Furthermore a questionnaireconducted by Compaq found that single most important thing to their employees in terms ofworkspace was natural light (Romm, 2006). The investment in biophelic fi t out materials suchas green spaces, green walls, natural vegetation and plants, materials that have been sourcednaturally and fl oor to ceiling windows to bring as much natural light in as possible will improve theoutlook of employees, result in productivity savings and create a visually beautiful workspace.

UCEM have highlighted the importance of aquiring a building that gives them a new identity andbecome recognised for it globally. The ideal building would be of architectural prestige and iconicstature, If somebody was to look at the building, they should think of UCEM. The building as wellas creating an identity for the company must be accessible in terms of location and close to othernotable tenants and ammenities.

Building brand identity is seen as investment in truly valuable asset of a business as it must representthe business and refl ect the mission and core values of the company. RE3 provides its professionalknowledge to accompany the relocation in a way which contributes to establishing a strong positiveimage of UCEM. Subject to building regulations it would be benefi cial to place the UCEM logo onthe façade of the building in order to catch attention and raise awareness.

Sourcing a building in a prime location close to the transportation, the fl ow of potential targetcustomers will be signifi cant, so the brand will become widely recognized and visual brand identitywill be achieved.

Location plays a signifi cant role in shaping business identity. RE3 will source offi ce space in aprestigious location within a large cosmopolitan European city with the multicultural population,good business climate and large amount of educational institutions surrounding. Such a location willhelp to enhance the client’s public image as well as establish the strong positive reputation.

Promoting sustainability values and implementing sustainable solutions in the new offi cespace naturally makes UCEM an example of an environmentally friendly organization.Moreover, following the principles of biophilia in new offi ce design revealing stronginterconnectedness with nature has positive infl uence on public image of the business.

4 - Building a New Identity

4.1 - Brand Identity

4.2 - Building Location

4.3 - Sustainable Identity

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A huge priority for UCEM is increased collaboration of its employees however the client has alsohighlighted the desire to be seen as a friendly and welcoming place to go for other professionalsand colleagues. It is required that the new UCEM building provides physical space and a welcomingatmosphere for clients, guests, students and other fi rms that UCEM collaborate with. It is veryimportant for UCEM that a new identity is created with this move and the focus on becoming theworld’s leading provider of online vocational education must be the priority.

To achieve this goal, RE3 Solutions believe that it is vital to create and foster professionalrelationships with other educational organisations and real estate fi rms. This willow allow UCEM toshare knowledge with other companies and gain vital insights into real estate market conditions thatwill be of great benefi t to the students.

The building will provide the spaces to share this information easily and open doors to new relationshipsand encourage interaction between employees and external professionals. The collaborative spacesthat will be on offer in the building include• Cafes• Social Spaces• Activity Spaces• Green Spaces• Sports FacilitiesThe goal we will try to achieve in improving external collaboration is for companies and partnershipsto have a place to go and relax when they are in the city and know that they are always welcome andcomfortable in the UCEM building. This will result in a recognisable building, it will enhance the identityof UCEM as a company and will open more doors for business growth and future collaboration.

4.4 - Improved External Collaboration

4.5 - Sharing Knowledge

4.6 - Collaboration Spaces

That’s the gym area in the Tel Aviv headquarter for Google A little unformal and easy section could be used to let

the emplooyees resolve misunderstanding and have

conversations to improve collaboration.

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UCEM have made it very clear that the sustainability of building effi ciently and suffi ciently is amajor aspcet of their move to a european headquarters.UCEM is taking into consideration their rolein protecting the environment and recognized their shared responsability to build and operate anoffi ce that contributes to the well-being of every member of their community and the environment.Creating a sustainable workplace can strenghten their mission to be the world-leading provder ofonline education and acknowledge that the approach to the sustainibility gives them a new identity.RE3 Solutions has identifi ed two key areas of sustainability to focus on in the builing selectionprocess, Effi ciency and Suffi ciency.

This type of sustainability relates to the technical qualities that enhance a buildings sustainability.Here we focuse on aspects such as the building envelope quality and ensuring the reduction of thespace heating demand and achieve a high level of thermal comfort. Another relevant aspect is theadaptability of the technical systems that reduce energy consumption, increase the quality of thespace and signifi cantly reduce operating costs.

The second area of sustainability looks at the suffi ciency, sociocultural and functional quality. Itfocuesed on the employee satisfation and how they interact within their workplace and the attitutethey have towards their own productivity. UCEM have identifi ed that employee satisfaction is a keyissue for them in achieveing the goal of increased connectivity, collaboration and productivity. Fromprevious discussions with our client, 25% of the current employees go to work by bycicle or go to thegym in the lunch break, so is important to provide them with appropriate facilities to support them inphysical activities. Combining leisure and work results in an improved employee perspective.

5 - Sustainability

5.1 - Effi cient Sustainability

5.2 - Suffi cient Sustainability

These collaboartaion spaces will also act as video conferencing areas that can be private or opendepending on the nature of the call. Students can be interacted with via video conferencing andonline lectures and webinars will take place in these spaces. RE3 Solutions have come up with anopen cafe space that our external collegues can meet before the security borders at the conciergeto protect the sensative data of the company. Examples of collaboration areas and the cafe beforesecure area to share knowledge with external sources such as other organisations. This has workedin the Edge Building in Amsterdam.

That’s the area that can improve

external collaboration with the students

and the other real estate fi rm, as in the

Edge Building in Amsterdam.

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6 - Space Budget Assumptions

6.1 Staff categories and occupancy

RE3 performed a rough estimation of the planned offi ce space allocation based on currentorganizational structure provided by UCEM. However, it should be taken into consideration thatthe university is planning to further expand, hire new staff or change its policy regarding the multi-locational types of working; therefore probably the space budget confi guration will be edited in future.Based on the information provided by the client, RE3 report is subject to the following assumptions:

Two core categories of workers in terms of working location: local workers and remote workers.Local workers are attached to the desk constantly, and the occupancy rate differs from 20% to 100%according to working content. Basically, we set a higher occupancy rate for fi xed working contentemployees, such as Finance and recourses department staff, “online learning” under Educationdepartment and “technical service” under Commercial and Business operations department; We seta relatively low occupancy rate for those staff who always take a business trip and have meetings,such as marketing, business development and tutors.

Remote workers have 0% occupancy, however special common areas are equipped for such workerswhen they visit the offi ce to resolve business-related issues. We suggest 40 sqm hot desking space.

Open plan offi ce concept with green separation

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6.2 Public spaces

6.3 Expansion

6.4 Space Budget Spreadsheet

Meeting rooms are quite important for UCEM, as these activity-based rooms would support all kindsof activities and even team building. So we suggest about 200 sqm for meeting room. In addition,catering, gym and leisure rooms also play an important role in team morale so we suggest 130 sqmfor these. Besides, aligning with client’s demand, we will include studio, library and backup room inthe space budget. All together, we suggest UCEM about 570 sqm for public use.

As Principal of UCEM stated, the expansion of university will take place in next 3 years - by 2019the amount of students will increase from 3,700 to 5,000 students. In order to attract new students,it is logical to assume that Commercial and Business operations department will hire more peopleand will grow more than other existing departments. Moreover, as the consequence of the studentinfl ow growth, the signifi cant increase in academic staff is expected to occur. Therefore, accordingto the client representative, by 2019 the increase is expected to be more than 30% in the followingdepartments:1. Education2. Student services3. Commercial and Business operations.For every other department apart from these 3, the growth is assumed to be 10%. So the expansionneeds about 300 sqm in 2019.Using the required average space for every workplace (below 10 sqm/person), occupancy rate forevery staff category, we calculate the total space budget for a new offi ce amounting to 2300 sqm in2016 and 2600 in 2019.

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7 - Cost Effi ciencyUCEM states that they want to focus on profi t centres as oppossed to cost centers and recognisesthe importance of reducing costs in building operations and management. The old space that theclient occupied was very expensive to run and operated very ineffi cientlly. UCEM wnat to be moreproductive in less space and use space more effi ciently. The concept of LEAN offi ces identifi es thecost savings and effi ciency practices when comparing the relationship between desity of occupationand space and time utilization.

Our goal is for UCEM to experience cost effi ciency and savings. Creating sustainable workingenvironment via methods of conserving energy, including• Rainwater management system• Geothermal heating system• Solar panel system.

RE3 Solutions believe that open space layout and a focus on natural light can improve bothworking emotion and performance for employees. Planting tree inside-out of the offi ce can also helpemployees to feel connected to natural natural environment.

UCEM can save signifi cantly on occupational space by adapting a new approach to workplacedynamics. Sharing smart spaces and collaboration spaces together with the open plan element tothe offi ce sapce will allow the company to operate more effi ciently and reducing occupational costsby having more productive employees in less space.

7.1 - Cost saving Aspects

7.2 - Space Sharing

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8 - Conclusion & Recommendations

Having thoroughly analyzed the 5 key factors and performed the space budget calculations, RE3came to conclusion that UCEM demands the measurable transformation of the workspace, whichunlocks the value added and increases collaboration. Therefore we came up with the followingrecommendations:

• Relocation to a European city positively affects the public image and brand recognition. RE3would assume that in the best possible scenario the new offi ce will be located in the unique, easilyrecognizable and accessible building with the favorable neighboring surroundings, large globalenterprises and universities.

• The open plan offi ce layout will enhance the work environment and transform the conventionaloffi ce space, increase staff productivity, add value, reduce operational costs, accommodate futuregrowth and provide a more effi cient amount of space per employee for local and remote workers.

• The new space should accommodate and combine work space, creative space withtechnology stimulating increased collaboration and connectivity between employees, students andexternal relationships.

• The work environment should incorporate elements of innovative cutting-edge biophilicdesign, which will contribute to going beyond the conventional space perception, as well as stimulatethe employees and create a visually appealing space.

• By implementing the principles of LEAN and incorporating sustainability features, themaintenance costs can be optimized and result in lower operating expenses, thus making the offi ceprofi t centre not cost centre.

Overall, all the aforementioned suggestions are clearly refl ecting UCEM mission and furtherenhances the brand recognition and identity of UCEM. RE3 believes that accompanied relocationwill be a signifi cant step towards achieving the status of the world’s leading provider of 100% onlinevocational education.

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About Us

“Providers of change”

RE3 is a global real estate consultancy company. Our mission is helping our clients to unlock thevalue added of their business.

RE3 hire the best talents from all over the world to form the most professional, experienced andcompetent teams providing excellent service for our clients. Multinational teams members withvarious backgrounds possess comprehensive knowledge of local and global real estate marketsalong with outstanding skills in property related spheres.

RE3 specializes on performing the market analysis, feasibility studies and development proposalsin all segments of commercial real estate.

Robert Hefferon, MRICSHead of Development Consulting+353833080930robert.hefferon@re3.com

Giulia RinaudoConstruction Consultant+3381532218giulia.rinaudo@re3.com

Nataliya MotorinaMarketing Consultant+79153751151nataliya.motorina@re3.com

Alessandro Romano GhezziInterior Design Consultant+393493305246alessandroghezzi@re3.com

Haojie YeFinancial Consultant+358465446733haojie.ye@re3.com

William TablerEconomic Research Consultant+16464653381william.tabler@re3.com

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