State government leaders will need to rethink their real estate strategies to fit tomorrow’s workforce

NASCA and JLL provide a road map for states to future-fit their real estate portfolios

As U.S. state governments face growing challenges attracting talent and reducing costs, most states are shifting to adopt some form of hybrid work as a permanent component of their workforce strategy, according to new research from the National Association of State Chief Administrators (NASCA) in collaboration with global real estate and professional services firm JLL.

Based on interviews of 23 chief administrators for this report, most states interviewed are rethinking their real estate portfolio strategies because of Covid-19; however most states are in the initial stages of rethinking their real estate portfolio strategies.

Given the magnitude and complexity of these changes, the research identified five success factors and 10 steps state leaders can take to transform their workplace into a fluid model where employees are empowered to work from anywhere, be it the home, office, or other locations.

“Portfolio optimization is not just about reducing space or assessing space based on costs,” said Herman Bulls, vice chairman and founder of JLL’s Public Institutions industry practice. “State leaders will need to examine how the built environment adds taxpayer value and invest in the footprint that enhances productivity and supports future workforce needs. By understanding the work that is performed and workforce expectations, a state can develop workplace strategies that empower people to do their best work, while respecting diversity and work-life balance.”

State leaders must take an intentional approach to portfolio management. The following five factors were cited by the states as the most critical to a successful implementation of workplace and portfolio changes.

• Centralized real estate models are more likely to have coordinated policies across state government. To implement change with decentralized models, CAOs have created pilots in their own agencies to demonstrate the effectiveness of hybrid work and flexible work environments.
• All states interviewed felt executive support from the governor’s office is instrumental to implement broad-based changes to workplace and portfolio strategy.
• Nearly all states considering implementing a hybrid work model are also considering investing in occupancy planning tools.
• States with explicit sustainability goals are more likely to implement hybrid work as a strategy to mitigate greenhouse gas emissions.
• Talent recruitment in government can be challenged by competition from the private sector, but hybrid work arrangements can be used to attract and retain top talent from across the state.

“As states’ workforce strategies, technology solutions and real estate portfolios have become more interdependent than ever before, state chief administrative officers (CAOs) are uniquely positioned to play a significant role in transforming the way state governments provide services,” said Jason Jackson, director of the Department of Administrative Services and Chief HR Officer for the State of Nebraska and Chair of NASCA’s Research Committee, the state-led governing body that guided the national research.

“Real estate optimization requires balancing workforce, real estate, technology, budget, and leadership. While there is not one-size-fits-all solutions for all our states, this research provides a road map to give state governments and public organizations a range of effective and efficient options that balance unique factors in their respective states.”

The report includes examples from a number of states with ambitious initiatives to rethink government operations including Colorado, Oregon, Michigan, Massachusetts, Tennessee, Nebraska, and Utah.

About the report

To provide national trends and relevant and actionable insights for NASCA state members, JLL and NASCA interviewed 23 state chief administrators and/ or their real estate leadership. The interview questions drew from subject-matter experts on real estate and facilities management. NASCA convened the Research Committee, a working group of members who are chief administrative officers (CAOs) to vet the questions, analysis, and recommendations.

The Future-fitting your real estate portfolio report is available to download from the JLL website.