The Challenges of Relocating a Corporate HQ

Chicago, IL | February 04, 2019

The Challenges of Relocating a Corporate HQ - Andrew Davidson

What are the main differences between relocating a company’s HQ versus other office types?

Relocating a company’s HQ is both a more complex process than your typical relocation and a move that is critically important to clients’ business functions. The process is complicated by HQs usually requiring larger space size, more time, and an emphasis on workplace strategies and talent attraction that you don’t see as much of in other types of transactions. Additionally, there is greater C-suite participation and a heightened focus on GAAP-related issues brought into play because of the large investment companies must make when moving their main office. HQs also house a much more diverse workforce than a company’s other offices, both logistically and demographically. Because of these differences, special considerations must be taken when representing a client who’s relocating their HQ.

What are the special considerations when relocating a company’s HQ?

The Challenges of Relocating a Corporate HQ - Andrew DavidsonGetting everyone from leadership to vendors on the same page before the relocation process even starts is always important, especially when working on a project of this magnitude. First, you should make sure there is consensus amongst the C-suite and stakeholders on items regarding timing, budget, workplace strategies and corporate culture, and talent retention and recruitment efforts as they relate to the HQ. Getting consensus from leadership can be difficult when dealing with a variety of strong opinions and hectic schedules, but creating a comprehensive, step-by-step plan outlining strategy and assigned roles is the easiest way to get everyone onboard and ensure a seamless process.

Speaking of roles, having a good team in place with people from both inside and outside the company is critical to a successful project. This includes hiring the right architects, contractors, engineers, and other vendors that you can trust to efficiently tackle issues pertaining to the construction process and adhere to budget, timeframe, and any additional specifications set forth.

Once you have a solid plan and team in place, your next consideration should be timing. If you are working with a company that requires a build to suit you may very well need to start the process two to five years prior to occupancy to ensure adequate time for zoning, incentives negotiations and the actual construction of the building. These same issues can come into play on non-HQ facilities, but in general, they tend to play a bigger role in HQ relocations.

Exactly how long a HQ relocation will take is hard to predict. For example, our team along with MBRE Project Services worked with Astellas, a global pharmaceutical company and long-time client, on a 440,000 SF build to suit that took over four years from the time our team was hired to the time of occupancy. For First Midwest Bank’s recent relocation for an 87,000 SF space, it was a much more traditional timeline of approximately 18 months.

Strong brand identity and prominent signage are also particularly important factors to consider in terms of site selection and space design, as HQs should uphold a company’s brand and serve as a model for divisional offices.

What are the potential challenges of relocating a company’s HQ?

As mentioned before, HQs usually have a more diverse workforce than a company’s divisional offices. For instance, a company’s call center consists of employees who all have virtually the same job function and compensation, which is quite a different landscape than your average HQ where you have a variety of titles and departments, such as the C-suite, accounting, HR, legal, and so on.

A wider variety of job functions means a larger spread of ages, interests, commute patterns, and compensation structures. This complicates the process from a workplace strategies standpoint because you need to design a space and find a location that satisfies a greater dispersion of people. Meeting everyone’s needs encompasses everything from ensuring convenient access to public transportation and airports, to workspace design that is both efficient and reinforces corporate culture – a tall order when you are dealing with so many different types of employees. Forward thinking companies also want to consider how their HQ not only attracts current labor talent, but future talent that may have different expectations than their current employee base.

Some of the biggest potential challenges of HQ relocations however are outside of our control, such as a change in the economy or company acquisitions or divestitures that come about, which can significantly impact the direction of the process. In tight markets, which are currently prevalent across the country, large users may only have a few viable options for their HQ. If the preferred option unexpectedly comes off the market, your client may have to compromise on a completely new build to suit, or even split operations. As a tenant rep broker, it’s up to us to plan for the unexpected, educate our clients, and make sure there are backup options. It’s also important to set realistic expectations for your client from the outset of the project.

What was First Midwest Bank’s goal for their new HQ?

First Midwest Bank recently took 87,000 SF at Triangle Plaza in O’Hare in a HQ relocation from Itasca, Illinois that also included consolidation of numerous, recently acquired facilities located throughout the suburbs.

The Challenges of Relocating a Corporate HQ - Andrew DavidsonWhat’s important to a company varies, but for First Midwest Bank, it was about bringing people together that had worked in separate offices, brand awareness, and designing a space that retained and attracted talent. First Midwest Bank had grown rapidly via numerous acquisitions, and although staying in separate operations was considered, the primary goal was to unify their culture, operate more efficiently, and find a location that was convenient for existing employees as well as more accessible to a younger workforce that primarily lives in the city.

Promoting interaction and bringing people together that had previously worked in separate operations was one of the main reasons leadership insisted on building a three-story stairway that ran from the C-suite to the cafeteria. The stairway represented more than just a means of transportation from one floor to the next; it represented the coming together of a diverse set of employees.

What strategy did your team use to successfully meet First Midwest Bank’s relocation goal?

At the beginning, there were a lot of scenarios and locations to consider for First Midwest Bank’s new HQ including consolidation, staying in separate operations, or moving downtown. With such a wide variety of possibilities, part of our exercise was putting together models that provided First Midwest Bank with enough data to effectively narrow down their options. Our Workplace Strategies and Project Services team also spent a lot of time upfront, working in tandem with First Midwest Bank personnel and their architect on what things worked in their current space and what didn’t, based on observational studies and interviews. We then showed First Midwest Bank the cost implications of various design decisions so as to accurately set expectations on what could be achieved with their final program at different locations in the marketplace.

HOW WAS THE DEMOGRAPHIC AND TIME TRAVEL ANALYSIS COMPLETED?

The first thing our team did was gather employee data that included their current home and work addresses (since employees were coming from multiple offices) and commute times. We used scenario modeling to measure what their commutes would be to the three locations that made the final cut and compared that to their current travel times. Our options were either to stay put and bring the employees to Itasca, move to Oak Brook, or relocate to the O’Hare corridor in Chicago’s Northwest Side.

After gathering the travel time data, our team looked at how these commutes differed during morning and afternoon rush hours and then broke our results down even further according to title and department. We then found what percentage of employees fell within a certain radius based on whether they were below or above a 30-minute commute. With this information, we helped First Midwest Bank determine that Chicago’s Northwest Side was the most viable compromise for employees commuting from both the suburbs and downtown.

WHAT ELSE WENT INTO THE STRATEGIC PLANNING AND DESIGN OF THE SPACE?

The Challenges of Relocating a Corporate HQ - Andrew DavidsonA lot of time was spent observing how the client actually worked in their current space and surveying employees. Our team, along with the architect, went onsite to see and document how staff used the space and potential pain points for efficiency, collaboration, and overall productivity. What we noted based off those observations and talks with leadership was that First Midwest Bank’s existing premises, although spectacular when it was built, didn’t support their current number of employees - especially younger employees, who require greater mobility, technology and more touchdown areas for spontaneous meetings and interaction. We were also able to prove from the space program and design exercises that despite adding significantly more amenity space to support this mobility, First Midwest Bank, could improve its SF/employee efficiency by over 30% by adopting more uniform standards and moving to a more open, less private office-oriented environment.

What were the biggest obstacles your team faced during this process?

First Midwest Bank’s desire for prominent signage certainly limited the options. Their rapid growth through ongoing acquisitions, and initial consideration of several scenarios, posed additional challenges when trying to finalize their program. However, these issues aren’t unusual. When dealing with project of this magnitude, perhaps the biggest challenge, and one of our primary roles, is assembling the right team, both inside and out, and making sure everyone is pulling in the same direction.

 

Learn more about MBRE’s Andrew Davidson.

Read about MBRE's corporate services, tenant representation and construction project management work with First Midwest Bank and other companies in our case studies.

Interior Images: © Michael Townsend | Design by Gensler