Incendium Consulting’s Nick LiVigne On the Office as a Choice

It’s a much different world these days. A boss needs to provide amenities to keep employees on the ranch. He or she needs to provide good food for lunch and good coffee for anytime. They need to provide a place to secure their workers’ bikes, and maybe a place for them to shower. They have to be in a building that provides space for them to work out, or maybe do yoga. There have to be plants galore, and maybe a terrace or two. (The library probably is not needed since just about any document or book can be made available with the click of a mouse.)

Fortunately for such corporate executives, there are firms like London-based Incendium Consulting ready to help them sort out the many complications surrounding workplaces these days. Incendium is a division of Instant Group, also London-based, which describes itself as a marketplace for flexible workplace solutions.In the new, post-COVID world of office, Incendium exists to help companies — and its clientele is largely Fortune 1000 types — sort out what they need from their real estate.

Incendium and instant group just announced that it acquired corporate real estate consultancy Capstan Advisors, too, to help facilitate growth of its U.S. footprint from its domestic headquarters in Midtown. 

Nick LiVigne, a director with Incendium, hopped on the phone in mid-August to explain his company and its clients’ needs  in more detail. 

His remarks have been edited for length and clarity.

Commercial Observer: First of all, what is Incendium and what do you do for it?

Incendium is a real estate consulting advisory firm. It was founded in 2014 by a group of folks who all had long careers in consulting, whether that was the likes of PwC or the Big Four, or real estate advisory firms like JLL, CBRE, etc. And they founded the firm kind of on the idea that there was a better way to do this — to do it from an independent perspective to provide strategic advisory around three practice areas: operating model and procurement, sustainability, and strategy and change.

The target operating model really focuses on how a corporate real estate department should operate within the context of the business. And then there is the relationship between the business and its outsourcing partners because corporate real estate is often executed through an outsourced supply chain and service providers. So what is the right relationship between those functions?

The sustainability function is focused on net-zero strategy and advisory where we help corporate real estate departments operationalize within their portfolio, from energy efficiency to renewable energy procurement.

Then the strategy and change bucket is really the largest bucket that we have in terms of the number of services within it. This ranges from workplace strategy and workplace planning, to portfolio strategy and flexible office strategy. Underpinning a lot of that is a PMO [project management office] function that can execute alongside a client.

I was hired just over a year ago to be the first employee here in the Americas, to build the practice in America, and throughout North and South America. My role is to essentially take what the team has built in the U.K. and EMEA [Europe, the Middle East and Africa] and build it here in the U.S. across those three practice lines.

What did they see going on in those areas that incentivized them to start the company, and then bring it to America?

I think it was just where they all were, working with each other, in the U.K. to start. But the interesting point here is that they saw a new path to be taken as an independent consultant, removed from the larger platform of occupier services and real estate services that came along with the larger groups that they worked for.

This was an opportunity to provide independent consulting in these areas for strategic advisory across those three buckets. Where Incendium does its best work is when CRE leaders are trying to address a transformational challenge within a business — a corporate separation, a massive growth mandate, acquisitions, etc.           

Could you give me a case study showing how this works in practice? While what you describe is good, it’s kind of theoretical.

Sure. Let’s start from the big picture, and then move to a smaller example. A large multinational corporation that was going through a separation. As part of that, Incendium was brought in to help program manage the separation of the physical portfolio and the function of corporate real estate. Within that, there were certain cost savings mandates that were part of the program to manage. So the Incendium team really focused on the elements of the program that were going to be around capability development.

They were going through this corporate split, and at the same time, the corporate split was announced just weeks before the pandemic hit. So they were challenged with how do we separate this organization, both physically and functionally, and account for a new reality — hybrid work, agile work? So the team was focused on understanding current capabilities within this organization within the function, and developing the required tools that would help them organize the portfolio in separation; then, also, injecting the idea of agility and flexibility into the portfolio.

Another example is an insurance company: They had a direct relationship between the performance metrics of an agent leader and the amount of space that they were allotted. So there was a neat kind of correlation between how much their team grew versus how much space they would take on. They were projecting a significant growth of agent headcount, and essentially had to make sure that their space would grow in lockstep. So they needed to break the model between performance metrics at the agent level and the allocation or entitlement of space at the real estate level. We helped them rethink that completely. And this also was in the context of coming out of the pandemic.

Another example is we helped a kind of mid-market company out of Chicago that had taken a remote-first approach to their workforce. There were a lot of benefits to that — they were able to hire in markets where they didn’t have offices — but they recognized that they still needed a headquarters in the Chicago area; not only just for regulatory reasons, but to engage their local staff. That was the largest critical mass of employees.

They had a small headquarters location of around 36,000 square feet in Chicago with a lease update coming up in January of next year. We helped them rethink what their headquarters should be: What is the purpose of space, the value of space in the context of their culture and how their team works together?

Now they were remote first, but they still desired that connectivity. We took them through an exercise that helped define their strategic pillars and the values of what the workplace should be for them. And what they will move into in January of next year is a space that went from 36,000 square feet to 7,000 square feet and that will be much more focused on collaboration and teamwork.

That’s pretty remarkable. If a company is dissatisfied with 36,000 square feet, you would think they would go for something in the six figures. But you’re telling me they actually went down to a four-figure headquarters. This is probably the only time in history where a growing company would actually shrink its headquarters.

Yeah, but that’s consistent with what we’re seeing in the market. Because, especially at the enterprise level, large multinational organizations have been looking to shed square footage for a long time. I think the worst-kept secret in workplace strategy is that on any given day pre-pandemic, the corporate workplace environment was around 60 percent utilized maximum. That was due to a number of different mobility factors and how people operated.

What the pandemic did was it tore the Band-Aid off and revealed that condition to everyone. So the most progressive organizations were already starting to solve for the challenge of utilization and underutilized space, through activity-based workspace and other kinds of strategies around where they place their real estate.

If I’m a landlord, those are some scary words. Because if companies are finding out that they are only utilizing about 60 percent of the space they’re actually renting, then my portfolio is going to be worth less. So talk to me a little bit about the landlord’s perspective.

I’m not in a good position to comment on the financials of landlords, but their customer is a corporate occupier, especially classic facilities that are looking for credit-worthy tenants.

So, I think the landlord needs to recognize that the landscape has changed. Their typical client is now likely looking for less space because they are starting to implement many of the impacts of hybrid work and how that translates into less space.

There’s also a recognition that, because choice is now at the center of the decision for the individual employee, the office needs to provide a better experience in order to overcome the initial friction of the commute.

We’ve seen the flight to quality — quality spaces, highly amenitized. Buildings that are in locations that have a lot of buzz, and social capital around it are doing okay. So landlords need to understand the reality of how their customers are making decisions moving forward, and it’s likely to translate into less space at the individual company level. 

But that doesn’t mean that they aren’t going to be able to fill their buildings or meet their financial targets. It’s more so understanding the amount of space their clients are looking for, what the experience needs to be around it, and with the understanding that the office is now much more of a choice.