Reconfiguring Workspaces: Adaptations of Corporate Real Estate Design in the Context of the COVID-19 Pandemic and Economic Crisis in Sri Lanka

Abstract

Corporate Real Estate (CRE) pertains to the real estate assets utilized by businesses for their corporate operations. It serves as a conducive environment for accommodating staff, manufacturing and selling goods, and delivering services to customers. The COVID-19 pandemic has precipitated substantial changes in the utilization of office spaces by organizations. Prolonged lockdown measures and the adoption of remote work practices have resulted in the underutilization of office spaces across many organizations. Additionally, the aftermath of the pandemic has severely impacted the Sri Lankan economy, leading to decreased economic activities due to high inflation, import restrictions, and high finance rates. Consequently, organizations are compelled to modify their CRE environments to maximize its utilization which creates mixed views on its impact on financial and non-financial performance of the organization. Against this backdrop, the study examines the impact of modifications and adaptations in corporate real estate design on financial and non-financial performance of organizations. Total of 12 hypotheses were tested, exploring the association between changing organization structure, minimizing space requirement, workplace redesign, downsizing, work from home arrangement, and the utilization of co-working spaces, on financial and non-financial performance of the commercial real estates. The study population comprises executive employees involved in CRE decision-making within commercial real estates. A total of 164 respondents participated in a questionnaire survey, which was distributed online using convenience sampling techniques. The analysis employs Partial Least Squares Structural Equation Modeling (PLS-SEM) and adopts reflective constructs. This approach provides a robust conceptual framework for assessing the overall impact of changes in corporate real estate design on organizational performance. The findings of the study confirmed that changing organization structure, downsizing, work from home arrangements, have a significant positive impact on financial performances of commercial real estate. Moreover, minimizing space requirement, downsizing, work from home arrangements exhibit a positive significant relationship with the non-financial performances. The study's results provide insights into the relationship between decision-making on Corporate Real Estate (CRE) and its influence on the overall financial and non-financial performance of the commercial real estate. These findings assist top management in understanding the alignment required between future CRE strategic decisions and corporate performance.