8 often overlooked risks of real estate changes

Morgan Stanley Smith Barney probably didn’t expect that multiple office moves over a period of years would expose the firm to regulatory fines and negative publicity, but that’s exactly what happened when it was discovered that the moving company had sold off thousands of IT assets containing personally identifiable information. The financial services giant paid $35 million in fines to the SEC, no doubt shedding light on the fact that real estate changes can be inherently risky.

This lesson shouldn’t be lost on companies planning real estate changes today. In the wake of pandemic-induced work habit changes, economic uncertainty, and rising real estate prices, organizations are making changes to their office space on an unprecedented scale. Half of companies with more than 50,000 employees plan to reduce office space, most by between 10% and 20%, according to a global survey by the real estate firm Knight Frank. A recent CBRE survey found that a majority of US companies plan to downsize their office space in the next three years.

Changes to the workplace are often considered to be the domain of corporate real estate professionals, facility managers, and moving companies. But stakeholders throughout the organization like records and information management (RIM) and IT professionals, department heads, and others should be involved every step of the way. There are multiple layers of risk when making changes to the workplace, ranging from the physical loss of assets to the compromise of sensitive information. Understanding and planning to mitigate these risks is a crucial component of any real estate change and should involve stakeholders throughout the organization.

Here are eight areas of risk that are easily overlooked during real estate changes.

1. Inherent risks of loss, theft, and accident

The physical process of moving exposes businesses to risks such as loss, theft, and damage to property. Even reputable contractors and movers aren’t exempt from the risk of misplacing or mishandling valuable assets, equipment, and furniture. Hiring a trusted and experienced partner with an established chain of custody and vetted and trained employees is an important consideration when evaluating potential service providers.

2. Compromise of paper records

We hear a lot about breaches of IT systems, but paper records can also contain confidential information that can easily be compromised if not handled correctly. With external service providers and other non-employees passing through the workplace during a real estate change, it’s essential to treat every document as sensitive. Many companies that have good cybersecurity practices in place don’t pay as much attention to physical records. In fact, a Ponemon Institute survey found that 71% of business professionals said they have seen a paper document in a public space that contained sensitive or confidential information. Whether records will be moved to the new space, moved to an offsite storage facility, or destroyed, it is important to have a plan and partner to ensure it’s done in a secure manner.

Related: Moving or downsizing your office space? Here's how to get information under control.

3. Loss or compromise of IT assets

The risk of IT assets being lost, stolen, or compromised during a real estate change is significant. Most offices contain storage closets or file cabinets full of data-bearing IT assets, so it’s critical to coordinate plans for these with the IT team. Smartphones, USB drives, and laptops can easily be misplaced, stolen, or inadvertently discarded during project execution, creating the risk of a data breach. Asset tracking, secure transportation, an established chain of custody, and a plan to securely dispose of or recycle these assets are not only necessary to ensure data security but can also support corporate sustainability goals.

4. Insufficient resources to execute projects

When sensitive assets are involved, human oversight is necessary. But ensuring that a project is constantly under scrutiny can be challenging due to turnover, staff shortages, and lack of communication. Without sufficient management of the project, there is a risk of errors, omissions, and security breaches. Maintaining proper oversight also helps avoid misunderstandings and assumptions that can lead to assets being misplaced or lost.

5. Unknown items in the existing space

Any office space occupied for a few years tends to accumulate unknown assets. File folders, computers, and boxes of documents whose purpose has been forgotten present a security threat. Companies that conduct an inventory discovery process often find they have up to 30% more assets than they previously realized. A real estate change is an ideal time to purge unnecessary and outdated assets. A company specializing in asset management and secure transportation and disposal can prevent sensitive items from ending up in the wrong hands.

6. Inadequate stakeholder consultation and collaboration

In 2022, the average employee experienced 10 enterprise changes such as restructuring, cultural transformations, and legacy technology replacements. This number is up from just two changes in 2016. Change is stressful, and failure to involve those affected in the process can create disillusionment and cynicism. Business stakeholders know better than anyone where the risks are within their organizations and how their people work together. Involving stakeholders from across the organization early in project planning results in better outcomes and lower risks for all involved

7. Wasted square footage due to poor asset and space understanding

Not fully understanding assets or the configuration of new space can lead to inefficient use of real estate, which is a costly resource. The average 100-person company wastes $300,000 a year on unused or underused office space. Different departments have different expectations of their people and work styles. Financial professionals may prize private offices, while marketers favor collaborative workspaces. A real estate change is an opportunity to optimize space for the way work is done, eliminating obsolete assets and equipment, creating an organized workplace environment, and improving overall space utilization.

8. Misplaced security responsibility

Most companies have dedicated security personnel, but that doesn’t mean it’s not everyone’s responsibility. Assuming that security is someone else’s problem is a significant risk. Every member of the organization needs to understand that they are responsible for the basics of good security hygiene, such as securing sensitive documents and IT assets and following secure disposal processes. Human error remains the number one security threat, and no central organization can watch over everyone.

Related: What does a risk-aware organization look like? Start by treating risk as a shared responsibility.

How should you manage risk during a real estate change?

In light of these risks, companies should take a multi-faceted approach to managing their office transition. Here are a few ways to introduce risk awareness to the process:

• Develop a robust asset management plan that includes tagging, tracking, and auditing all items throughout the project.
• Ensure that all paper records and IT assets are handled in compliance with data protection laws, industry requirements, and company policies.
• Allocate enough personnel to supervise the project and handle potential contingencies.
• Involve stakeholders across the organization in the planning process to align the project with organizational needs and employee preferences.
• Establish a culture of security awareness with clear responsibilities and accountability standards.

Addressing these often-overlooked areas can significantly reduce the potential for costly mistakes and ensure a smoother transition to a new and better workplace.

Don’t open your organization to risk during your next real estate change.

Iron Mountain Clean Start provides a complimentary on-site assessment and recommendation report to support your project planning and resources to support project execution.

Moving or downsizing your office space? Here's how to get information under control.