Development Magazine Summer 2012

Development - Ownership

Workplace Essentials

At the center of the workspace “neighborhoods,” a large, multi-functional and colorful “Town Square” anchors the office like an urban center, serving as a café and meeting room. Photo credit: Warren Patterson Photography.

“It’s just so exciting to see people happy to come to work. It’s the most rewarding thing.” That’s how Jay Poswolsky, director, Workplace Innovation, Philips North America, Andover, Massachusetts, summed up the benefit of changing Philips’ headquarters office design. The former traditional cubicle-heavy layout was changed to a largely open, collaborative, green-conscious space that Marc Margulies, principal of Margulies Perruzzi Architects (MPA) describes as “high-efficiency, dense, active, invigorating and inspiring.”

Workplace trends – call them alternative workplace strategies, high-performance workplaces, “me to we” spaces – are moving quickly and inexorably in this direction:

  • More open spaces for collaboration (“Collaboration Drives Innovation” is the mantra); 
  • Informal meeting areas for small teams;
  • Lower-height walls for workstations;
  • Flexibility to accommodate a mobile workforce;
  • Small enclosed spaces for privacy when it’s needed; and
  • A big emphasis on sustainability.

“Smaller and more efficient” is the reigning principle, so there’s less private office space, or space allocated according to a rigid hierarchy and generally, less square footage per employee than ever. CoreNet Global, the corporate real estate association, recently reported that many companies expect that the average allocation of office space per person in North America will fall to 100 square feet within the next five years.

Philips Headquarters office space

Different colors defining each “neighborhood” are visible in the ceiling lighting and workspace areas while providing another element of distinction between work and collaborative space. Photo credit: Warren Patterson Photography.

These trends are not new. More than 10 years ago, in fact, the Commercial Investment Real Estate Institute asked Steelcase, a manufacturer of office equipment, to predict office design and configuration trends for the year 2000 and beyond and many of the manufacturer’s predictions were the same then as now. The focus was on collaboration as the new work model and activity-based planning as key to space design, the demise of private offices, shared private enclaves and “touchdown” spaces for the workforce.

A number of factors have made these changes more compelling now: economic conditions and competitive pressures make it imperative to reduce costs, increase productivity and speed-to-market. Companies have become more cognizant, too, of the need to use their real estate as a three-dimensional tool to reinforce and enhance their brands as well as to work with HR and IT departments in advancing corporate cultural changes.

Despite nagging unemployment statistics, companies also face pressure to attract and retain workers and provide a suitable workplace that enhances the talents of a workforce more populated with Millennials whose work styles differ significantly from their older counterparts. Technology, of course plays a huge role as well. Laptops and mobile phones not only take up less space, but have also untied workers from their desks. WebEx conferencing, Skyping and other forms of virtual meeting tools enable teams to work together from any location.

Digital Natives Work Differently

Dr. Marie Puybaraud, director of Global Workplace Innovation at Johnson Controls, observed that “it takes a while to shift an environment to 70 percent collaborative space,” but expects that this will happen over the next 10 years. In the last five years, she continued, companies have been starting to move from a ratio of one desk per person to desk-sharing for up to 10 people.

“This was science fiction five years ago,” she said. “Today it’s reality.”

Life science companies are in the forefront in creating collaborative hubs in their facilities because “they must be innovative or they won’t survive,” said Puybaraud. Banks, too are embracing the new model. Even “traditionalist” companies are moving in this direction, she noted.

Philips Headquarters Meeting Space

The flexibility of each work setting allows employees to migrate from desk to desk depending on workflow, projects and accessibility to other team members in the office. Photo credit: Warren Patterson Photography.

Johnson Controls has done an in-depth study of what it calls “digital natives” -- defined as the generation born after the general implementation of digital technology, who never experienced organizing, planning or interacting without mobile phones, laptops and the Internet. Dr. Puybaraud said what was most surprising about doing the study was learning how much technology has become an integral part of “digital natives’” lives. They simply couldn’t live without it, she said. Most are online two to four hours a day, although one-quarter are online four to six hours a day and close to 80 percent reported high use of technology in the workplace.

John Hampton, senior vice president, Corporate Solutions, Jones Lang LaSalle (JLL), said that Millennials and Gen Xers work in a highly collaborative way and are less concerned about having levels of privacy. “That is extremely powerful for companies to leverage,” he said, adding that “consultancies are very much in the forefront, with a mobile, young workforce.” And what about their older colleagues?

“It’s a cultural shift,” he said. “People who complain are those with a sense of entitlement and tenure.” That is just one reason why he counsels involvement by corporate HR. “It’s not just real estate,” he said. “What’s most effective is to educate management as to how to leverage the new plan: to treat it as a program, not a project. This transition is a transformation that has to be implemented and sustained. It’s going to evolve over time.”

In a 2011 CoreNet Global and Steelcase study, 86 percent of companies now offer alternative work strategies such as home offices, hoteling (shared workspaces that can be reserved) and mobile work (consistently using multiple places to work virtually). This number is up from 50 percent in 2009. An additional 16 percent of respondents said they planned to implement an alternative work strategy. But despite the trend toward increasing mobility, nearly half of all organizations reported that they have 10 percent or fewer of their employees regularly working remotely. Why?

“Last year was the year digital nomads came home to roost,” said Richard Kadzis, vice president, Strategic Communications, CoreNet Global, and editor of the association’s Leader magazine. Seventy-two percent of respondents said the office is the best place to interact and collaborate with colleagues, while 40 percent said the office provides access to much needed tools and technology.

So the office is not disappearing; the basic human need to feel a sense of belonging and connection to an organization’s culture is still strong. But according to Hampton, corporations that had been using between 40 and 50 percent of their office space are now up to 75 to 80 percent. “Caution is the buzzword,” he said. “They’re committing to new space only as needed and where needed, and only after a lot of due diligence.”

Rethinking New Development

If corporate space users are looking for less and less space per employee, and relying more on flexible and mobile work styles, does that mean that even when job growth and demand for space pick up, developers should build smaller buildings? Robert Ward, executive vice president and regional manager, Skanska USA Commercial Development, and a member of NAIOP’s Trends in Real Estate Development Forum, remarked, “You build the maximum density available to you.” Instead of building a 350,000-square-foot building with massive floor plates, a more desirable approach would be two buildings on a site, so there is open space in the center that is more creative and tenant-focused.

Philips Headquarters workspace

With no private offices, Philips Healthcare’s open workspace features individual work-settings in a “free addressing” concept. To provide privacy when necessary, small meeting rooms, enclosed work settings and file/copy areas divide each of the seven “neighborhoods.” Photo credit: Warren Patterson Photography.

Skanska’s 733 10th Street in Washington, D.C., which it started on spec in early 2010, shows that an owner can serve tenants’ needs for lower costs and reduced space and still do very, very well. Skanska acquired the property in 2009 and undertook a significant structural redesign of the eight-story, 165,000-square-foot building. It worked with two different interior architectural firms to devise more efficient tenant spaces. The building was 90 percent leased when it opened in 2011. One tenant, paying more per square foot for space than it had before (though “its overall real estate spend is less,” said Ward), now accommodates its employees in 72,000 square feet here, rather than in 78,000 square feet in other, less efficient space.

One element that Skanska did not foresee as important as it turned out to be was the ability to knock out panels on every floor, so tenants could install internal stairs. “Every tenant is using it,” he said. One tenant has two connecting floors, and the space created an atrium, with an attractive and open common kitchen and lunchroom.

The building is expected to be LEED-Gold certified, which Ward said is “a minimum threshold.” Tenants are starting to understand what this means. Even if they don’t understand the technical aspects of certification, tenants do understand owner efforts to offer better air quality and low VOCs, for example. “Intuitively there’s an impression of quality and a sense that this is a healthier building. That resonates with tenants,” commented Ward.

The Challenge of Existing Buildings

Marc Margulies of MPA noted that “we’re talking with every client about high performance workspace.” In his view, there are four main elements to high performance workspace:

  • The work space itself, ranging from cubicles to a benching system;
  • Collaborative areas;
  • Amenities; and
  • Branding.

Clearly, workplace trends have important implications for those who build, own or manage office properties. How can existing buildings be redeveloped to cater to these new styles of work? Margulies explained that for one corporate client, a two-story building with a 110,000-square-foot floor plate was redone by cutting out its middle and designing a lushly landscaped atrium that offers open meeting space and a dozen conference spaces. This corporate headquarters also has a cafeteria, fitness center and sundries shop. For a non-corporate headquarters building, he estimated that an owner would need a minimum of 250,000 square feet to make such a dramatic change work, though larger would be better to develop shared amenities with economies of scale.

Jack Weber, principal and workplace strategist at the architectural and design firm Gresham Smith & Partners (GS&P), sees the issues from both the corporate and owner/developer. “Owners need to understand where their clients are coming from,” he remarked. To do this, GS&P uses a number of procedures, processes and tools to understand a company’s culture and business — where it’s headed and how their people work — so the workplace can best support it. Those tools might include visioning, cultural assessment, observation techniques and technology to see how space is actually being used. It also engages employees and leadership in the process, to make a stronger case for design that reflects what a particular company is.

“As we plan more open environments, we are pulling open work stations away from the window wall, so there’s more natural light and views,” he went on. An office layout should be able to create circulation around the perimeter. “You don’t want dead-end corridors or cul-de-sacs.” The perimeters are where hot and cold zones tend to be, which can prompt the most tenant complaints about heat and cold.

733 10th Street, Washington, D.C.

The ability to knock out panels on every floor so tenants could install internal stairs was an important part of Skanska USA’s significant structural redesign of 733 10th Street in Washington, D.C.

Three-foot columns along the perimeter are another no-no, he pointed out. They lead to inefficient, underused space that impedes circulation. Weber advised developers to build smarter spec space, focusing on energy efficiency and sustainability.

Open environments require more attention paid to acoustics. Weber noted that for one client in a Nashville building, the firm sent back the owner’s pre-purchased ceiling tile because it didn’t have the acoustic absorption level the tenant needed. Moral of the story: owners should refrain from pre-purchasing items that don’t address tenants’ needs.

Weber advised that owners should think about amenities, such as fitness, lobby space, cafeterias or cafes and shops, in an integrated way. “Don’t put them in a corner that’s left over in a building,” he said. “Think creatively about providing meeting space, or a WiFi zone. You want to create that ‘second’ or ‘third’ place for employees to go, even for an hour, where they don’t have to leave the building.”

Looking to the Future

The future in workplace design may have already arrived. Though there is still much tweaking to be done with such issues as managing the balance between group work and privacy and understanding how to manage people who work remotely or only sometimes work in an office, the pace of change is unrelenting. To get a handle on the future, CoreNet Global embarked on a research initiative, Corporate Real Estate 2020, bringing together some 200 executives to forecast trends in eight domains:

  • Enterprise leadership;
  • Portfolio optimization and asset management;
  • Technology tools;
  • Location strategy and the role of place;
  • Service delivery and outsourcing;
  • Workplace;
  • Partnering with key support functions; and 
  • Sustainability.

A few predictions the executives have already made offer food for thought: 

  • “Bring your own technology” (BYOT) will impact the size and design of the corporate office.
  • Cloud computing is about to be replaced by always-networked personal devices with near-infinite memory.
  • A single device will integrate voice, data, graphic and video.
  • Technology security will become biometric.
  • Artificial intelligence will be used to recognize and adjust the environment to individual preferences.
  • There will be wearable technology; nanotechnology will enable tech to be implanted on clothing or even skin.
  • Facility management will be virtualized.

Designing "Neighborhoods" to Encourage Collaboration, Flexibility

For the 32,000-square-foot interior fit-up of Philips’ new offices, the challenge was to translate the company’s shift in work and corporate culture into a high-performance workspace. The space leverages both technology and office design that reduces unoccupied space on any given day; aligns work-from-home practices and technology; provides collaboration space and privacy; and promotes Philips’ brand.

With no private offices, Philips’ open workspace features 200 individual work-settings for 260 employees with "free addresses." To promote collaboration and interaction, the open workspace is arranged in seven "neighborhoods." To address privacy needs, small meeting rooms, enclosed work settings and file/copy areas divide each neighborhood. At the center of the neighborhoods, a large, multi-functional and colorful "Town Square" anchors the office like an urban center, serving as a café and meeting room.

The ceiling layout and lighting were designed to provide a clear sense of circulation and aid in differentiating workspaces, collaboration space and circulation. The light fixtures and controls are all from Philips; 90 percent are its LED fixtures. Architect Marc Margulies estimated that Philips’ office space comprises 124 square feet per person, which is "half of what we would have used eight years ago," he said.

For more information

Philips North America’s headquarters
CoreNet Global 
Gresham, Smith & Partners   
Johnson Controls  
Jones Lang LaSalle   
Margulies Perruzzi   
Skanska USA Commercial Development  

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