Development Magazine Spring 2014

Development - Ownership

The Next Generation of Corporate Offices

ExxonMobil’s new 3-million-square-foot, 385-acre campus, now under construction north of downtown Houston, will contain 20 low- and mid-rise buildings arranged around landscaped paths and quadrangles connected via arcades and sheltered by a canopy of trees and trellises.

The office building is dead. Long live the office building.

When asked what keeps them up at night, the CEOs and COOs that Oxford Properties interviewed for its “Destination Collaboration: The Future of Work” report said, “the ability of the enterprise to attract and retain top talent.” Following the eventual “silver tsunami” of baby boomer retirements comes the millennial generation workforce, a demographic group even bigger than the boomers and with an entirely different attitude about where and how they want to work.

Although corporations are faced with accommodating the differing work styles of as many as four generations under one roof, Andrew McAllan, senior vice president and managing director, real estate for Oxford Properties in Toronto, notes wryly, “who is the more difficult employee to attract and retain? The reality is, it’s the younger workforce, the 25- to 40-year-old knowledge workers, who are highly sought after.”

Paul Paradis, senior managing director, Hines, adds his perspective from Northern California, “The Twitters, Facebooks, all the software-type tenants — these companies are attracting younger employees who are growing up in a different way, with smartphones and the Internet. Their lives are based around the new model of living with all these technologies.” That is becoming equally true for traditional businesses. According to Paradis, one large accounting firm reported that half of its employees in San Francisco were 26 years old or younger.

In the energy sector, Anthony Markese, principal with Pickard Chilton, master plan and design architects for the new headquarters of ExxonMobil Corp., ConocoPhillips and Devon Energy, notes that all three companies are “facing similar issues — needing to recruit the next generation of talent and retain the best of their current workforce. In each project, the underlying motivation is really about the people. The goal is not necessarily to create a monument to the corporation, but to create a better place for the employees.”

Giovanna Chaisson, associate, interior design at Stantec, has worked with Sun Life Financial for seven years and recently guided the firm through a corporate reconfiguration of its four-building Wellesley, Mass., campus. She muses, “It’s so easy to work from home. How do you get people into the office and wanting to be there?”

In short, to attract and maintain millennial knowledge workers, where should the next-generation corporate office be located and what should it look and feel like? What’s “in” in office space? Consider the following short list:

  • Vibrant location;
  • Short commute;
  • Amenities for all;
  • Collaboration;
  • Flexible space; and
  • Sustainability (a given).

Vibrant Location

Much has been written about millennials preferring to live and work in a vibrant location. “Vibrant” often is interpreted as “urban,” but it doesn’t have to be. Some developers, like Hines, are fortunate to have an ideal site in a world-class city like San Francisco, but even this can be a challenge when trying to attract a millennial workforce.

“On a one-acre site, you end up being tall, and that means a tower,” explains Hines’ Paul Paradis. “But a tower is not what these fast-growing companies have warmed up to. It’s not a match with their culture. They prefer a little bit of an ‘off location,’ like an exposed brick, renovated warehouse.”

exterior view of Transby Tower office building

At 1,070 feet, San Francisco’s 61-story Transbay Tower will be the tallest building in the western United States when it is completed in 2016.

Making a tower attractive to these companies, Paradis says, “is an interesting puzzle. On the one hand, they want to be in the heart of the city, with easy access to transit, close to home. But what they really want is a modern, productive, enjoyable work environment.”

For the second part of that equation, corporations typically gravitate toward a suburban campus, not a dense environment. Hines’ solution, says Paradis, was to “redefine what a tower is. It’s a vertical campus!” It can offer fresh air, daylight, access to outdoors — it just happens to be stacked. Paradis notes: “Instead of walking across a 100,000-square-foot floorplate to do what you want to do, you take the elevator.”

On Houston’s northern edge, ExxonMobil is reimagining “vibrant” and “urban” in a new suburban location. The vision is to consolidate up to 10,000 employees into a single campus. That meant starting with a denser master plan. “It’s a suburban context, but it’s not suburban in any [other] way,” Pickard Chilton’s Markese explains. “Buildings are quite close to each other. We were trying to create a smaller footprint, but also make sure the campus felt active and had an urban vibe.”

The resulting campus will resemble a very large mixed-use development, with housing, retail, healthcare and entertainment facilities, in addition to the office space. “It’s a richer landscape,” adds Markese, “very different from a stand-alone campus.”

interior view of Transby Tower office building

Designed to attract knowledge-based companies, it will feature high ceilings, continuous windows and flexible workspaces.

How can existing suburban office complexes compete with the vibrancy and amenities of urban locations to attract corporate headquarters? Do your research and get hard data, advise Larry Lander, principal, and Valerie Thompson, senior associate with Planning Design Reseach (PDR), a Houston-based architecture firm that specializes in workplace design and has worked with ExxonMobil, ConocoPhillips and other Fortune 100 companies on their corporate campuses for more than 30 years.

“Inevitably, with regard to any project in the corporate environment, they are interested in ‘What do our competitors do?’” notes Lander. PDR advocates taking road trips to check out successful projects. “We talk to people who have done it before. The more significant the project — and it can run to thousands of millions of dollars — [corporations] want to have a high degree of confidence that it makes sense. This is a 30- to 50-year investment.”

Short Commute

Not surprisingly, high on every employee’s wish list is a “short commute.” But according to Oxford Properties, which surveyed 2,000 office workers across Canada for its “Destination Collaboration” report, that does not translate into a commute from the bedroom to the home office. “What was once seen as the future of work — working from home — is on the decline. Organizations are offering flexible work options, but most Canadians will continue to work in the office,” the report notes.

Andrew McAllan, who worked on the report, points to generational differences among respondents. Members of the older generation indicated that 45 minutes to one hour was their maximum desirable commute; younger workers said 30 minutes was their limit. The report concluded that “workers will be much more selective in seeking career opportunities and employers located within a reasonable commute and close to convenient lifestyle amenities and accessible transit routes.”

lobby of Devon Energy office building

Joe Aker/Aker Imaging

“There was a bigger focus than I expected on commuting time,” says McAllan. “All other things being equal, commute time would be the deciding factor in a younger person’s taking a job or not taking a job.”

Amenities: Shared Space for All

The continuing emphasis on amenities also reflects a sharing of space in corporate offices and the move from private spaces to public perks for all. Popular amenities include fitness centers, restaurants, secure bicycle storage and landscaped outdoor gathering spaces.

On-site parks are part of the appeal at Hines’ Transbay Tower in San Francisco. Adjacent to the fifth floor and accessible from every elevator in the building, a 5.5-acre park will sit atop a transit center that Hines’ Paradis describes as “the Grand Central Station of the West.” The rooftop park and a ground-level plaza will be landscaped with plants representative of California’s ecosystem, including redwood trees. “It was a real coordination challenge to create an environment where redwood trees can grow downtown. Our goal is to have the most important trees of California next to the newest iconic building in California.”

Designers for ExxonMobil’s and ConocoPhillips’ Houston campuses and Devon Energy’s Oklahoma City tower all focused on creating spaces for employee wellness, according to Pickard Chilton’s Markese. Amenities range from smaller workout spaces to fitness centers and even an on-site medical clinic. Says Markese, the thinking was, “if we can keep our workforce healthy, it’s to their and our benefit.”

At Sun Life Financial’s Wellesley campus, the improved amenity was somewhat more modest, but extremely impactful. “The biggest change was the cafe,” relates Stantec’s Chaisson. “We took what was a tight corridor with microwaves and vending machines, and created a place for informal meetings and creative encounters.”

Collaborative Space

According to Oxford’s “Destination Collaboration,” “smart organizations are recognizing the inefficiencies and lost ‘knowledge sharing’ opportunities of operating in silos. As organizations tap into their greatest asset — their people — leading companies will find opportunities to enhance teamwork and inspire creativity through strategic office design.”

Collaborative space can take many shapes. PDR’s Thompson explains: “Broadly, we divide collaborative space into three physical manifestations:

Formal: collaborative space for traditional meetings, where I invite somebody and reserve a room;

Informal: casual locations for meetings that do not require privacy; and

Remote: spaces where people meet long-distance, using technology to ‘display visual thinking’ and transmit it to others.”

Although the trend toward collaborative space probably began with tech firms, now even conservative bastions of private offices — law, accounting and financial services firms — want physical space where their internal teams can work together.

exterior view of Devon Energy building

Completed in October 2012, the 1.9-million-square-foot, 844-foot high Devon Tower, headquarters to Devon Energy, is the “tallest building on the Plains” and a new anchor of the downtown Oklahoma City business district. Joe Aker/Aker Imaging

As an example, Sun Life Financial decided to re-evaluate its use of space at its Wellesley corporate campus to better serve its business goals and employees. Chaisson says that “the challenge was to design space that would be flexible for an evolving, multigenerational workplace, while also maintaining department connections that were critical to the daily work flow.”

Shifting from “me” space to “we” space minimized private offices and eliminated high workstation panels. Perimeter offices and isolated cubicles gave way to flexible meeting and conference spaces. Lowered panels and glass inserts on workstations let light permeate through the office. As Chaisson reports, “The result is a reimagined office with an open, lively, inviting space, flexible and adaptable to different working styles and preferences.”

Dedicated or Undedicated?

“For a while, there was a sense that office buildings would become an obsolete concept,” recalls Oxford’s McAllan. But the trend toward decentralized employees working remotely is slowing. Matt Ward, senior vice president at The Alter Group, shares his personal experience: “Telework is part of my everyday life, but I don’t telework five days a week. I still have an office.”

When teleworking employees do come into the office, their presence can create problems. Should they work at dedicated or undedicated workspaces? The current consensus is that “hoteling” — a system of unassigned seating at workspaces used on an as-needed basis — works best for employees who travel most of the time and those who frequently move from one office to another.

On the other hand, employees who spend most of their working time in one workplace still prefer to have a designated workspace. Referring to a survey of workers at Royal Bank of Canada (RBC), Canada’s largest employer, McAllan reports that “a majority of respondents (89 percent) prefer having their own designated space, compared to only 11 percent who support hoteling. There’s the predictability of knowing, ‘That’s my desk. My sports team photo is on my work station.’ If you spend the most time in your office, you want that sense of belonging.”

The Alter Group’s Ward is unconcerned about the effect of hoteling on demand for office space. “Alarm bells went off around five years ago that this would mean the end of office space, but it’s probably not dramatically reducing the amount of office space per employee. It’s maybe 10 percent off, but that’s all.”

Flexible Space

In the early years of tech companies, uniformity was valued. At companies like IBM, every worker had an identical workstation. “This was great from a real estate and facilities approach, but it made employees feel ‘not special,’” recalls Larry Lander of PDR.

interior of SunLife office building

 

interior of SunLife office building

Low walls around workstations at Sun Life Financial’s redesigned Wellesley, Mass., campus let in natural light and help energize the space while a variety of seating areas encourages collaboration.

Today, in its work with ExxonMobil, PDR is trying to “accommodate the work more than the personality of each individual. Every single space is not the same. There is some choice,” Lander notes. Furnishings are designed from a limited kit of parts that can be used in open space or closed-office combinations. Changes can be made quickly, even reconfigured overnight, and at low cost.

Valerie Thompson, Lander’s colleague at PDR, predicts that sit/stand desks will become more popular. “Prices for sit/stand desks are coming down,” she explains. “Sitting is akin to smoking,” Thompson says, referring to recently published health reports that evaluated the effects of sitting for long periods of time. Making the connection to the popularity of fitness/wellness centers as a corporate amenity, Thompson points out that “sit/stand desks extend the fitness idea to the office.”

More or Less Space?

In their workspace projects for corporations in the energy sector, Lander and Thompson are noticing that although these companies are making the shift toward more shared spaces, they also are seeking to strike a balance, recognizing that while people do work collaboratively, they also need space to do heads-down work. “Overall, my personal workspace is getting smaller,” says Lander, “but total usage of space isn’t changing.” Thompson says it comes down to “choice, control and variety of spaces.”

Ward, of The Alter Group, concurs. “What ends up happening is that the space I call my ‘home’ is smaller. In our space now, we have a gym, a meeting room, a gaming area. When you run the math, the ratios of square footage per employee are still pretty similar.”

Real World Experiences

How are developers and corporations incorporating these new workplace trends and realities into the next generation of corporate offices? The following examples offer some details about their approaches and experiences.

Transbay Tower, San Francisco

Hines is incorporating three principles into its Transbay Tower “vertical campus”:

Volume of Space. “Tenants will feel like they have no lid on them,” Paradis says. “We made the floor-to-ceiling heights very high. Traditionally, they would be 8 to 8.5 feet high, but because of the way we are distributing the air, we are able to have ceilings over 13 feet high.”

Access to Daylight. Despite the height of the building, the depth of each floorplate from the windows to the core is “modest — 40 to 45 feet,” notes Paradis. Windows are 10 feet high and continuous around the building.

Flexible Workspaces. “We are giving tenants the ability to make their space whatever they can dream up,” Paradis adds. He envisions it as “almost loft-like, with columns only on the perimeter and in the core.”

Noting that “knowledge-based companies are quite dense, in terms of number of people,” Paradis says that Hines designed systems like elevators, exiting stairwell, bathrooms, etc., to be able to accommodate the increased density of workers in the tower, which is under construction and expected to be completed in late 2016.

RBC, Canada

RBC conducted internal research to determine how its workspace could better support employees and improve productivity. As reported by Oxford Properties in “Destination Collaboration,” RBC’s corporate real estate team believes that four key factors are shaping the workplace:

  • The need for flexibility to accommodate organizational growth and change;
  • A desire for greater collaboration and mobility;
  • An increased focus on environmental sustainability; and
  • Enhanced technology.

In the past, RBC’s traditional office environment typically allotted private offices with windows to middle and senior management, notes Oxford’s McAllan. As part of a redesign that is currently underway, the bank is moving these private offices to the building interior and providing more open work areas to foster collaboration along the exterior, where they can be suffused with natural light.

RBC also evaluated how its employees were using their workspaces and found that at any given time, more than half of the desks and offices were vacant. As a result, the bank adopted protocols giving dedicated workspaces to those employees who work in the office every day and undedicated, touch-down workspaces to transient ones.

Three Energy Companies, Three Headquarters Visions

“ConocoPhillips’ existing campus is fantastic,” says Pickard Chilton’s Markese. “They kept what was great and the additional work was done in a sensitive way to make it better.” This was accomplished through a “combination of infill, repurposing and slight densification.”   

ConocoPhillips had some under-utilized land remaining at its suburban Houston campus. The company used that land to build new amenities, structured parking and infill office space to make the campus more efficient and dense, while maintaining a comfortable, campus-like feel. The project was completed in 2007.

For its new Houston campus, ExxonMobil is embracing density, with defined quads and connected exterior spaces. “It’s as if you could create an instantly dense and vibrant environment. It will be a village immediately,” says Markese. “Young people will find it a great transition from the university, because it will have a kindred feeling. What will be interesting is to see how the older generation reacts to that urban vibe” when employees begin moving into the 385-acre campus later this year.

A suburban campus wasn’t what Devon Energy had in mind for its corporate headquarters. Devon envisioned an urban tower that would bring increased vibrancy to Oklahoma City, where the company is a longstanding corporate citizen, and redefine the skyline. Markese describes the effect on downtown as exponential: “Through 10 pounds of effort, we have done 50 pounds of enhancement to the city.” The amenities that surround the base of the tower are open to the public, creating a porous interface with neighboring buildings.

Markese sums up these three companies’ diverse visions: “In each case, what people will say is, ‘I can’t believe how much of a transformation has occurred.’”

Sun Life Financial, Wellesley, Mass.

A project to restructure Sun Life Financial’s operations in suburban Wellesley prompted a reconfiguration of its campus and resulted in a reduction from four to three buildings.

According to Stantec’s Chaisson, Sun Life is changing the way people are working across the entire campus. Going one floor at a time, the company identified which floors were not being utilized to their full potential and which groups work best together, then realigned their offices accordingly.

Chaisson notes that during the process of breaking down silos, Sun Life “got [workers] out of their existing space, talking and interacting.” The company also created “an engaging space that you want to go to.” Reducing the number of private offices let in more natural light and energized the space.

Now every floor reflects its own identity, Chaisson says. “Marketing has giant banquettes, retail areas, kiosks they are testing. HR has more conference rooms and a different palette — greens, blues — which are calming for people coming in to be interviewed.”

Conclusion

Looking forward, it is becoming clear that the next generation of corporate office buildings will be very different from those of the past. Trends that began in high-tech, creative workplaces are migrating into corporate environments, changing them forever. These trends offer clear lessons for commercial real estate developers and corporations seeking to build new office buildings or redevelop existing ones. The (traditional) office building is dead. Long live the (more flexible, vibrant, collaborative, amenity-rich) office building!

Microsoft Neighborhoods Transform Corporate Space

rendering of the interior of Microsoft's office cubes

The Microsoft neighborhood kit of parts includes open plan workspace, focus rooms, open meeting spaces, project rooms and phone rooms, all of which can be arranged in different amounts and combinations to suit each team’s needs.

A model of advanced workplace design and talent attraction strategy when it was constructed in 1985, Microsoft’s Redmond campus was originally built with mostly private offices. “The idea at the time was that software programming needed to get done behind a door,” recalls Martha Clarkson, global workplace strategist, real estate and facilities, at Microsoft. But by the late 1990s, Microsoft had transformed from a software company into a global diversified corporation offering products and services to both office and consumer markets.

The exponential growth strained its real estate holdings and led to “an urbanization of the campuses out in the [Redmond] suburbs” and the building of four office towers in nearby Bellevue, Wash. Asked why Microsoft didn’t consider relocating its headquarters, Clarkson explains, “with a company of such a large size, magnitude isn’t going to let people pick up and move” to another location.

Real Estate as Productivity Strategy

In 2003, Microsoft formally launched a strategic initiative known as the Workplace Advantage Program, which emphasized productivity rather than square footage. The challenge, as articulated by Microsoft, was to “evolve the workplace globally to how work is actually being done. Create and operate work environments that inspire innovation, functionality and efficiency, to enable employees to be successful and help Microsoft achieve greater business results.” The program’s goals were to:

  • Enhance innovation and productivity;
  • Create function-based workspaces;
  • Pay attention to human factors (e.g., variety, light and stimulating environments); and
  • Showcase the Microsoft brand and technologies of various divisions in their workspaces.

Following research at select sites around the world using interviews, surveys, focus groups and time-use observations “to see who’s using what space,” Clarkson says that Microsoft came to the conclusion that although “one size doesn’t fit all, we could develop a kit of parts that’s flexible for different groups.”

Function-Based Work Environments

At the heart of the new concept is the evolution of “neighborhoods,” with spaces designed for teams of no more than 20 people that reflect the work they do. For example, Clarkson explains, “R&D is all about the products. Their work is very face-to-face, and they are on the Redmond campus, with assigned seats.”

In contrast, software sales offices around the world are more focused on desk sharing and mobility. “They are always with customers, in their car, working from their home. That is not a job type that is tied to a desk, nor should it be.” Real estate department employees also are often on the move. When they are in the office, they use lockers and unassigned desks, in a hoteling approach.

The Neighborhood Kit of Parts

Focus Rooms. When Microsoft conducted its time-use observations, researchers noticed that people were using large corporate conference rooms for small group or even one-on-one meetings. The Workplace Advantage Program reduced the number of corporate conference rooms and replaced them with neighborhood “focus rooms.”  Outfitted with flexible furniture elements, ample outlets and audio-visual equipment, focus rooms allow team members to collaborate virtually or face to face.

Open Meeting Space. These lounge-like spaces, intended for collaborative work, can be informal (a place to meet over coffee) or formal (a setting for a structured, small group meeting.) “They are very tricky to design,” says Clarkson. “The location can’t be too public, or it won’t get used. If it’s too private, people can’t find it.”

Project Rooms. A neighborhood occupied by a group working on long-term projects might need a project room, which can be dedicated to a specific project until it is completed.

Phone Rooms. These are small, enclosed spaces, resembling phone booths, from which employees can make telephone calls. Clarkson emphasizes that phone rooms must provide strict acoustical privacy for employees. “If you are going to design open work areas, you have to deliver on the promise of privacy.”

Humanizing the Workspace

Today’s workplace design also needs to pay attention to human factors, Clarkson notes, especially for companies where employees put in long hours. Providing access to daylight for all workers and making the office “much more residential looking” can improve employees’ sense of well-being. Using natural materials and a variety of colors helps create a unique and stimulating space. “In the corporate world, people are spending so much time at work, they need variety and flexibility” in their surroundings, says Clarkson.

Brand Infusion

“It used to be that corporations would slap a logo on the wall in the reception area, but when you walked down the hall, you had no idea where you were,” Clarkson recalls. In contrast, showcasing the Microsoft brand and technology is core to the Workplace Advantage Program. Each division’s work products are reflected in the design and decoration of its office space, with Microsoft technology in use and displayed front and center.

Results

Moving to a neighborhood concept and providing a variety of spaces for a variety of work styles resulted in the following improvements at Microsoft:

  • Individual effectiveness increased by 9 percent;
  • Informal collaboration increased by 12 percent;
  • Overall workplace satisfaction increased by 9 percent;
  • Team effectiveness increased by 8 percent; and
  • Formal collaboration increased by 22 percent.

Although, as Clarkson notes, space reduction and savings are not the driving factor behind the Workplace Advantage Program, they have occurred organically during the evolution. “The switch to neighborhoods from private offices has resulted in a 20 percent reduction in space. There is less wasted space, groups have greater proximity and space per seat is lower.” The overall improvement helps Microsoft maximize space on its 500+-acre Redmond campus, as well as at its other locations around the world, and stay well positioned for future growth. “It’s not really about real estate,” says Clarkson. “It’s about making our businesses successful.”

Microsoft Real Estate

  • 639 sites
  • 107 countries
  • 127,000 employees, staff and partners
  • 34 million square feet globally
  • 15 million square feet, +55,000 workers at Redmond campus

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