CREJ - Office Properties Quarterly - June 2018
The nature of office space is changing. Typically, I would say I know this because I read it seemingly everywhere. The factors are many and variable: Generation X taking over the C-suite, millennials demanding more amenities, the disappearance of the private office, the pushback over the lack of privacy in the open-office layout, co-working and the creative office. The list goes on and the contradictions seem to build. As a builder, I pay attention to these trends and the feedback so that we can better respond to our clients with options. At the same time, as a former developer, I wonder how these changes are affecting exit strategies. I know most of you reading this are in one of these same situations. Recently, I have found myself with a new perspective. It came about so grassroots that it surprised me. We started our company almost four years ago and immediately placed a focus on developing a culture different than that of the other companies I’ve worked for in the past. Among other things, we decided to rent space at a co-working facility and move our workspace “into the cloud.” It has worked very well for a young company trying to prioritize expenses. It encouraged our efforts to take all of our paperwork and correspondence virtual as well, a trend we’ve been seeing for years. We can now be productive from just about anywhere. It’s a blessing and, sometimes, a curse.
So, what’s the new perspective? We now are considering leasing office space. Perhaps it was inevitable, but we’re working to keep the focus on a unique culture and not fall back into the usual office routine. I enjoy the flexibility the virtual workspace has afforded us and we sell it, successfully, to prospective employees as a perk. But I do miss the opportunities that happen when two or more employees are together around a table in person. We have proven that we don’t all have to be at our desks every day in order to do great work; we have grown nicely over the years and continue to build relationships, internally and externally. However, we are seeing that direct connection is necessary at times and are thinking about how best to facilitate that while continuing to build on our unique culture. I think what this means is a combination of the flexibility of a coworking space with the pride that comes from working in, and welcoming others to, our own space. I envision a space that’s heavy on open office and collaboration areas, light on private work spaces, professional yet inviting. One thing that’s clear to me, in contradiction to everything I’ve experienced, is that we are deliberately sizing our office not to accommodate everyone at a private desk space. We will have the ability to host everyone for company meetings and the space will be sized to encourage our folks to be out of the office some portion of the time. Additionally, we are looking for the usual access to amenities both for retail and outdoor experience. The nuance is that we’re looking for those types of amenities that serve our employees while also contributing to the pride we want to feel in our space. This means a brand of some sort, on the building, the neighborhood, the nearby tenants, something that brings a unique factor that folks will remember. We’re a construction company, which means we have multiple projects underway around the metro area at any given time. By definition, we always will have “branch offices,” so to speak, which means undersizing our office may work better for us than for other companies. That said, I don’t expect that folks will either work at the office or at a project site. In fact, we have proven that we can work from home, a coffee shop, even a beach (at times). I believe this realization we’re having can’t be unique. If that is the case, it means that there’s another trend happening. Incidentally, this same trend may be related to the “structural shift” in the office space market that NAIOP’s Office Space Demand Forecast Q2 surmises. In a nutshell, this forecast highlighted a contradiction between positive economic performance of corporate America and a well-below expected amount of absorption of office space in the first quarter of 1.3 million square feet. Economic models had predicted an average in excess of 10 million. What’s important in all this is that it’s making the office-space equation more understandable and that is helping us relate to tenants and developers alike. As we continue to focus a portion of our capacity in building interior spaces, I find myself energized by the experience we’re having at the same time. To the extent we are wondering what is happening in the market, we might be served to look at what is happening within our own organizations as we grow and change.