Office space is changing, that is for sure. In the last two years I have worked with three Fortune 500 companies that have cut their existing offices spaces by more than 50% (without cutting employees). Hard walls are out. Cubes are in.
There are reasons for this:
1. In the three cases stated above the offices were built when the market/economy was hot. Lots of money flying around. Everybody gets extra space.
2. It status thing. The younger generations apparently don’t care about having an offices. They don’t need it to show their “status”. From what I can tell to someone under the age of 25, status only applies to Facebook and Twitter accounts.
Some of these features have been included in Cushman & Wakefield|Cornerstone’s new offices, although these features aren’t quite in full acceptance yet.
The article below from USA Today outlines the changes that are taking place in office space nationwide. While every market, and every business model, is different, I could seen this trend continuing for a while.
At online retailing giant Zappos, two of the top managers have no titles, and no one — except for two in-house lawyers — has an office. Not even the CEO.
The Nevada-based company’s 1,300 workers (average age, 36), from the founders to programmers, mill about rooms without walls. Small cubicles serve as stations to park personal items, but work can be done anywhere — on couches, at shared tables or at the coffee shop down the street. Ear buds, not partitions, act as sound barriers.
“They’re more concerned about being around other people who do cool things than how big their desks are,” says Zach Ware, a no-title Zappos executive. “Our workspace has become our laptops.”
Technology, the urge to go green, telecommuting and a generation of workers who grew up with smartphones in their hands and computers in their laps are revamping the work culture. Companies are knocking down walls, even dismantling cubicles to create a free-flowing layout that many believe gets the creative juices flowing and encourages collaboration.
And they don’t need an assigned work station to call their own. Their cherished family photos adorn not their cubicles but their computers’ wallpapers. They’re kept on smartphones and posted on Facebook, not pinned to a bulletin board at desks.
At the same time, office equipment from printers and copiers to computers are shrinking. The paper trail is also waning, making big file cabinets obsolete in many work areas.
The office of The Office is fading and shrinking in the process. Younger workers welcome the change, says Patricia Lancaster, head of The Lancaster Group real estate consulting company who teaches at New York University’s Schack Institute of Real Estate. “They don’t aspire to the big corner office,” she says. “They don’t even want it.”
There’s an added bonus for employers: Open floor plans accommodate more workers in less space, a welcome savings for companies scrambling to cut costs in a rough economy. Efficiency is also at a premium at a time when environmental concerns are on the rise.
A survey this year by CoreNet Global, an association of corporate real estate and workplace professionals, found that for many companies, the average allocation of office space per person will fall to 100 square feet or less within five years.
Only 24% of the 465 companies surveyed said they had already hit this low, but 40% said they would by 2017. Square footage per worker has already slipped from 225 square feet in 2010 to 176 today, according to CoreNet. The main drivers: More companies stressing “collaborative and team-oriented space” and “smaller but smarter” offices in a bad economy, says Richard Kadzis, CoreNet’s vice president of strategic communications.
The trend is expected to accelerate as 10-year and 15-year leases signed in the late 1990s and early 2000s expire. “That is going to encourage companies, when they do go to market in this new environment, to try to make upgrades to a 21st century office space,” says Dan Fasulo, managing director of Real Capital Analytics. “It absolutely makes sense. Your more forward-looking firms have already made the transition.” Offices traditionally use 200 to 300 square feet per worker — an average of everything from clerks’ cubicles to executive suites. By encouraging staff to work from home, getting rid of offices, even resorting to “hoteling” — workers check in when they’re in the office and get assigned a desk for the day — some companies are slashing average square footage per worker to less than 100, about the size of a one-car garage.
“Obviously, you’re going to need less space when you have open space,” says Adam Leitman Bailey, a New York City real estate lawyer. “American workers need less space than they did 10 years ago. Just by not needing an office, you’re saving space.”
Working in the city
The move back to cities and to urbanized suburbs close to city centers, transit lines, shops, restaurants and apartments is helping fuel the trend. Space in developed areas is more expensive and harder to find, but that’s where younger workers want to be.
“Cities around the world are competing to become creative digital lifestyle centers,” Lancaster says. “To do that is not how big offices are. (Young workers) are into culture, parks, working closer to home, having dogs in the office.”
By being located near urban services, companies are saving space. Not as many workers drive, so fewer parking spaces are needed, and eateries and fitness clubs are nearby, so there’s no need for a large cafeteria or on-site health club.
“We consider the entire city to be a workplace,” says Patrick Olson, who heads the development of Zappos’ new downtown campus in Las Vegas. Now headquartered in Henderson, Nev., Zappos will move next year. The company now averages about 120 to 150 square feet per employee. When it moves into its new digs in the old City Hall building, it will slash the ratio almost in half. The trend “could help lead to somewhat of a rebirth in some of these older cities,” Fasulo says.
Accenture, a global management consulting and technology services company, last month moved its Washington, D.C.-area office from a more remote suburban location in Reston, Va., to the very urban Ballston area of Arlington, across the Potomac River from the capital.
The new office has a cafe that doubles as a working area, technology that allows employees to work almost anywhere, and walk-and-work stations equipped with low-speed treadmills and electric height-adjustable desks. Floors are made of cork, and countertops of recycled glass. More than half the workers are Generation Y‘s twenty- and thirty somethings. The federal government, which occupies millions of square feet of office space in the Washington area, is moving in the same direction, says Marc McCauley, director of real estate development for Arlington Economic Development. The General Services Administration, which oversees office space for government agencies, owns and leases 354 million square feet of space in 9,600 buildings in more than 2,200 communities nationwide. When renovation of GSA’s downtown Washington headquarters is finished next year, the building will accommodate 4,500 workers — almost 2,000 more than today — because of shared work spaces and telecommuting. “Teleworking is getting a big push from the federal government,” McCauley says. “Technology makes it so much easier.”
Working from home is on the rise nationally. In 2005, 3.6% of the 133.1 million workers ages 16 and older telecommuted, according to Census data. Five years later, 4.3% of 137 million workers did their jobs from home.
Open spaces not for all
Not everyone is embracing the office-as-living-room concept. “We lawyers still need offices, and that is not going to change,” Bailey says. “We need quiet to focus on our briefs and deals.” Despite that, space needs are declining even in offices that have more traditional layouts, because technology allows people to take on more duties. Lawyers, for example, don’t need secretaries to take dictation. They do their own typing. Receptionists may greet visitors and also handle social-media and technical duties. “There’s a struggle right now between the old and the new,” Bailey says. “We don’t know what works. In the end, it’s what’s going to be best for the talent we hire.”
In Houston, a hub of the oil and gas industries, traditional office quarters still rule, says Coy Davidson, senior vice president of Colliers International, a large real estate services firm. “They’re still using private offices,” he says. But Davidson himself often telecommutes. “My office is 30 miles away from my residence, and I live in a big city with a lot of traffic,” Davidson says. “I still have a fairly large office, but I’d be fine with 150 square feet myself.”
No one knows how far the trend will spread. Nevertheless, there is an undeniable generational shift in workers’ relationships with the work space. “The corner office doesn’t have the cachet it once had,” says Robert Lang, professor of urban affairs at the University of Nevada-Las Vegas. “There are other markers for status. It’s not the turf. It’s your network power.”
Stephanie Michael, 22, just graduated with a double degree in science and economics from the University of Maryland and is headed to the University of Virginia law school in the fall.
“I don’t really see that as being super important,” Michael says. “I don’t see status as office size.” What she values more are flexible hours and the ability to work from home a few days a week, as some of her friends already do.But because technology allows work anytime, anywhere, it can become “a Faustian bargain,” says Lang, referring to the legend of Faust, who traded his soul to the devil in exchange for knowledge. “The work is everywhere, unfortunately. There is less time you have to be in an office, but now you’re sitting on a beach texting somebody for work.”
–posted by Justin Cazana, CCIM