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Thursday
Nov202014

Improving Commercial Office Space Through Placemaking

Office spaces that engage employees by creating unique experiences create value and function as a strategic business asset rather than just a workspace. Picture: Airbnb’s headquarters, designed by Gensler. Image © Jasper Sanidad

This post also appears on Convene's blog.

One way to understand the importance of well-designed commercial real estate is to ask the simple question: What about this space compels people to want to occupy it in the first place? People will show-up for work no matter what, but they’ll show up with enthusiasm and vigor if their workspace presents the possibility for an enjoyable experience. Experiences sell audiences; consumers buy experiences as much as they buy products. They shop for lifestyles and look for the story behind the product. And for commercial real estate developers, the audience is the workforce and the experience is the physical workplace.

Consider this: There are 69 million office workers today in the United States alone. Those 69 million people are the audience designers and developers are courting. And by 2030, 75 percent of this audience will be Millennials.

So what does that mean for design? For starters, Millennials have a system of values that informs the ways they buy and engage with products. Eighty-seven percent of millennials choose products and brands that align with their personal values, which is overwhelmingly different when compared to my Baby Boom generation. This radical change in mindset will affect how we design office buildings (and yes Millennials will continue to come to the office in spite of the proliferation of mobile work options). Offices for Millennials will have to rely on placemaking to create exciting in-office experiences.

Today, if you are someone making long-term investments in real estate or if you are overseeing the development of urban areas, you must ask the question, “are we building around the right conversations, and are we preparing to engage an audience that’s 10 years down the road?” Remember: Millennials will make up the entire workforce within a decade’s time—seventy-two million baby boomers are migrating out of the workforce right now making the way for 73 million millennials to take their place. And they will wield the power of decision making. Along with this demographic change, there will be a huge shift in thinking. You will see legacy products go to the wayside, and new products developed with foresight and innovation take their place.

It’s important to ensure the design of your workplace aligns with your company’s overall culture and help engenders a sense of community. Picture above: McCann, Image © Ryan Cook.

When I speak with CEO’s and major decision makers today, the conversations tend to revolve around corporate culture. They tell me that the organizational strategy of the future is community-based, because community lies at the heart of organization. Organizations want to build community from the ground-up. They want to incite ground-up stake-holdership and all-around leadership. Companies today are too big, complex and fast-moving to lead from top down anymore. The only way they can manage themselves is to empower employees from the ground up to embrace leadership roles and stay engaged with their company’s culture.

Unfortunately, engagement can be hard to maintain without the right physical space. At Gensler, we’ve found that 15 percent of the current workforce is thoroughly engaged, 19 percent is actively trying to attack the companies they work for, and everybody else sits in somewhere the middle. There’s clearly a lot of room to change that model.

So how are companies trying to reengage their employees and improve performance? The solution that has proven quite popular is increased placemaking via the inclusion of more amenities. Space allocated for amenities is taking up a larger chunk of corporate real estate portfolios. Ten years ago amenities tended to account for only three percent of a company’s entire portfolio. Now approximately 10 percent of the average portfolio is given over to amenities, from lounges and cafeterias to health and wellness centers—a whole bandwidth of things that aren’t desks and offices. In the entertainment business and in the technology sector, allocations for amenities are as high as 12 percent at large companies, and are even larger at smaller companies.

Research indicates that the average amount of real estate per person has shrunk to as low as 100 square feet for employees in training desk models and 150 square feet for employees in traditional office configurations. Concurrently, the amount of real estate dedicated to amenity space has grown to an average of 16.5 square feet per employee. That’s a significant allocation, so it’s critical to design these settings to engage the workforce and reinforce culture and values. That way, both individual and organization performance will be higher.

Commercial real estate portfolios now tend to include more amenities spaces, like the kitchen pictured above, than they did in the past. Pictured: Airbnb headquarters, designed by Gensler. Image © Jasper Sanidad

When you think about a center core buildings—50 stories high with 40 foot planning depths—you think about desks in offices. When you think about how buildings are changing, they need to consider a different distribution of product types. If you are designing restaurants and education centers and innovation labs and all of the other specialty uses that are required by every company today, are you really designing nine foot ceiling to floor, five foot grid module for an office? Think about those models that you see so typically in the real estate formula, and then start to look at how portfolios are actively changing. We should be rethinking our ceiling heights, our outdoor space, our penetrability of the building, the size of square footage, and our ceiling heights. That’s what I mean by curating the product and instigating change around the voice of the employees.

Thomas Vecchione currently serves as a member of Gensler's firmwide Management Committee and is a principal in the firm's New York office. With a background in urban planning and architecture, he is a recognized expert in the field of real estate strategy. He can be reached via email at thomas_vecchione@gensler.com.

Reader Comments (4)

Tom,
Great article and always good to have someone like you remind us that our assumptions of the norm can be and should be questioned at all times...
Doug
11.20.2014 | Unregistered CommenterDoug Wittnebel
Terrific post, Tom. Really helpful to have the data woven into the story.
12.7.2014 | Unregistered CommenterBob Peck
Its necessary that commercial offices be well designed, and have necessary amenities for the employees.
05.20.2015 | Unregistered CommenterNaman
your blog is very informative for me… thanks for share this blog….

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