Up until a year or two ago, the industry media were writing
about the "doing-more-with-less" trend as companies looked to
squeeze any savings they could out of their built environments.
In addition to the massive recessionary layoffs, cubicle spaces
shrunk in that time to as small as 100 square feet, according
to architecture firm Gensler. But CBRE's Schreyer reports that
corporations are awakening to the fact that they can only "cut so
far without impacting productivity." At some point, they've got to
grow to impact the P&L, and that means hiring.
But it doesn't mean we'll see an increase in cubicle size. "We’re
finding there's a delta between the exact space you need and the
amount of square footage you need for creative, collaborative
space," he says. "You're trading empty cubes for environments
where people can be collaborative or just be more comfortable,
spaces with more comfortable couches or a pool table or foozball,
the things that bring people together."
Not your old man's office environment, is it? And that’s exactly
the point. The office that Schreyer describes, while benefiting all
employees, is geared specifically to a younger audience.
All in, Schreyer estimates that there is still a reduction in the
total amount of space companies are leasing, but the reduction is,
well, reducing. "We're trading dead square footage for interactive
square footage," he says. "The net of it may be 20 percent less
space but not 40 or 50. It's a slight reduction, but the space you
have is much more useful."
"Companies are much more focused on employee satisfaction
with the environment," agrees West, who in addition to her SIOR
duties is also vice president at the Tulsa CBRE office. "We see so
much competition for hiring and recruitment, it’s become much
more important for companies to attract new employees based on
She calls it no less than a paradigm shift. "Coming out of the
recession, it was all about creating more efficiency by driving
down the dollar per square foot." In such a severely compressed
environment, "how do we keep that satisfaction number? If
employees are more comfortable, they're more productive and
less likely to take sick days." Schreyer reports that in CBRE’s
new, much-publicized Los Angeles HQ, which he says employs
many of the above-mentioned types of amenities, there has
actually been an increase in the office headcount as employees
seek that comfort and collaboration.
But is this truly a sea change? Are we closing the door on an office
environment that has existed since the Kennedy Administration?
"The American dream has shifted," reflects West. "What the
average worker wanted in the '60s is very different than what the
average worker wants today."
"This is not a fad that’s going to run its course," adds Schreyer.
"But there may always be a moderation, some kind of balance
over time." But clearly, he says, the people, and especially the
younger people, "have spoken."
(continued from page 60)
Another observation about commercial real estate is that there
seems to be a fascination on the past. Comparables from as far
back as a year ago are used to predict what a good lease should
be today, or even in the future. As brokers who have been in the
business for a while can attest to, the market changes rapidly.
A year old comparable is antiquated in many instances, so
why is it such a prominent tool in the business? Why not use a
more scientific method in predictions? Admittedly, forecasting
is a scary endeavor. There are many factors that constitute
market movement that nobody can fully predict, but having a
mathematically based model that has had a proven track record
for years helps ease some of the tension associated with the
unknown future. If it is used in conjunction with modeling out a
prospect or client’s transaction and using the economics to project
their future rental rates, it gives them a basis from which to make
tough decisions. A statistical model can be as simple as using
past and current job growth, annual absorption rates, or even
square feet under construction. Or it can be an analysis on
transactions completed in a single building showing the
trend in what the landlord perceives to be the market in terms
of rate and concessions. These types of analyses can be very
powerful during negotiations in a tight market.
The bottom line is that you can still use traditional tools
on a daily basis (comparable transactions, market reports,
etc.), but be prepared to use other devices to help make
more informed decisions for your current clients as well as
prospective clients. Commercial real estate is both an art
and a science. Ultimately, a fool with a tool is still a fool.
You cannot simply imbed yourself into the analytics without
having experience or a story to go with it. Accordingly, while
using the analytics, they are simply another powerful tool
that you possess in order to drive the best economics for your
client. Just as the landscape on how to interact with potential
clients is ever evolving, so are technological capabilities
of the industry. It may be a slow change, but it is changing
and is unstoppable. Be at the forefront of this movement,
by embracing data analytics, to secure your advantage over
GETTING AHEAD OF THE
USING ADVANCED MARKET