NEW ORLEANS – Today’s workplace strategy not only includes design, technology and change management – but bike racks, spaces for pets, expansive break areas and wellbeing centers.
“At the end of the day, coffee is king and people want to be around that coffee shop vibe that helps foster the human connection,” joked Manuel Navarro, senior associate and design director, at Houston-based Ziegler Cooper Architects’ Austin office.
So are bike storage areas, he told attendees at the 50th annual National Association of Real Estate Editors real estate journalism conference in New Orleans this week.
“To millennials, bike storage a big thing,” Navarro explained. “Millennials don’t only want what the landlord supplies, but a dedicated bike storage area on their floor.”
Animals at work are becoming an increasingly popular item. Navarro said one building allows 12 dogs per floor.
Today’s real estate developers are catering to the sector of the population everyone else is: millennials. That means few – if any – offices, smaller area to work, more open area, and additional well being amenities, says Kim Rousseau, principal, director of interior design at Atlanta’s Cooper Carry.
“Technology companies need scrum space, where everyone can work together every day, then space where they can go away and do work, and then come together again,” she explained. “It’s important for the space to be open and accessible. A lot of companies want the raw and industrial feel, but sometimes that is more expensive than new, conventional space.”
It’s passé to have a wellness program, she added. “Well being is huge and quietly coming into its own,” she said. Everyone has a fitness program, but now it’s about mind, body, and soul and how it connects with everyone.”
Clients seeking office space are younger nowadays, says Navarro. “At many tech companies,” he said, “the average age of employees is 23-25, and decision makers are in their low to mid 30s.
In addition, providing space for the new generation of workers also means a shift in investment strategy, said Jane Page, CEO of Houston-based Lionstone Investments, which has some $5 billion of assets under management. Page noted that the offices for the innovative industries around the country have some of the better rates of return for investors.
Lionstone carefully looks at all the cities nationally, seeking to invest in neighborhoods in competitive cities that will drive rental rate growth. Lionstone then picks a city, selects a submarket and then zeros onto a block it feels will produce investor returns.
“It used to be about buying a building in a prestigious area, but now it is about productivity and connectivity,” Page explained. “Over the last five years, Manhattan’s Park Avenue had 21% rental growth, but the city’s Chelsea area and the Meatpacking District had 48% rental growth,” Page explained. “Today’s creatives are looking for unique architecture, often found in historic properties, combined with the latest technology. Those properties are often getting higher rents than newer buildings. “
She added that over the past half decade, San Francisco’s financial district reported a 94.7% increase in rental growth. “But the city’s SOMA district saw 159% rental growth and as an investor, that’s what we have to look for.”
The old workplace strategy of merely filling up the building with workers has gone through paradigm shifts, driven by millennial generation, noted Bryan Berthold, managing director, strategic consulting at Cushman & Wakefield’s Atlanta office. “Baby boomers and Gen X-ers adapted to workplace, “ said Berthold. “Millennials expect the workplace to adapt to them!”
Offices used to be a place where people went to do private work with an occasional meeting, he added. “Now workplaces are thriving areas to collaborate — social places – and where you do individual focused work is less important. The older generation evaluated your productivity by your presence. But millennials’ productivity is amazing if you provide them the right experience, place to work and amenities that matter, whether in the office or elsewhere.”
June 10, 2016