Just have to post this after a reader sent it my way, especially on the heels of Monday night’s AIA film and panel discussion about Dallas, the Trinity Toll Road/Parkway, and the automobile’s domination of our lives. Millennials are trying to be less car-centric. Something that might be contributing to that is our work habits. Because of technology, changing work habits and the sharing of spaces, commercial office space is also changing drastically and could affect commuting habits.
Some real estate office pros maintain that the revered millennials will lose their collaborative mojo and revert back to wanting to work in walled-off private offices and will move to the suburbs to make babies and raise families.
See, Emerging Trends is out — I have to get my hands on a copy for weekend reading. That’s an annual report published by the Urban Land Institute and PriecWaterhouseCoopers through a collaboration of interviews with real estate experts in residential, retail, hotels and industrial. We are talking 1,500 interviews and opinions from an aggregate of developers, owners, asset managers and brokers of all stripes plus some academics . It’s a must-read for those of us who live and breathe real estate.
Basically, the size of employee’s workspaces has shrunk to 190 square feet per employee in 2013 versus 225 in 2010. No wonder Millennials don’t want to be confined in cars! More than 70% of employees work in an open office environment today. Back in the 1980’s, 85% of US employees said they needed places to concentrate without distraction, while 52% said they lacked these spaces. Then in the late 1990’s, it all changed as the workplace became more communal. Only 23% of employees wanted more privacy, but 50% said they needed more access and interaction with others at work. Thus was born the open office space concept and the shrinking individual employee space. It always reminded me of a giant Montessori kindergarten. Conveniently, that also saved huge finish out costs because expensive walls and cubicle partitions could be replaced by earbuds whose cost the employees themselves bore. The concept flourished.
Well, that tide is turning. Research now shows that people once again feel the pressing need for privacy.
Employees are not too keen on their lack of privacy. I experienced this open office experience and found it very, very difficult to concentrate much less have a private conversation. Ironic that as the sharing of health information became more private thanks to HIPPA, the office space became so wide open so that if you wanted to talk to your doctor about a private matter, well, you had to find a private place with insulation. Or just go outside. Open workplaces were also not very conducive to high concentration levels, I found, because of constant interruption even if most of it was self-imposed by my ADD.
Anyhoo, according to this Emerging Trends report, some real estate brains think this collaborative workspace concept and open space planning is a temporary fad that will pass.
The report points to a belief that space compression in office space is “about at its end, and in the coming years the quality of the office environment will be used as a marketing tool to recruit talent.” The notion touted by the conventional wisdom is that the millennials will not put up with the space cram-down much longer, especially as it gains seniority in the workforce…..”I don’t think people need to talk to their coworkers all day long.”
Employees, particularly in the U.S., are tiring of having their next door neighbor know every time they pass gas.
Enter the sharing economy, which was bubbling through my head Monday night while watching “The Walls Are Rising.” What if landlords offered collaborative and shared office locations so tenants could rent out unused conference rooms by the hour or a day? This is not an unusual concept — it’s basically the executive suite. I’m sure I’m not the only one bothered by an office we pay dearly for sitting unused on weekends and evenings.
More presciently, other respondents in the report suggest that the rise of the sharing economy could turn the office market upside down with landlords offering collaborative and shared office locations themselves – as well as tenants renting out unused conference rooms by the hour or a day of underutilized office space.
More companies want fluidity in their leases, and turn white when they learn that the utilization of a typical office space runs at 35% per employee.
So that’s something else to consider when we examine transportation options: the explosion in alternative workspace options. Most Realtors I know work from home, or more accurately, their cars, popping into the office only for meetings. Realtors have always used alternative options. Some of the newer indie brokerages are paring down office space to bare minimum to whittle down expenses. Maybe we can no longer plan urban life on a 9 to 5 model that worked in 1967. After all, if your car spends 90% of the time parked, and that parking costs you an arm and a leg, is it not cheaper to leave the driving to an Uber, Lyft, Yellow Cab or a trolley? That will still put cars on the road, but with more employees working outside of the urban core, or at home, the commercial real estate industry should and will adjust — one way or another.
Have you ever worked in an open office system? If so, how was it?