Flexibility Key to Office of the Future

As employers strive to use their office space as efficiently as possible and as generational shifts and new technologies are creating new models of how and where people work, reshaping how they use offices, office developers must adapt to these changes in order to provide affordable, sustainable, and appealing workplaces for the future. Panels of developers, office product providers, and office users at a Bisnow Media event in Washington, D.C., earlier this summer discussed how offices are changing and how they must continue to evolve.

“The future of the office is a more flexible work environment that gives occupants more control over their workspace,” said Tom Ike, vice president of commercial and residential systems business for Lutron Electronics and a ULI member. Workers who once sat in their offices all day are now spending more time working from home or other locations; when they do come into an office, they tend to spend more of their time there collaborating with coworkers. A Cisco Systems survey found that 60 percent of the firm’s employees did not feel that they needed to be in the office to be productive; 66 percent said they would rather have a lower-paying job with more workplace flexibility than a higher-paying job with less flexibility.

Office buildings in denser, transit-accessible locations with access to appealing amenities—like Vornado/Charles E. Smith’s buildings along Crystal Drive in the Washington, D.C., area’s Crystal City—are outcompeting standalone suburban office parks. Photo by Larry Olsen

“That’s a key theme that’s shaping the office, particularly as the millennial generation begins to enter the workforce,” said Albert Cho, director of strategy at Cisco. “Technology is enabling a lot of new models for how people work,” he added, noting that these changes in technology, mobility, and virtual collaboration are reshaping how offices are used. Cisco has eliminated many individual cubicles and created flexible open spaces for ad hoc collaboration, more meeting rooms, telepresence suites (where workers at one site can link with those elsewhere), and audio privacy rooms for phone calls. Developers who understand “what makes a more compelling office environment for workers” will have a competitive advantage in the future. “The key is to think about how to create workplaces that leverage technology to make those spaces irresistible to people who can work from home,” concluded Cho.

With many employers focused on achieving greater efficiencies and cost savings, increasing numbers of tenants are downsizing their office space. Using law firms as an example, Peter Johnston, senior vice president with Boston Properties, noted that many are looking to shrink their amount of downtown office space by reducing square footage per attorney as well as by moving accounting and other functions to less expensive suburban space; maintaining fewer mock courtrooms; and digitizing files, which reduces the amount of file space they need. Other panelists provided additional examples of how law firms are reducing their office space needs while also increasing collaboration and mentoring—by replacing large libraries and conference rooms with smaller, more informal coffee lounges and pairing senior and junior associates in shared offices to shorten the learning curve for new attorneys.

From the federal government perspective, Robert Peck, public buildings service commissioner for the U.S. General Services Administration (GSA), noted that “we’re trying to reduce our carbon footprint, and if you want to reduce your carbon footprint, the first thing you have to do is reduce your footprints. So we’re looking to squeeze square footage.” The federal government, he added, is not going to be the “last adopter” in this instance; instead, it is exploring the many ways in which it can reduce the amount of office space it occupies, where that space is located, and how it can use that space most efficiently—and implementing those changes. As an example, ULI member Peck cited the ongoing renovation of the GSA’s headquarters, built in 1917. Between 2,200 and 2,500 people had been assigned to the roughly 750,000-square-foot (69,675-sq-m) building; after the renovation is complete, it will house more than 6,000 employees.

Finally, “location, location, location” remains as important as ever to office development, but the locational factors valued by prospective tenants have changed, said Mitchell Schear, president of Vornado/Charles E. Smith and a ULI member. “It’s proximity to transportation, to amenities, to where you live, to the customer and the people [with whom] you work, that is really important.” Developers of suburban office buildings now “are vastly more sensitive to locating projects near mass transit,” noted Bill Alsup, a senior vice president with Hines. “In the suburbs, it’s going to be more and more important to be closer to mass transit, as opposed to office parks that don’t happen to be near [transit] systems.” Johnston agreed, adding that “it isn’t just transit, it’s really the amenitization of the environment that you’re creating, and that’s true downtown as well.” Projects with access to restaurants, grocery stores and other shops, housing, and transit will be an easy sell, Johnston noted, whereas standalone suburban office sites are struggling—and will continue to do so.