Trends in office space – Using less to create more

The old adage, “Location is everything” always holds true, no matter how the economy shifts, changes, grows or even contracts. And if you think of location as a combination of physical space, design, amenities and hygiene, it gets even more interesting. Where a company is, in terms of their lifecycle, has a huge impact on the space they look to inhabit.

As the economy rebounds and readjusts, insight becomes inspiration, which in turn gets incubated into new business opportunities. The renaissance brought by IoT (Internet of Things) and data-driven business models have brought an explosion of small new companies with small, lean teams of employees. At the same time, many regions are reinventing their economies by embracing new industries or even welcoming back past ones. Commercial spaces, of course, have followed suit.

Shared space and amenities are big

The success of shared workspaces tells us a lot about the modern economy, and what workers want from “office space”. As shown by the recent trend of “open office spaces”, companies and their workers are looking for spaces that bring people together, rather than just working autonomously. Coffee bars, lounges, common spaces and corner couches are just some of the features that encourage collaboration and teamwork. Combined with offerings like free micro-roasted coffee, tea, water and even beer, the amenities aim to both bring people together and keep them in the building with little need to dart out for breaks.

A recent study – the Tork office trend report 2016 – found that 65% of employees agreed that the office space design has an impact on the atmosphere between co-workers.

By reducing physical barriers between coworkers, even workers from different businesses or enterprises can comingle, inviting opportunities for fresh thinking, feedback and even cross-industry collaboration. Beyond shared space models, the amenities and “wow” factor of office spaces figure to help boost retention and recruitment of workers. And, simply put, there’s less need to leave the workspace, even for informal or social gatherings.

Less space, higher expectations

The drive towards increasing efficiency has slashed the square footage per employee over the last decade. Currently, many companies are leasing between 125 to 225 sq. ft. of space per employee. Current trends have tenants pushing for even more density. As part of its Corporate Real Estate 2020 research report, CoreNet Global predicted the average space per office employee would decrease from 176 sq. ft. in 2012 to 151 sq. ft. by 2017. At the same time, 2016 national vacancies remain at the low level of 15.7 percent according to REIS.
So with employers squeezing more workers into less space, building owners and landlords are trying to set themselves apart by creating unique spaces and adding modern amenities indoors and out.

Steven Rapoport, CCIM, a broker at Chicago Real Estate Resources sees the trend first-hand. “The walls in the office are coming down – in 2016, I have seen businesses continue to move toward the open workspace rather than private offices,” he adds. By designing smaller and nicer office space, it allows for more work-from-home or mobile working options, such as “hot desks” or temporary workstations.

Sometimes the workspace isn’t a workspace at all. Many firms encourage remote working because it helps reduce overall office costs, allowing savings to go toward technology that makes working from home easier. And of course, some of those savings go into the above mentioned amenities.

If the “wow” factor seems like something out of the first tech bubble, you’re wrong. Perhaps a sign of the economic recovery, amenities and minor luxuries are also a sign of a competitive job market, where fewer workers from a relatively small pool of talent are highly sought after. As creative jobs like Tech, Architecture, Advertising & Marketing become more competitive, so too do their expectations for office space that features more than just a water cooler and drop ceilings. The same goes for employers looking to attract a millennial workforce.

And those higher expectations relate to hygiene, as well. Four out of 10 respondents in the Tork office trend report say that they encounter empty soap and paper dispensers and restrooms that haven’t been cleaned properly.

No longer will the current workforce accept the status quo of hygiene. Perhaps in previous generations, employees accepted sub-standard sanitary environments. But 79% of employees surveyed said they would inform their office managers or a facility manager if they weren’t satisfied with the quality of hygiene products.

Coming home from the suburbs

The historic business and residential exodus away from central business districts of the 1950s and the 1960s has been over for quite some time. The lifestyle that urban centers offer is a huge pull for companies and their workers. The notion of a “live-work-play” lifestyle that happens within blocks of each other is in high demand by millennials.

As far as bellwether companies go, McDonald’s is a great example. Having moved their headquarters and famous “Hamburger University” to Oak Brook in 1971, McDonald’s just broke ground on a new headquarters in Chicago’s red-hot West Loop neighborhood. The proximity to downtown is no accident.

Tom Gimbel, founder and CEO of Chicago-based staffing and recruiting firm LaSalle Network explains, “There is some millennial talent in the suburbs but it’s harder to find and it’s easier to create a culture in the city.” He adds, “There is an energy level that comes from new hires. It touches everything.”

The trend shows no sign of slowing, and other companies like Motorola Solutions, Kraft Heinz, Gogo, Hillshire Brands, Beam Suntory and ConAgra have followed suit by moving to the Chicago area. If it’s not the amenities offered in the actual office space itself, it’s all about what’s available within a 10-minute walk that counts.

Putting it all together

The idea of doing more with less is nothing new, and recent trends in office space is just following this timeless axiom. The healthy, resurgent economy hasn’t brought a loosening of purse strings, but a renewed commitment to properly allocated resources in order to maximize productivity, worker retention and attract the best talent. And, that’s a good thing, since 39% of respondents agree that restrooms in their office are not always properly cleaned.

As it happens, this reimagining of workspace and the impact on the people within it just happens to come with fewer walls, frapuccinos and sometimes a short walk to the local gastro-pub. Some would say that‘s a lot more interesting than free parking and artificial ponds. The power of location is the same as before, but the view has changed.