HNI Reports Earnings Growth and Margin Expansion in Q4 and Full Year 2023 / DIRTT Reports Fourth Quarter 2023 Financial Results / Haworth Group Reaches New Milestone in 2023 / Artcobell names Kevin Smith as President / What Many Get Wrong About the US Office Market / More Evidence 'Flight to Quality' a Myth Amid Dismal Office Report / Steelcase Earns Top Score in Industry for Climate Change Disclosure From CDP / Google opens New York HQ built on renovated 1930s train terminal / Commuting Data Provides More Insight into Remote Work / The Strategy Behind The Pentagon’s Bold Remote Work Pivot / Employee turnover will skyrocket if firms monitor office attendance, says former EY leader / These Are The Top Coworking Amenities & Features To Attract Members / Pawsitivity at Work: Perks & Pitfalls Of Creating Pet-Friendly Coworking Spaces / and much more…


The Working Space
Monday, February 26, 2024


"Shifting Gears: How Companies Are Navigating Growth, Sustainability, and the New Work Paradigm in 2023"
 
In the contract furnishings world, keeping up with the latest financial reports, strategic moves, and market trends is crucial, and it seems like the landscape is as dynamic as ever. So, let's dive into some of the highlights and what they could mean for the market and you.

Starting with HNI Corporation, their 2023 wrap-up came with a mix of news. Their earnings report showed a solid performance with consolidated net sales up by 3.1%, despite a 10.6% organic sales dip. The standout was their non-GAAP net income per diluted share jumping from $2.20 to $2.65. The acquisition of Kimball International seems to be a strategic win, promising even greater synergy than expected. Yet, the Residential Building Products segment faced a downturn, a reflection of the broader housing market's challenges. CEO Jeff Lorenger's optimism for 2024, fueled by expected solid earnings growth and the positive impact of the Kimball acquisition, paints a hopeful picture.

Over at Haworth Group, they celebrated a milestone year in 2023, marking their 75th anniversary with a 3% sales increase to $2.57 billion. Their growth, investments in showrooms, headquarters, and the Haworth DesignLab, alongside strategic acquisitions like Zanotta, shows a robust strategy for innovation and expansion. Their commitment to sustainability, evidenced by their SBTi-validated emissions targets, underscores a forward-thinking approach aligning with global environmental goals.

DIRTT Environmental Solutions shared a positive outlook in their fourth-quarter financial results, with a notable 20% revenue increase to $50.9 million. Their journey from a net loss in 2022 to a net income of $1.0 million in the same quarter of 2023 exemplifies a remarkable turnaround. The reduction of long-term debt and successful capital raising efforts further solidify their financial health.

In architecture, the ABI report for January 2024 pointed to continued softness in billings across the industry, despite a growing interest in new projects. This mixed signal suggests a cautious optimism in the sector, with potential for recovery on the horizon.

The appointment of Kevin Smith as president of Artcobell highlights a strategic move towards growth and operational efficiency in the educational furniture market. Meanwhile, Steelcase's environmental stewardship has been recognized with a top score from CDP, showcasing their commitment to sustainable practices.

The narrative around the US office market is being questioned. Brookfield's analysis suggests the real issue is not an oversupply but the obsolescence of older buildings. This perspective is echoed in other reports highlighting the challenges faced by Class A properties and the increasing foreclosures in the commercial real estate sector, signaling a market in flux.

Google's new NYC headquarters, a renovated 1930s train terminal, stands as a testament to innovative workplace solutions, blending historical architecture with modern sustainability and functionality.

As companies like Independence Blue Cross implement mandatory office days, and the Pentagon embraces telework flexibility, the debate over the future of work continues. With employee turnover concerns tied to office attendance monitoring, the importance of workplace culture and employee engagement is ever more apparent.

In essence, these stories today reflect a business landscape that is navigating through challenges, embracing sustainability, and adapting to new work paradigms. Whether it's through strategic acquisitions, sustainability efforts, or innovative workplace designs, these companies are carving paths forward in their respective sectors. As we look ahead, the blend of optimism and caution underscores the complexity of the current market environment, offering insights and lessons for businesses and professionals alike.

Industry News

HNI Corporation Reports Earnings for Fourth Quarter and Fiscal Year 2023
HNI Corporation reported its earnings for the fourth quarter and fiscal year 2023. Consolidated net sales increased by 3.1 percent, while on an organic basis, net sales decreased by 10.6 percent. Gross profit margin expanded by 360 basis points, and selling and administrative expenses as a percent of sales increased by 280 basis points. Non-GAAP net income per diluted share was $2.65, compared to $2.20 in the prior year. Workplace Furnishings net sales increased by 39.7 percent (including the Kimball acquisition), while Residential Building Products net sales decreased by 13.1 percent. The outlook for 2024 includes expectations of solid earnings growth, low-single-digit organic revenue growth, and the positive impact of the Kimball International acquisition.
 
"We made outstanding progress in 2023 and finished the year on a strong note, delivering greater than 50 percent earnings growth in the fourth quarter. Our Workplace Furnishings profit transformation plan continues to pay dividends and drove segment fourth quarter operating margin to pre-pandemic levels. The synergy capture associated with the Kimball International acquisition is ahead of schedule; moreover, we now expect total synergies to be $10 million higher than our initial projection. In Residential Building Products, our actions to support profitability fueled margins to near record levels despite housing market weakness. Overall, we exited 2023 a fundamentally stronger company, reflecting the power and dedication of our member-owners," concluded Jeff Lorenger, Chairman, President, and Chief Executive Officer.

Haworth Group Reaches New Milestone in 2023

Haworth Group, a privately-held global furniture maker, reported a 3% increase in sales for 2023, reaching $2.57 billion USD, marking a growth of 16% since 2019. The company continued its expansion and innovation, celebrating its 75th anniversary and joining Leesman's global study on hybrid working. They also made significant investments in showrooms and its global headquarters and launched the Haworth DesignLab, a collection of product design concepts from emerging designers.

In addition, Haworth completed the acquisition of Zanotta and expanded in the Middle East. It also announced the license of the Ralph Lauren home furniture collection and had its near-term and net-zero emissions targets validated by the Science Based Targets Initiative (SBTi). The company, founded in 1948, operates in over 150 countries through a network of 400 dealers and 8,000 employees, and is committed to creating spaces that empower people to thrive.

DIRTT Reports Fourth Quarter 2023 Financial Results
DIRTT Environmental Solutions reported its financial results for the fourth quarter of 2023. The company achieved revenues of $50.9 million, a 20% increase compared to the same period in the prior year. Gross profit improved to $19.2 million, representing 37.8% of revenue. Net income after tax was $1.0 million, compared to a net loss of $(5.9) million in the fourth quarter of 2022. Adjusted EBITDA was $4.3 million. The company also reduced long-term debt and successfully closed its rights offering for gross proceeds of C$30.0 million.
Architecture firm billings remained sluggish in January 2024, with a decline for twelve consecutive months. However, inquiries into new projects continue to grow, indicating client interest. Business conditions remained weak in all regions except the Midwest. The broader economy showed improvement, with employment growth and decreasing inflation. Most firm leaders reported increased or steady business development spending, and a majority believed their marketing efforts were effective.

Artcobell names Kevin Smith as President
Artcobell, a leading furniture manufacturer for K-12 educational environments, announced the appointment of Kevin Smith as the new president. Smith, an experienced operations management executive, has played a key role in implementing Lean practices and preparing the company for growth. Rick Parker, the immediate past president, will continue to serve as an advisor. Artcobell aims to meet the evolving needs of the educational furniture market.

Steelcase Earns Top Score in Industry for Climate Change Disclosure From CDP
Steelcase has earned a top score of A- from CDP for its best practice environmental strategy and actions. Ranking in the top 5% of participating companies, Steelcase's continual commitment to transparency and environmental improvement has been recognized. The organization has disclosed through CDP since 2011 and has consistently improved its score. This recognition highlights Steelcase's dedication to reducing its impact on the environment and building a more sustainable future.
According to Brookfield, the widely accepted narrative about the US office market is flawed. They argue that the issue is not an oversupply of office inventory, but rather a lack of the right kind of inventory. Older, functionally obsolete buildings face significant drops in occupancy, while buildings with modern amenities and functionality see stable vacancy rates and high rents. Brookfield suggests that a large portion of older office buildings will need to be repositioned, repurposed, or demolished to address the vacancy issues.
A recent report on the office market reveals a decline in asset values, with average office property prices down by at least 25% nationwide. Despite the notion of a "flight to quality" in office leasing, losses were concentrated in higher quality Class A or A+ buildings, while lower-end buildings in non-prime locations are also experiencing a downturn. The trend is expected to continue in 2024.
According to a report from Attom, there were 635 US commercial real estate foreclosures in January, a 17% increase from the previous month and nearly double the number from January 2023. The increase in foreclosures is attributed to the end of forbearance programs, higher interest rates, and decreased demand for office buildings due to shifting work trends. California saw a particularly drastic increase, with foreclosures rising 72% from the previous month and nearly tripling since January 2023.

Features

Google has opened its new North American headquarters in New York City, housed in a renovated 1930s train terminal. The 12-storey office building, developed by Oxford Properties, was designed by CookFox Architects and Gensler. The building features an adapted rail station, flexible workspaces, cafes, event spaces, terraces, and outdoor green space. It will accommodate over 3,000 employees and has LEED v4 Platinum Certification for sustainability. The headquarters is part of Google's larger development plan for the area, which includes two more buildings.

Workspace News

A report from the Census Bureau on commuting in the U.S. reveals that in 2022, almost 140 million people commuted to work, while over 20 million worked from home, accounting for 15.2% of the workforce. Regional differences were significant, with Colorado, Washington, DC, and Washington having 20% or more of the working population working from home, while Mississippi, North Dakota, and Puerto Rico had 8% or less. The report also highlights changes in commuting patterns, such as a one-minute longer average commute and a decrease in the use of public transportation compared to pre-pandemic levels.
Young associates in law firms value workplaces that offer choice, flexibility, and technology. The physical workplace plays a crucial role in recruitment and retention, especially given the average tenure of a law firm associate is 2-3 years. The hybrid work model is preferred by younger generations, combining office work for collaboration, mentorship, and client interaction with some remote work. Spaces that foster internal and external events, and those that ease interactions with clients, are highly valued. Firms that invest in these aspects will attract and retain top talent.
The Department of Defense (DoD) has updated its telework policy to allow greater flexibility and attract top talent, reflecting adaptations to post-pandemic workplace norms and a push to maintain operational efficiency and national security interests. The policy carefully balances security needs with the advantages of telework, aiming for a future-ready, inclusive, and dynamic federal workforce amid political pressure to increase in-office presence. The DoD's approach is strategic, focusing on enhancing operational efficiency, recruitment capabilities, and employee retention. By leveraging telework, the DoD aims to position itself as an attractive employer, particularly in specialized fields like cybersecurity. The policy also emphasizes career opportunities for military spouses, accessibility for persons with disabilities, and retention of employees with specialized skills. This move signals a recognition within the federal domain of the need to adapt to changing work paradigms and will shape the future of work in the public sector.
Independence Blue Cross has joined other Philadelphia firms in mandating a three-day workweek in the office, while other companies are embracing remote work. The healthcare company requires its employees to work in-office three days per week, starting in March for managers and supervisors and in April for everyone else. This comes as Philadelphia struggles with low return-to-office numbers compared to other major cities. While some companies are enforcing stricter in-office policies, others are moving away from office requirements and opting for remote work.
Former EY leader and CEO of AM Bank, Dr. Nahla Khaddage Bou-Diab, warns that monitoring office attendance can lead to increased employee turnover and lower retention rates. She believes that the methods adopted by EY and other Big Four consultancy firms to encourage employees back to the office highlight a wider cultural issue in global business. Bou-Diab emphasizes the need for a supportive and innovative culture that makes employees want to return to the office, rather than relying on attendance monitoring. The article also mentions the impact of mass layoffs in the Big Four firms and the potential negative effects on job security and employee retention.

Trends

Architect Eran Chen believes that architects should go beyond designing buildings and be involved in programming and activism to meet the changing needs of urban environments. He sees opportunities in blurring the lines between public and private spaces and shaping buildings based on experiences rather than traditional functions. This approach is slowly gaining traction among developers who recognize the commercial success of innovative designs. Chen also emphasizes the importance of architects being involved in community outreach and advocacy, acting as instigators and connectors between private actors, policymakers, and communities to create positive change.

Design

Workers in hybrid arrangements are facing challenges finding spaces to focus and work in open offices. The most important function of office space for employees is having a place to focus, according to a global workplace survey. Companies are incorporating productivity-centric spaces like libraries and quiet zones, as well as pods and phone booths, to provide privacy and minimize distractions. Some companies are redesigning existing spaces to create designated focus areas. The trend in office design is adaptability to accommodate the changing needs of hybrid working environments.
To attract members, coworking spaces should prioritize state-of-the-art technology, flexible workspace options, wellness and recreation facilities, networking and community events, 24/7 access and security, thoughtfully designed interiors, and supportive staff and services. These amenities and features enhance the coworking experience, meet the diverse needs of professionals, and foster a sense of community and collaboration.
This article discusses the practice of converting office buildings into residential apartments for downtown revitalization. It highlights the benefits of adaptive reuse, such as preserving historic buildings, minimizing carbon emissions, and revitalizing downtown areas. The article also provides best practices for successful building repositioning projects, including embracing authenticity, selecting the right building, and seeking incentives for adaptive reuse.

Coworking

WeWork has renegotiated lease deals with landlords in Washington, D.C., Atlanta, and Portland as part of its bankruptcy restructuring. The company has saved $1.5B in future rent payments through the process and has more leases to decide on before emerging from bankruptcy. The renegotiated deals include reduced rent and shrinking of office space in some locations.
The desire for pet-friendly workplaces is on the rise, with 90% of employees expressing attachment to their company's mission. Coworking spaces have the opportunity to attract a unique customer base by allowing pets. Benefits include enhanced well-being, increased member satisfaction, improved work-life balance, fostering a sense of community, attracting a diverse clientele, increased productivity, and minimized stress levels. However, there are challenges such as allergies, noise disruptions, safety concerns, property damage, legal considerations, and personal discomfort. Embracing pet-friendly spaces can transform the coworking experience, but careful consideration and practical solutions are necessary.

Technology

Immersive classroom technology, initially developed by Rutgers University, has been successfully adapted for hybrid corporate meetings. This technology, involving high-quality audiovisuals and consistent user interfaces, allows for interactive and immersive classes across lecture halls. Cisco has also applied similar technology in its office redesign to support hybrid work, emphasizing flexible workspaces and seamless integration of remote technology. The use of this technology has addressed the challenges of hybrid meetings and improved connectivity for in-person and remote participants.

Latest Product News

HON introduces SoCo, a modular lounge series designed to meet the demand for collaborative and creatively stimulating workspaces. With its soft, rounded shapes and versatile design, SoCo offers limitless possibilities for productive teamwork or focused individual work. The collection solves common problems with traditional lounge seating arrangements by incorporating dual-purpose glides, curved shapes, and integrated power. SoCo is suitable for various settings, including cafes, reception areas, and breakout spaces, and aims to inspire creativity and engagement while promoting productivity and serenity.
Swiss furniture manufacturer Vitra is reintroducing the iconic Eames Plastic Chair in a more eco-friendly version made from recycled plastic. The chair, originally designed by Charles and Ray Eames in 1950, was the first mass-produced plastic chair. The new Eames Plastic Chair RE comes in different colors and is suitable for indoor and outdoor use.
Carl Hansen & Son introduces Studio CHS, a new business unit that offers customized furniture for hotels, restaurants, and offices. Customers can create truly unique furniture in partnership with the company, which has a long tradition of producing high-quality and timeless designed furniture. Studio CHS also offers an off-the-shelf furniture collection and the option for clients to design their own furniture line. All furniture is produced at Carl Hansen & Son's own factory in Vietnam, ensuring sustainable production and quality.
Designtex has partnered with the Frank Lloyd Wright Foundation to launch Elemental Wright, a collection of textiles, wallcoverings, and custom materials inspired by Frank Lloyd Wright's teachings and philosophies. The collection incorporates nature, geometric systems, and color palettes, offering designs that celebrate Wright's principles and encourage designers to interpret his legacy. The collection includes woven upholstery textiles, digitally printed wallcoverings, Digital Studio patterns, and a customizable digital asset based on Wright's Design for Hillside Theatre Curtain.
FilzFelt has launched Mosaik, a customizable acoustic wall tile made from 100% Wool Design Felt. Developed in partnership with Artaic, Mosaik uses automation to assemble mosaics from various sources of inspiration. The collection includes five designs by Kelly Harris Smith and is created using 2-inch square tiles available in over ninety colors. FilzFelt emphasizes sustainability and the reuse of materials, with Mosaik being made from felt left over from architectural product manufacturing.

Trends in Commercial Projects from Around the Globe

Tangram Interiors Partners With Neiman Marcus to Create Innovative Corporate Workspace in Dallas
Tangram Interiors partnered with Neiman Marcus to create an innovative and luxurious corporate workspace at CityPlace Tower in Dallas. The project prioritizes employee wellbeing and belonging, with a focus on flexibility, equity, and comfort. The workspace integrates physical and virtual elements to accommodate remote-first teams and features vibrant communal spaces, dedicated team areas, and state-of-the-art technology. Tangram Interiors is proud to have contributed to the realization of this impressive workplace.
Design firm Tengbom helped real estate firm Croisette Knight Frank infuse their identity in every detail of their new headquarters in Malmö, Sweden. The office features a bold infusion of pink throughout the space, including herringbone flooring in various shades of pink. The design reflects the company's brand and has garnered positive reactions from both employees and visitors.
Fyra Design Agency collaborated with EY Finland to create an environmentally-friendly Helsinki office design aligned with EY's hospitality-driven vision. The workplace, comprising existing and newly constructed floors, underwent a two-year renovation to enhance the employee, client, and brand experience. Sustainable design principles, including reuse of materials and low-carbon choices, were prioritized. The building received the highest LEED Platinum certificate, and a garden atrium with biophilic green walls was integrated into the space. The new workplace accommodates approximately 950 workers and embraces a hospitality-driven concept, offering amenities and promoting well-being. The project involved extensive user engagement and participation, and a digital art experience was created in the visitor lobby. Overall, the project successfully achieved a future-proof workplace that fosters collaboration and reflects EY's culture.

Upcoming Industry Events


HD Expo in Las Vegas for 2024
April 30 - May 2, 2024, | Las Vegas
 
The HD Expo + Conference, the largest hospitality product discovery event in the U.S., will take place at the Mandalay Bay Convention Center from April 30th to May 2nd, 2024. The event will feature over 700 product manufacturers, 30+ conference sessions, and the HD Awards ceremony. The ceremony will honor the best designs in 40 categories and present the Designer and Hotelier of the Year Awards. Registration is now open.

Clerkenwell Design Week 2024
May 21-23, 2024 | London

Clerkenwell is home to more creative businesses and architects per square mile than anywhere else on the planet, making it truly one of the most important design hubs in the world. To celebrate this rich and diverse community, Clerkenwell Design Week has created a showcase of leading UK and international brands and companies presented in a series of showroom events, exhibitions and special installations that take place across the area.

NeoCon 2024
June 10-12, 2024 | Chicago, IL
 
NeoCon has served as the world’s leading platform and most important event of the year for the commercial design industry since 1969. A launch pad for innovation—NeoCon offers ideas and introductions that shape the built environment today and into the future.  

Orgatec 2024
October 22-26, 2024 | Cologne, Germany

Orgatec is the International trade fair for office and property equipment. Held in Cologne, Germany.

Upcoming:
Workspace Design Show reveals all-encompassing speaker programme
The Workspace Design Show, taking place on February 27-28, 2024, in London, will feature over 120 speakers across various discourse elements, including the Workspace Design Talks programme, Sustainability Works, the Occupiers Forum, and the FIS Conference. The event aims to bring together industry professionals to exchange insights on workplace design and showcase innovative ideas.

Industry Briefing


BOS Orlando promotes Angel Shawver to Executive VP
BOS in Orlando, FL has promoted Angel Shawver to Executive Vice President. With over 16 years of experience, Angel's expertise in corporate accounts and building lasting relationships has earned her a reputation as one of the best in the business. As the BOS Orlando team continues to grow, Angel's leadership and sales experience will have a positive impact on clients, partners, and the community.

Groupe Lacasse Canadian Sales Team Appointment of Julia Rosen - New Business Development Director –Healthcare Canada
Groupe Lacasse has appointed Julia Rosen as the New Business Development Director for Healthcare Canada. With her extensive experience in the healthcare sector and her track record of spearheading large-scale projects, she is expected to contribute to the company's success in the Canadian healthcare market.

Humanscale Welcomes Justin Alejandro Lladoc as the New Head of APAC Marketing
Justin Alejandro Lladoc has been appointed as the new Head of Marketing for Humanscale in the Asia Pacific region. With a strong background in brand management and marketing strategy, Lladoc will play a crucial role in driving Humanscale's brand growth and sales initiatives, while emphasizing sustainability and intelligent design.

Landscape Forms Enters a Partnership with the International Downtown Association
Landscape Forms has announced its partnership with the International Downtown Association (IDA), a organization focused on revitalizing and sustaining vibrant downtowns. Landscape Forms, a leading designer and manufacturer of site lighting and furniture, shares IDA's commitment to enhancing the human experience through placemaking. The partnership aims to connect professionals in the place management industry and provide the knowledge and tools needed to create livable and prosperous urban areas.

In Case You Missed It: Humanscale Highlights New and Hero Products at Stockholm Furniture Fair
At the Stockholm Furniture Fair, Humanscale showcased its latest sustainable and ergonomic office designs, emphasizing active workspaces that promote movement and wellbeing. The exhibition featured the exclusive preview of the Freedom Ocean chair, made from ocean-bound plastic waste, highlighting the brand's commitment to environmental stewardship. Other products showcased included the Float Mini table and Active Pony stool, designed to encourage activity in the workplace. Humanscale also highlighted its range of ergonomic solutions, emphasizing comfort, flexibility, and sustainability in office design.

Configura Elevates Commercial Interiors Design with CET 14.5 Minor Release Update
Configura announces the release of CET 14.5 Minor, focusing on enhancing and refining existing functionality for the Commercial Interiors industry. Key highlights include a streamlined workflow with faster export and support for Revit 2024, enhanced user experience with improved precision and shortcuts, interoperability with exported SIF files, and informative dialogs in the Commercial Interiors Library. Configura encourages user feedback to drive innovation and improvements to the platform.

Find the best Contract Furniture Industry jobs and hire the best talent.
Dear Stephen, I work for a contract furniture manufacturer with HQ in North Carolina. We're a subsidiary of an overseas company. It seems we have a new President or CEO every couple of years. I'm in sales, and we have a great product, but the leadership keeps changing.


The Territory Sales Rep will be responsible for the specification and sales of The Senator Groups products, including both its Allermuir and Senator brands, in the New York/Northern New Jersey MSA. 
The position will streamline the sales and design process on commercial furniture projects to provide thebestresults for A&D and other new business development partners.
The Senator Group has an immediate career opportunity for a Territory Sales Rep in the Baltimore/Washington DC area.
Indoff is expanding and in need of experienced outside sales professionals in your area. If you’re tired of missing out on money due to low commission rates or you’re sick of quotas, then Indoff is the perfect solution for you.
This Merchandise Mart based Dual Role position provides collaborative support for the Chicago market and is responsible for all showroom management duties for our brand new AIS showroom.
MergeWorks is an ancillary furniture manufacturer seeking an experienced and enthusiastic Regional Sales Manager to...
The Designer provides design services and workspace solutions to dealership customers, including site/inventory verifications, programming, space planning, typical development, presentation materials, working/installation drawings, specifications and site-to-plan review.
The Project Manager (PM) is the point of contact for all aspects of assigned contract furniture projects, from inception of project to final close-out and invoicing.
BRC is looking for an effective independent manufacturers representative group to drive sales in Florida’s strong commercial market.
The Design Liaison Associate will be responsible for working closely with key design community and specification stakeholders within a given market area supporting design and specification of The Senator Groups brands, both Allermuir and Senator.
BRC is looking for an enthusiastic Regional Sales Director to join our dynamic team.
Territory – Covering Ohio (Davis Group), Michigan (DII), KY (TMG-KY), IN (TMG-IN), Central/ Southern IL (Direct rep), Chicago and Northern IL (Direct Sales team), WI (Direct rep), MN, ND and SD (True North), IA, NE, KS and MO (M2 Inc and M2 Inc - MO), 

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