ABI November 2024: Architecture firm billings remain flat / MillerKnoll Faces Challenges Amid Cloudy Office Furniture Market / MillerKnoll, Inc. Reports Second Quarter Fiscal 2025 Results / Steelcase Reports Third Quarter Fiscal 2025 Results / Jeff Turk Returns to Guide Formaspace’s Next Chapter / Office Real Estate Is Facing ‘a Year of Reckoning’ in 2025 / AT&T joins Amazon in ordering employees back to office 5 days a week / 2024 was a record-setting year for office building conversions / With Offices Overflowing, Amazon Delays RTO For Some Employees / Supply, Demand And A Recovering Office Market: Global CRE Outlook For 2025 / Packed Cubicles, Empty Corner Office: Remote Work Is Increasingly a Right of the Rich / Why the office still matters / Companies push return-to-office because of expensive leases: study / Employer Strategies to Boost Office Attendance in 2025 / and much more…


The Working Space

Monday, December 30, 2024

Industry News

MillerKnoll, Inc. Reports 2.2% Increase in Net Sales for the Second Quarter Fiscal 2025

MillerKnoll reported positive second quarter fiscal 2025 results with consolidated net sales up 2.2% year-over-year to $970.4 million, despite ongoing macroeconomic pressures. The company saw growth in several areas, particularly in Americas Contract where sales increased 5.9%, while maintaining a strong gross margin of 38.8%. Through the first half of fiscal 2025, the company returned approximately $93.1 million to shareholders through dividends and share repurchases.

Looking ahead, the company expects improving demand trends across most markets, though the third quarter will face some seasonal softness in Americas and International Contracts businesses and impacts from Chinese New Year. For Q3 FY2025, MillerKnoll projects net sales between $903-943 million and adjusted earnings per share of $0.41-0.47. The company has also narrowed its full-year adjusted earnings guidance to $2.11-2.17 per share, reflecting continued growth expectations despite slower than anticipated macroeconomic improvements.

MillerKnoll has been facing challenges in the office furniture market, particularly following its Q2 earnings report, which, along with weak results from Steelcase, has dampened recovery hopes. Despite a 2.2% year-over-year revenue increase to $970.4 million, the company lowered its adjusted EPS guidance for Q3. Although orders are improving, they are doing so at a slower pace than anticipated. The Americas Contract segment is performing well, with Q2 sales up 6.2%, while the International and Specialty segment also saw a 2.1% sales increase, driven by growth in the Middle East and Asia. However, the Retail segment experienced a decline. MillerKnoll is actively monitoring tariff proposals and is prepared to mitigate potential impacts. The company remains optimistic about trends and aims to gain momentum in the latter half of FY25, despite concerns over rising interest rates.

Steelcase Reports 2% Increasse in Net Sales for the Third Quarter Fiscal 2025

Steelcase Inc. reported third quarter fiscal 2025 results with revenue of $794.9 million, representing a 2% increase from the prior year, driven by 5% growth in the Americas while International declined by 6%. The company achieved net income of $19.1 million and adjusted earnings per share of $0.30. The Americas showed strong performance with 7% organic revenue growth and positive order trends, particularly from government, healthcare, and education customers.

Looking ahead, Steelcase expects fourth quarter fiscal 2025 revenue between $770 to $795 million, with earnings per share projected at $0.17 to $0.21 and adjusted earnings per share of $0.20 to $0.24. The company's total liquidity strengthened by $152.0 million compared to the prior year, reaching $576.6 million, and management noted that fiscal 2025 adjusted earnings per share are projected to exceed their target.

Architecture firm billings remained flat in November, indicating stabilization after two years of decline, with regional variations in performance. While inquiries for new projects grew, profitability and workforce planning are top concerns for firms heading into 2025 amid easing inflation and declining interest rates.
WHY THIS MATTERS: Architecture firm billings remained flat in November, signaling a stabilization after nearly two years of decline, with the Architecture Billings Index (ABI) hovering near the 50-point threshold that separates growth from contraction. While inquiries for new projects continued to grow and the pace of decline in new design contracts slowed, the recovery remains uneven across regions and sectors. Firms in the West and South saw increased activity, while those in the Northeast and Midwest experienced slower declines. Multifamily residential and institutional specializations showed notable improvement, but commercial/industrial firms continued to face challenges. Broader economic indicators, such as rising employment and easing inflation, provide optimism, though profitability and workforce planning remain top concerns for architecture firms heading into 2025. As interest rates decline and financing challenges lessen, firms are cautiously optimistic about aligning their strategies with evolving market conditions.

Jeff Turk Returns to Guide Formaspace’s Next Chapter

Formaspace announces Frank Bucher's departure as CEO, with Founder and Chairman Jeff Turk resuming operational leadership.

Turk, who founded Formaspace in 2004 and led it to 1,000% growth over 17 years, returns after briefly transitioning the CEO role to Bucher in January 2023.

The company is known for custom furniture solutions in healthcare, education, and industrial sectors, with Turk's return emphasizing continued innovation and service excellence.

"I am excited to reengage with our team, clients, and partners," said Turk. "We will continue empowering people to achieve remarkable results."

Turk will maintain his Chairman role while managing daily operations. Corey Hutchins continues as sales leader.

DIRTT Environmental Solutions plans to initiate a normal course issuer bid to buy back up to 7.5 million common shares starting December 20, 2024, aiming to enhance shareholder value. The company has not repurchased shares in the past year but has previously engaged in buying back convertible debentures.
The commercial real estate industry is facing significant challenges as it approaches 2025, characterized by high borrowing costs and a surge in loan delinquencies. Many property owners are struggling to refinance due to rising interest rates and falling property values, leading to a situation where loans are maturing without the necessary funds to pay them off. Strategies such as "extend and pretend" and "amend and extend" are being employed by lenders to delay losses, but these tactics may only exacerbate the situation in the long run. Key players in the industry are increasingly concerned about the potential for widespread defaults, as economic conditions remain uncertain. The impact of these issues could have far-reaching consequences not only for the real estate sector but also for the broader financial system, highlighting the risks associated with high levels of unsustainable debt.
Commercial real estate markets face challenges in 2025, with limited supply in key areas like Scotland and Dubai, while nearshoring boosts demand in Costa Rica and Chile. Office markets are recovering, focusing on high-quality spaces to enhance collaboration as companies bring employees back. Strategic development and adaptive strategies will be crucial for navigating these dynamics.
Amazon is postponing its return-to-office plans due to insufficient office space for employees. Although the company mandated a return starting January 2, certain locations, including New York and Houston, are not ready to accommodate all workers. Employees in these cities can continue working from home until May 2025. Originally, Amazon aimed for a full return by early 2025, but capacity issues are delaying this timeline. The company's strict office policy has faced pushback from employees, particularly after leadership emphasized a return to pre-pandemic norms. As logistical challenges persist, employees have been assured of a full return by the designated date, regardless of workspace readiness.
In 2024, the trend of converting vacant office buildings into housing and other uses reached a record high, with over 70 projects completed and 30 more expected by year-end. This surge is largely driven by declining office values and high vacancy rates, which have persisted post-pandemic. Most conversions are aimed at multifamily housing, accounting for 74% of projects, while others include hotels and industrial spaces. Cities are incentivizing these conversions to address the surplus of empty offices, leading to predictions of even more projects in 2025, with a total of 279 planned or underway.
In November, foot traffic to office buildings across the U.S. dropped to 62.4% of the levels seen in November 2019, marking a decline from previous months. This downturn has been attributed to record travel during Thanksgiving, which led many people to prioritize holiday plans over returning to the office. The analysis suggests that the increase in travel during this time has significantly impacted office attendance.
San Francisco has experienced a decline in office vacancy rates for the first time in over four years. This change indicates a potential recovery in the commercial real estate market, as businesses begin to reassess their space needs in the evolving work environment. The report highlights the implications of this trend for both landlords and tenants in the city.
AT&T has announced that it will require all office employees to return to the office five days a week starting in January, moving away from its previous hybrid work model. This decision aligns with similar moves by other major companies, including Amazon, which is also pushing for a full return to in-office work. Company representatives emphasize that in-person work is essential for collaboration and innovation, citing that many employees have been working on-site throughout the pandemic. The shift back to more rigid work arrangements reflects a broader trend among corporations to roll back flexible work policies established during the pandemic.
Trump's hard-line immigration policies could significantly impact the construction industry, which relies heavily on immigrant labor. Mass deportations may exacerbate labor shortages, disrupt the economy, and worsen the housing crisis, as the industry is already facing a deficit of native-born workers. Advocates call for practical immigration reform rather than mass deportations to address worker shortages effectively.

Feature Stories

Executives increasingly enforce return-to-office mandates for their employees while maintaining remote lifestyles in luxurious locations, exposing a significant disparity in workplace expectations. Leaders like Marc Benioff and Brian Niccol require staff to be in the office several days a week but continue to work remotely from homes far from their companies’ headquarters. This contrast underscores a broader economic divide, where higher-income workers enjoy more remote work privileges than their lower-income counterparts. Research consistently shows that remote work enhances productivity, improves diversity in the workplace, and supports caregivers and individuals with disabilities, yet these benefits are often overlooked. Instead, return-to-office policies frequently align with financial pressures, suggesting their true purpose may be to reassure shareholders rather than improve operations.

Beyond the workplace, this divide extends to societal issues, such as housing crises in affluent towns where remote-working elites drive up costs while service workers endure long commutes. Evidence shows that remote executives underperform compared to those working on-site, raising further questions about the logic behind these mandates. Moreover, the reliance on private jets to bridge geographic gaps highlights environmental concerns and reinforces class distinctions. The push for a return to office life alienates many employees, particularly those juggling caregiving or accessibility needs, while perpetuating inequalities both in the workforce and broader society.

In 2025, expect advancements in AI agents, smart gadgets, improved weather forecasting, and a potential TikTok ban. The electric vehicle market may face challenges with subsidy rollbacks, while health tracking evolves into longevity tracking. Self-driving cars will become more accessible with services launching in major cities.
Five notable design films to watch include documentaries on Eliot Noyes and Eileen Gray, a historical drama about a Holocaust survivor architect, and a sci-fi epic by Francis Ford Coppola exploring visionary architecture. Each film highlights the intersection of design, personal stories, and societal issues.
The rise of remote work has increased loneliness, but returning to the office offers a chance to rebuild community and foster connections, enhancing mental well-being through everyday social interactions. Embracing these opportunities can counteract feelings of isolation and promote personal growth.

Workplace News

AI integration is crucial for workplace productivity, but many organizations face challenges due to a lack of training and support. A shift towards data-driven decision-making is emerging, while some experts warn against over-reliance on technology, advocating for flexibility and recovery to enhance productivity.
The new rules of engagement in workplace politics emphasize the importance of transparency, effective communication, and collaboration among team members. It highlights the need for professionals to navigate complex interpersonal dynamics while maintaining respect and professionalism. The focus is on fostering a culture where differing opinions can be expressed constructively, ultimately leading to a more inclusive and productive work environment.
Companies are increasingly implementing return-to-office (RTO) policies due to the financial strain of long-term office leases signed before the pandemic. A survey of 900 business leaders revealed that one in three are enforcing RTO mandates specifically because of these existing lease agreements. Many leases will not expire until 2028 or later, prompting companies to reconsider their office space needs as remote and hybrid work models have proven effective.
 
While almost 30% of leaders plan to require full-time office attendance by 2025, others are opting for part-time arrangements. This trend is particularly pronounced in the tech industry, where companies like Amazon are mandating in-office work despite employee pushback. The financial burden of these leases is a significant factor driving the push for RTO, which may risk alienating talent and hinder opportunities for flexible work solutions. Balancing economic constraints with the demand for modern work environments will be crucial for companies in the evolving post-pandemic landscape.
Many corporate leaders are seeking to increase office attendance in 2025, with two-thirds of surveyed professionals expecting employees to be in the office at least three days a week. Key barriers to attendance include commute time and the lack of enforced attendance policies. While flexible working hours and proximity to public transit are considered, many employers are adopting people-focused strategies to improve attendance. This includes role modeling by leaders, manager training, and enhanced social programming. Additionally, companies are adjusting workplace designs to better accommodate new working patterns, focusing on amenities and activity-based spaces. However, financial constraints remain a challenge for some organizations aiming to upgrade their facilities.
The U.S. federal workforce has experienced increased productivity, engagement, and job satisfaction through telework, especially during the COVID-19 pandemic. However, a push by the Department of Labor to return to in-office work threatens these gains, risking morale and efficiency. Union leaders emphasize the importance of flexibility, citing data that shows remote work has improved both work quality and customer satisfaction. Concerns arise over the potential loss of institutional knowledge and workforce capacity if employees, particularly those hired during the pandemic, are forced back into traditional office setups. The ongoing debate highlights the need for policies that balance operational requirements with employee well-being, ensuring that the lessons learned from telework are not overlooked as agencies consider their future work arrangements.
The life sciences market is experiencing a significant slowdown, prompting discussions about the potential reversion of office buildings converted to labs back to their original use. As demand for lab space decreases, developers and investors are reevaluating underperforming conversions, especially in suburban markets where office leasing activity is beginning to recover. The transition to lab spaces was initially driven by a booming life sciences sector, but with current market corrections, there is a noticeable gap between lab and office rents, complicating the financial viability of such conversions. Experts believe the shift could lead to consolidation of lab spaces in major hubs, leaving less desirable suburban areas behind. This trend underscores the volatility of real estate markets and the necessity for strategic alignment with sustainable market demands, presenting both challenges and opportunities for recovery in the office sector.
Major corporations, including AT&T and Sweetgreen, are implementing stricter return-to-office policies as they aim to bring employees back into the workplace. AT&T will require most of its 124,000 U.S. employees to report to the office five days a week starting in January, following a previous mandate for managers. Sweetgreen will enforce a four-day office requirement for non-restaurant staff beginning January 2.
 
Many companies are moving away from flexible work arrangements, with a significant percentage expecting a full return to the office by 2025. A survey indicated that about one-third of companies plan to increase required in-office days, as they believe on-site presence enhances team cohesion and productivity. However, this shift has sparked considerable employee resistance, with many expressing an intention to seek more flexible job opportunities if their hybrid work options are removed.

Trends

Key takeaways from 2024 workplace trends include the importance of sustainability, work-life balance, positive workplace culture, trust and connection, and fostering creativity and innovation in both remote and in-person settings.
In 2025, the workplace will be shaped by several key trends. First, the ongoing debate over return-to-office policies will continue, as companies strive to balance employee desires for flexibility with leadership preferences for in-office collaboration. Many organizations are likely to adopt hybrid work models to retain talent.
 
Second, artificial intelligence will increasingly influence jobs and hiring processes. While some fear job losses due to automation, experts suggest that AI could create new roles and streamline hiring by assisting in candidate screening and interviews. However, caution is advised regarding AI's limitations in determining the best fit for positions.
 
Lastly, there is a growing backlash against diversity, equity, and inclusion (DEI) initiatives, with several companies scaling back their programs in response to conservative activism. Despite this trend, many businesses still recognize the importance of DEI for fostering a positive workplace and maintaining competitiveness. The evolving landscape of DEI will be closely monitored as societal and political pressures change.
Traditional office buildings are increasingly incorporating medical tenants to address high vacancy rates, providing steady income and appealing diversified portfolios, despite challenges like infrastructure needs and increased foot traffic. Suburban growth and discounted distressed properties are also shaping this trend.

Design

In 2024, hybrid working trends have transformed office design, highlighted by top articles on branded interiors by Sony Music, the hospitality focus of co-working spaces, the role of science and technology in workplace wellbeing, innovations from Big Tech, and a mixed-use office-retail space in Amsterdam.
Five tips to enhance productivity while working from home include creating a dedicated workspace to minimize distractions and improve efficiency, as a cluttered environment can lead to procrastination and ineffective multitasking.
Eight designers identify trends they want to see disappear in 2025, including social media-driven products, arches, revenue-focused success metrics, and the AI aesthetic, advocating for more thoughtful and sustainable design practices.

Coworking

The coworking industry is undergoing a transformative period driven by advancements in AI, growing corporate demand, and the rise of niche spaces. AI is revolutionizing coworking operations by enhancing personalization, streamlining member experiences, and unlocking advanced analytics, enabling operators to focus on hospitality and community building. Meanwhile, corporations increasingly embrace coworking as a solution for hybrid work, fueling demand for flexible, hospitality-driven spaces. Specialized coworking hubs, such as those tailored to Med-Tech or fashion industries, are fostering innovation and collaboration, creating unique opportunities for growth.

Key trends shaping the industry’s future include a shift towards hospitality as the core of coworking, a reevaluation of the term “coworking” to emphasize community, and increasing integration of technology and flexible design. Despite WeWork’s bankruptcy, its potential turnaround could catalyze a new era of growth. Industry players are urged to prioritize sustainability, equity, and mental health to align with evolving member expectations. With the potential for consolidation and renewed investment, coworking is poised for a renaissance, marking a pivotal moment for innovation and reinvention.

Green / Sustainability

Design is not just about aesthetics or functionality—it’s an essential driver of sustainable change and social impact. With 2024 on track to be the hottest year on record and global challenges mounting, the design community is uniquely positioned to lead transformative solutions that address climate change, inequality, and economic resilience. By embedding principles like circularity, eco transition, and glocalisation into every project, designers can reimagine products and systems to benefit people and the planet. For MMQB readers, this signals the urgency and opportunity for leveraging design as a tool to create a more equitable, sustainable future while setting new industry standards for innovation and responsibility.

Latest Product News

Fräsch has launched FAZR Wall, an innovative acoustic wall panel system that combines superior sound control with a modern design, available in 36 colors and wood finishes. Made from eco-friendly materials, it aims to enhance various environments while promoting sustainability.

Industrial Design

Fourteen designers reimagined a chair by Dutch Invertuals for the Specimen exhibition, showcasing diverse materials and styles, including tree branches, copper fossils, and laser-cut aluminum, celebrating the studio's 15th anniversary.
NYC's MTA plans to replace older subway cars with new models, phasing out the beloved orange bucket seats known for comfort and social seating arrangements, reflecting a shift towards high-tech features and a more sterile transit experience.

Trends in Commercial Projects from Around the Globe

OCCA has moved to a new open-plan studio in Glasgow, designed to reflect its values and foster collaboration among its team. The space features natural light, ergonomic workstations, and areas for creativity, showcasing local products and serving as an inspiring hub for design innovation.
Pinterest's new Chicago office, designed by Partners by Design, features a 19,000 square foot space inspired by the city's culture, including themed areas like a Chicago Pizza Parlor micro kitchen and a Navy Pier-inspired Executive Business Center, fostering collaboration and creativity.
The new Mercedes-Benz Istanbul office, designed by Boytorun Architects, enhances productivity and collaboration with flexible workspaces, social areas, and sustainable design, aiming to foster a strong sense of belonging among employees.
Allianz Australia has completed new office fitouts in Brisbane and Adelaide, focusing on employee wellbeing with flexible spaces, natural light, and biophilic design. The projects enhance collaboration and community among staff, leading to increased workplace occupancy and satisfaction.

Latest In Real Life WFH

Andrew Clare is a tech content creator with over 215,000 followers, known for his iPhone-crafted videos and insights. His workspace includes an M4 Mac Mini and ergonomic furniture, and he emphasizes creativity through rest and community engagement. Challenges for creators in 2025 will include consistency and evolving content.

Project Leads

The Florida Department of Agriculture has begun construction on a new 256,000 sq. ft. facility in Tallahassee, expected to save $70 million over 30 years and consolidate 940 employees to enhance efficiency and collaboration in supporting Florida's agricultural community.
Ezee Fiber leases 94K SF at Houston Technology Center to consolidate operations and support growth, expanding into New Mexico and planning further state expansions in 2025. The facility offers extensive office and data center amenities.
Momentum is building for the redevelopment of aging federal office buildings near the National Mall, with calls for the government to offload properties to create a vibrant mixed-use district, potentially transforming the area into a cultural and residential hub.

Upcoming Industry Events

NeoCon 2025 / DesignDays 2025
June 9-11, 2025 | 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.  Joining at the same time, in Fulton Market is DesignDays, a compatible show that now hosts more than half of the largest office furniture manufacturers. Hint: See both.

Industry Briefing

Susan Pilato joins the NeoCon Advisory Council
Susan Pilato, the Founder and CEO of Mantra Inspired Furniture, has been appointed to the NeoCon Advisory Council. This council, consisting of 25 influential stakeholders from the commercial design industry, serves as a platform for sharing insights and expertise aimed at enhancing the industry's leading annual event. The members represent various segments of the NeoCon community, including manufacturers, dealers, A&D professionals, facility executives, industry associations, and media.

Global Furniture Group, USA adds to its growing team in South Florida
Francisco Ramirez joins Global Furniture Group as Regional Sales Manager for South Florida, bringing over 20 years of experience in strategic sales and business development. He aims to drive sales growth and market expansion while fostering a high-performing sales culture in the region.

Global Furniture Group, USA adds to its growing team in the Northeast
Karen Krasnomowitz has joined Global Furniture Group as Regional Sales Manager for Metro New York, bringing over 20 years of experience in sales and a focus on inclusive team environments. She aims to drive sustainable growth and enhance client relationships across various markets.

Humanscale’s Freedom 25 Chair Wins Distinguished Best of Year Award
Humanscale has announced that its Freedom 25th Anniversary Signature Edition chair has won the 2024 Best of Year Award in the contract conference/task seating category. Designed by Niels Diffrient, the original Freedom Chair revolutionized seating comfort with its self-adjusting features. The limited edition release celebrates the chair's 25th anniversary, featuring an upholstered back, polished aluminum trim, and options for premium fabric or leather. Each of the 250 chairs produced is signed and numbered, making it a collectible piece that combines innovation with elegance.
HNI Corporation has been recognized as one of America’s Most Responsible Companies for 2025, ranking No. 36 overall and No. 3 in the Retail and Consumer Goods category. This marks the sixth consecutive year the company has made the list, which evaluates the top 600 publicly traded companies based on their environmental, social, and governance performance. HNI's commitment to corporate responsibility focuses on reducing operational impacts, creating sustainable products, and respecting people. The company has set measurable goals, including reducing emissions and achieving zero waste to landfill at several facilities.
Find the best Contract Furniture Industry jobs and hire the best talent.
A professional expresses frustration over needing to self-advocate for promotions despite a strong track record. Stephen advises that self-promotion is essential, and timing, visibility, and potential biases can affect promotion opportunities. If consistently overlooked, it may be time to consider other organizations that will recognize one's potential.
Logiflex a well-established office furniture manufacturer is looking for a Corporate Sales Representative for the  North Texas and Oklahoma USA market to expand our clientele and create strong relationships with our clients.
Logiflex, a well-established office furniture manufacturer is looking for a Regional Sales Director responsible for increasing sales in the South East USA Market. Identifying new business opportunities, developing business relations and increasing Logiflex’s visibility. 
District Manager has responsibility for sales, promotional, support, trainingand educational activities targeted to designated OFS/ Carolina dealerships, The Architect/ Design community, Commercial Real Estate community and the End User community.

Partner with Fluidconcepts to Inspire Workspaces Across these Regions:

North Texas I Oklahoma I Arkansas I Missouri I Iowa I Nebraska I Kansas I Minnesota I Wisconsin

If you’re experienced in building relationships with designers and dealers and have a passion for innovative furniture, we’d love to hear from you. Email us at sales@fluidgroup.com.

This is a full-time remote role for a Sales Specialist.
Nightingale Corporation, a leading chair manufacturing company located in Mississauga, Ontario, is seeking a dedicated and enthusiastic individual to join our Corporate Sales Team.
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