Pivot Interiors Opens New Design Center in Los Angeles / Austin's Best CEOs: Beth Goff-McMillan led SKG through unpredictable challenges / Unit Sizes Coming Down Again As Remote Work Renters Gravitate To Common Spaces / Office Sublease Availability Hits Record in Silicon Valley / Manhattan Office Availability Rate Sets Another Record / “Coffee badging” is the latest workaround for return-to-office mandates / Manhattan Office Leasing Sinks 30% Despite String Of Big Deals / Less Feels Like More in Hybrid Workspace Design / Are the days of landmark corporate headquarters over? / and much more…


The Working Space
Monday, October 9. 2023

Industry News

Pivot Interiors Opens New Design Center in Los Angeles
Pivot Interiors has opened a new design center in Los Angeles, serving as an office, showroom, and collaborative space. Housed in a historic building, the center pays homage to the city's history and features original brickwork, natural light, and future outdoor space. The design center emphasizes distributed work, collaboration, and wellness and aims to engage with the local community through partnerships with artists, breweries, and caterers. The address of the new design center is 2116 Sacramento Street, Los Angeles CA 90021.
As remote work becomes more prevalent, renters in Atlanta are seeking common spaces outside of their units to socialize. This trend, along with rising construction costs, has led to a decrease in apartment unit sizes. Developers are focusing on unique amenities, with coworking spaces rivaling the size of clubhouses. Storage rooms and smart technology are also popular among residents. The reduction in unit sizes is also driven by the need for more affordable housing options. However, developers acknowledge that a change in lifestyle may be necessary to accommodate smaller units.
Beth Goff-McMillan, CEO of SKG, successfully led the company through the challenges of the pandemic. Prior to Covid, she grew SKG's revenue from less than $18 million in 2015 to over $65 million in 2019. Despite the impact of the pandemic on the office outfitting industry, Goff-McMillan quickly got her team back to work and helped clients do the same. She also steered the debut of a new technology platform and successfully navigated the acquisition of SKG's major furniture partner. Goff-McMillan's ability to understand and motivate others has contributed to her success, and she has implemented initiatives such as the "Give Back Kick Back" program. SKG specializes in commercial space design and works with over 250 furniture providers. Goff-McMillan is also involved in various leadership roles outside of work.
Despite efforts by companies to enforce return-to-office policies, office attendance in big cities remains at around half of pre-pandemic levels. The return rate may even decline further due to factors such as the potential increase in Covid-19 cases and a weakening economy. Business leaders are struggling to fill office spaces, but the majority of companies are still allowing employees to work remotely at least part-time. The average return rate in the 10 U.S. cities tracked is around 50.4% of 2019 levels. These disappointing return rates are adding to the challenges faced by office owners dealing with high vacancy rates.
Office sublease availability in Silicon Valley reached a record high of 7.6 million square feet in the third quarter, with a projected increase for the rest of the year. Leasing activity has decreased, but rental rates continue to rise. Savills expects tenant-favorable market conditions to persist as landlords compete for occupancy and anticipates flight to quality and capital as well as slow market conditions through early 2024.
Approximately 10% of German companies plan to reduce office space due to the rise of remote working, putting additional strain on the commercial real estate market. While some industries like automotive and broadcasting show higher percentages of downsizing plans, sectors like trade and construction have fewer plans to cut back. With a quarter of employees working from home permanently, this downsizing trend is expected to continue as long-term office leases expire and firms reassess their workspace needs, potentially exacerbating the real estate market crisis.
After the pandemic, many trends that were accelerated are now returning to pre-pandemic levels. E-commerce, migration patterns, and remote work are all shifting back to normal. Office leasing, specifically per-worker absorption, experienced a drop during the pandemic but is expected to revert to the long-term trendline as economic conditions improve.
Office buildings in San Francisco are trading at significant discounts, with Blackstone recently selling a property in Showplace Square for half of its purchase price. The 83K SF office building at 650 7th Street was sold to LBA Realty for $25.4M, compared to Blackstone's purchase price of $50.5M seven years ago. The office vacancy rate has increased to nearly 34% in the third quarter, and the volume of tenants touring available space in San Francisco has risen by 10% year-over-year. Other office properties in the Financial District have also experienced significant declines in value.
The office availability rate in Manhattan reached a new record of 17.9% in Q3, marking the fourth consecutive quarterly increase. The available supply has risen by nearly 80% since March 2020 to a record high of almost 97 million square feet. Leasing activity increased to 6.5 million square feet, with the FIRE sector leading in leasing. However, office investment sales dropped by 83% YoY, and upcoming large blocks of vacant space from tenant relocations will continue to put pressure on the market.
The AI leasing boom in San Francisco's office market is seen as a potential turning point for the struggling market. The city has become the AI capital of the world, with many AI companies signing office leases in recent months. The release of ChatGPT and Microsoft's investment in OpenAI have fueled interest in the AI industry. AI companies prioritize in-person work, leading to a concentration of AI firms in the Mission District. The AI industry is expected to continue growing, but it alone cannot solve San Francisco's office market problems. Other emerging sectors like cleantech and life sciences may also contribute to the market's future.
The D.C. office market continues to struggle as vacancy rates reach an all-time high of 20.9% in the third quarter. Tenants, both in the private sector and government, are reducing their square footage and moving to higher-end spaces. The trend of decreasing footprints is expected to continue, leading to a higher vacancy rate in the future. The federal government's efforts to shed space have also contributed to the increase in vacancy. While trophy buildings experience lower vacancy rates, older Class-B and Class-C buildings face challenges due to lack of tenant demand and inability to convert.
Manhattan office leasing in the third quarter of this year decreased by 30% compared to the same period last year, with availability increasing to 19.6%. While some market-moving leases were signed, concerns about sublease space and the impact of WeWork's situation are expected to dominate the rest of the year. Despite challenges, there are signs of improvement, such as reductions in sublease supply and expansionary leases. However, Class-B and C office deals continue to face difficulties, and the pipeline for new office development is narrowing due to rising interest rates.
Despite efforts to enhance in-office experiences and demand for employees to return to work, the global commercial real estate market is still struggling, with demand for square footage only at half of pre-pandemic levels. While companies have introduced perks and incentives, the hybrid work model has not been fully optimized, leading to challenges in connectivity and productivity. Reductions in office space and headcount continue to be cost-saving measures for companies, impacting commercial real estate owners and operators. The construction of new office towers contrasts with predictions of unused office space in the future, suggesting a potential protracted slump in the market.

Features

Remoov's warehouse in San Francisco has become a graveyard for corporate furniture from shuttered offices. With the shift to remote work during the pandemic, the company has cleared out commercial spaces and resells the items at a fraction of their retail value. San Francisco's teachers and artists have found affordable options among these secondhand furnishings, which come from various neighborhoods in the city. Remoov's business has become an indicator of the shifting commercial real estate market in the city.

Workspace News

Hybrid work has become the new normal for many knowledge workers, but it comes with challenges such as isolation and a lack of interaction. Some companies have successfully implemented hybrid work strategies by finding the right balance between remote and in-office work, adopting radical approaches like virtual team meetings, setting clear rules and guidelines, and developing integrated strategies that consider all aspects of the work environment. These approaches aim to enhance productivity, collaboration, and employee experience in the long term.
Workers are adopting a new trend called "coffee badging" where they show up to the office for required attendance, earn an imaginary badge for it, and then leave to work from home for the rest of the day. This practice allows for flexibility in work schedules and helps maintain a work-life balance. While some see value in being in the office for meetings and socializing, others use coffee badging to maintain a traditional appearance without being present for the full day. Trust between employers and employees regarding productivity is still an issue, but companies are finding ways to monitor office attendance. Ultimately, the office still has a place, but flexibility in when and where people work is becoming the new standard.
Zoom has joined other tech companies in requiring employees to return to the office after promoting remote work during the pandemic. While some workers are pushing back and even quitting their jobs, Zoom calls its plan a "structured hybrid" policy, requiring employees within a 50-mile radius of an office to return two days a week. The company is focused on flexibility and addressing employee concerns on a case-by-case basis. Zoom has already seen benefits from in-office collaboration, but it's still early to determine the success of the strategy. The company is conducting surveys to measure employee satisfaction and is open to evolving its approach based on worker needs.
The future of work and the return to office movement depend on understanding what Millennials want. With their digital native status, adaptability to new technologies, and high education levels, Millennials are the largest working generation and hold significant influence. To coax Millennials back to the office and keep them engaged, companies should focus on flexibility in work location and schedule, creating 15-minute office environments with convenient amenities, fostering communication and collaboration, and providing in-office perks and amenities that enhance productivity and well-being.
Flex space solutions are becoming increasingly important for corporates as they navigate return-to-office policies and seek high-quality work environments. Demand for flexible space is expected to rise, with 42% of corporate occupiers planning to use it more in the next three years. While large corporates use flex as a bridge to better quality spaces, small to medium businesses see it as a strategic tool for growth. Flex space enables optimized office occupancy, provides amenity-driven spaces, and allows organizations to quickly adapt to changing demands. Traditional office leasing and flex are expected to remain friends in the foreseeable future.
A conference at Stanford University explored the economic and societal impacts of working from home, with papers discussing housing prices, crime rates, and gender imbalances. The debate on remote-based productivity remains contentious, with research finding both positive and negative effects. Some companies are calling workers back to the office, claiming it will improve innovation and collaboration. However, a paper from a Federal Reserve Board economist challenges the notion that fully remote work leads to lower productivity, citing increased research output and collaboration among white-collar professionals. Another study shows that more people reported increased productivity while working from home compared to those who felt their performance suffered. The debate on remote work's impact on productivity is influenced by differing perceptions between workers and managers. The productivity benefit often comes from time saved on commuting rather than increased efficiency. The advice is to involve staff in creating flexible work policies to understand their preferences.

Other News

The Las Vegas Sphere, a unique orb-shaped entertainment venue, has garnered attention for its impressive exterior. However, the 875,000 square feet of interior spaces are equally captivating. Designed with advanced technology, including a massive 16K LED screen, a sophisticated speaker array, and haptic features, the theater offers a truly immersive experience. The rest of the venue, such as the atrium and food and beverage areas, is designed to transport visitors into a surreal world. The goal is to create a narrative that encourages exploration and discovery. While technology plays a significant role, it is meant to enhance the experience rather than overshadow it.
Despite concerns about AI leading to job losses, a survey of young tech workers in Europe reveals that almost four in five believe AI will have a positive impact on their work. Confidence levels are highest in the UK, with over 85% of young tech workers feeling confident about AI. The survey also shows a significant increase in job satisfaction and security among young tech workers, with more than half choosing to be in the office four or five days a week. Purpose and positive impact are important drivers for young workers, and mental health support is seen as crucial by respondents.
Still looking for that perfect showroom space in Fulton Market, but afraid you’ve lost out on the best spaces? Don’t worry. Fulton Street Cos. has secured a $233 million loan for a new office building at 919 W. Fulton St in Chicago's Fulton Market. The building aims to stand out with its location, being the tallest in the district, and offering the most outdoor space and a restaurant from Gibsons Restaurant Group is expected to open on the ground floor by the summer of 2025.. Investment firm Harrison Street has already signed on as the anchor tenant. The project hopes to bring renewed confidence in the stagnant office market and features a hotel-like lobby design for a more comfortable work environment.

Trends

The article discusses the idea that the creation of landmark corporate headquarters may indicate problems for the company. Examples of British Airways' Waterside building and FTX's campus in the Bahamas are given. The article questions whether monumental headquarters statements are becoming a thing of the past.

Design

Architectural design can play a crucial role in forging emotional connections in the workplace. In a post-COVID-19 world, where hybrid work models have increased feelings of isolation, emotionally evocative design can entice teams back to the office. Aesthetically pleasing environments trigger the release of dopamine, reducing stress and evoking pride in the workplace. The concept of the Aesthetic Triad, which focuses on coherence, fascination, and hominess, highlights the importance of emotional responses to the layout and organization of spaces. Exposure to natural elements and the strategic use of color can also profoundly affect mood and emotions. By leveraging these insights, we can create workplace environments that nurture the emotional, aesthetic, social, and psychological needs of occupants.
As organizations navigate the hybrid work model, workspace design plays a crucial role in balancing employee expectations and business goals. The shift towards flexible work policies and the decline in office worker density present an opportunity to reimagine workspace design with a focus on employee well-being and engagement. High-quality, well-located office buildings with amenities that enhance employee experiences and align with environmental and social targets are more likely to attract occupiers. Additionally, the integration of outdoor spaces and the concept of local coworking in residential areas contribute to the success of the 15-minute city, reducing commute times, fostering community, and supporting the local economy.
In this video, Haworth's International Design Studio Manager, Nicolai Czumaj-Bront, shares his design journey and the intersection of psychology, philosophy, and design. He discusses his experience working for Haworth, fostering global design cohesion, and understanding diverse cultures. Nicolai also highlights his favorite project, Fern, which redefined chair design, and shares insights into the future of design, including hybrid solutions and sustainability.

Coworking

Fitch has downgraded WeWork's credit rating to C, indicating a high likelihood of default or a "default-like process." The ratings agency predicts that WeWork will undergo reorganization in bankruptcy rather than liquidation. WeWork's solvency has been in question for months, and recent news of missed payments has further shaken investor confidence. Fitch also downgraded $1.4B of WeWork's existing debt. Despite restructuring efforts, WeWork's cash burn remains high, and its ability to improve operating performance is not materializing. Economic conditions and pricing challenges continue to weigh on the company. While cost-cutting measures have provided some savings, it remains uncertain if improvements will be enough to avoid default. WeWork's stock has plummeted over 98% in value compared to a year ago.

Latest Products

Allsteel introduces the Beyond Thin Framed Door, a wall solution that combines functionality and aesthetics. This system extension addresses the need for workplace functionality while providing sleek aesthetics. The Beyond system offers quick adaptability, reduced installation time, materiality choices, and optional integrated power and technology. It also features an exclusive scissor-lift leveling mechanism for a consistent and clean appearance. The Thin Framed Door is designed to support ADA compliance and inclusivity, with offset glass and accessibility ladder pulls. Allsteel's dedication to innovation is evident in this solution that seamlessly fuses form and function.

Bjelin launches Medium-sized panels
Bjelin has launched Medium-sized panels of hardened wood flooring in response to customer demand. These Scandinavian-designed floors, manufactured in Europe, offer flexibility for commercial projects and reflect the company's commitment to efficiency, flexibility, and sustainability. The floors are equipped with a durable surface, a leakproof floor-locking system, and incorporate patented Woodura® technology for stronger and dent-resistant wood floors. To learn more visit https://www.bjelin.com
The Rivet Chair, designed by Jonas Trampedach, showcases a unique riveting technique for joining separate sheets of aluminum. The chair celebrates the purity of aluminum and combines craftsmanship with industrial production. It is made of laser-cut raw aluminum sheets and joined together by hand using a basic hammer tool. The Rivet Chair is available for purchase through Danish design brand Frama.
Jamie Stern Furniture, Carpet & Leather has partnered with interior designer Caroline Kepley to launch the Reverie Rug Collection. The collection features three designs inspired by Kepley's love for novelty, human connection, and beauty. Kepley's focus on crafting distinct experiences and evoking emotions is evident in this collection, which draws inspiration from natural color gradients and the tension between manmade and nature.
The article discusses the 1956 pendant lamps designed by architect Vilhelm Lauritzen for the Folkets Hus in Copenhagen. The lamps, known as VL 56, have been updated by manufacturer Louis Poulsen in 2023 with brass and chrome-plated aluminum bodies. The article also requests readers in Copenhagen to take close-up shots of the original pendants, which are still hanging in the concert hall adjacent to the wood-paneled bar.
The Light Block Chair, designed by Danish architect and industrial designer Christian Flindt, is made of a material called HIMACS, which offers a durable, smooth, and visually seamless surface. The chairs were created for an exhibition and are not in production. HIMACS, composed of minerals, acrylic, and natural pigments, can be shaped through thermoforming and comes in a wide range of colors with some shades exhibiting translucency when exposed to light.
Jamie Stern Furniture, Carpet & Leather has partnered with Ze Haus Design Studio to launch the Paradiso Rug Collection. Designed by Kenzie Leon Perry, the collection features three bold and distinctive designs - Mira, Palmetto, and Laurel - with an emphasis on handmade production techniques, all-natural fibers, and a Miami flair. Perry drew inspiration from black and Afro-Caribbean culture, historic neighborhoods like Coconut Grove, and his love for nature. The incorporation of natural fibers captures the essence of the collection's inspiration.

Trends in Commercial Projects from Around the Globe

Real estate firm CBRE has opened a new office space in Milwaukee that embraces hybrid work and free-address desks. The 15,330-square-foot office on the 18th floor of BMO Tower features local touches like cream city brick, historic newspaper ads, and artwork by Milwaukee artists. The office combines two CBRE divisions and offers shared workspaces with no assigned desks. With about 40 to 50 people in the office on any given day, there is one desk for every 1.5 employees, while collaborative areas have more than one seat per person.
Lake|Flato Architects has reinvented its main office, focusing on creating a welcoming entrance through a courtyard and improving the workspaces. The renovation includes better acoustics, various meeting spaces, and a shift to a more collaborative and flexible work environment. The office also aims to achieve WELL and Zero Carbon certification, reflecting its commitment to sustainability. The architects emphasize the benefits of in-person collaboration while still allowing for remote work. Overall, the renovation has revitalized the office and created a dynamic and engaging workspace.
Perkins&Will's Monterrey studio in Mexico is a showcase of sustainable design and inclusivity. The studio, designed to capture the essence of the firm's craft, incorporates local influences and features a dedicated space for design industry events and collaborations. The project highlights the firm's commitment to well-being, community integration, and sustainability, with LEED Platinum and Fitwel certifications. The design process involved input from employees and integration of sustainability requirements. The studio's unique features include a concrete wall, a centrally located kitchen, and a focus on natural light and mountain views. The project also lists the various products used in its construction and emphasizes the studio's role in establishing connections with clients in Latin America.
London-based design studio Sella Concept transformed DICE's headquarters into a hybrid workspace and hospitality venue. The 2,000-square-meter space features a moody yet welcoming lounge on the ground floor, workspaces and meeting rooms on the first and second floors, and a dedicated quiet zone for research and reading on the top floor. The design incorporates rich materials, colors, and textures, creating a sophisticated and homely atmosphere.

Upcoming Industry Events

EDspaces 2023
November  7-9, 2023 | Charlotte, NC
 
There has never been a better time to move forward; to reset the places where teaching and learning happens, and to create inspiring spaces for better experiences and learning outcomes.If you play a part in the learning process, from educator/administrator, architect or interior designer, to distributor, integrator, or supplier, EDspaces is the can’t miss event driving the expectations for what the learning experience will be in the future.

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.

Industry Briefing

Catalyst Consulting Group Strengthens Public Sector Team with Industry Veteran Ryan Hay
Catalyst Consulting Group has strengthened its public sector team by adding industry veteran Ryan Hay. With over 15 years of experience in federal and public sector sales, Hay brings unparalleled knowledge and expertise. Catalyst Consulting Group, founded by Michelle Warren, aims to help furniture manufacturers and distributors succeed in federal and public sector sales. Hay's addition to the team is highly anticipated and he is expected to contribute significantly to the company's growth.

COE Distributing Ranks Among Pittsburgh’s Largest Private Companies for 2023
COE Distributing has ranked 62nd among Pittsburgh's largest private companies for 2023, based on its revenue of $114.775 million in 2022, a significant increase from the previous year. The company has also been recognized as one of Pittsburgh's fastest-growing companies and has received awards for its profitability, company culture, and charitable efforts. COE Distributing is a national office furnishings distributor known for its high-quality products and commitment to creating inspiring work environments.

TAPIS / ULTRAFABRICS donates to Orbis Flying Eye Hospital redesign

Tapis/Ultrafabrics has donated over 200 yards of fabric to refurbish the Orbis Flying Eye Hospital, allowing it to resume on-board surgeries after the COVID-19 pandemic. The mobile teaching hospital provides vision-saving eye surgeries and training to underserved populations worldwide. The donated fabric was used to refurbish the onboard seating, which serves as a classroom for medical professionals. The integration of design and technology in the MD-10 aircraft is a pioneering breakthrough.

Barry Silverman, Vice President of Marketing and Brand at Ultrafabrics, says “Our focus in serving our partners is about bringing the highest quality fabric solution to brands that are innovating in their field, and Orbis exemplifies that. We focus on serving the end user and work back from there. Seeing the integrated aircraft seating being used to expand the impact of training, and being used as a seating area to bring the team together while watching live surgeries, is a true innovation. Hearing about Han and her family being the first patients to return to the Orbis operating room since the pandemic really takes up space in the hearts and minds of the entire Tapis/Ultrafabrics team. We are grateful to have contributed a small part to this amazing organization.”

Humanscale Honored in Fast Company's Brands That Matter 2023: Pioneering the Future of Sustainable Manufacturing
Humanscale is honored in Fast Company's "Brands That Matter 2023" for their leadership in sustainable design and manufacturing. Their commitment to true sustainability, emission reduction targets, renewable energy use, and product transparency showcases their industry-leading role. With a focus on consumer health, waste diversion, and social responsibility, Humanscale sets an example for businesses globally.

Moody Nolan Announces Rebrand
Moody Nolan is the country’s largest African American-owned architecture firm. Founded in 1982 with just two employees in Columbus, OH, Moody Nolan has grown to more than 350 employees in 12 locations around the country, leveraging the power of diverse backgrounds to drive design innovation. Specializing in corporate, education, sports/recreation, collegiate, healthcare, housing/mixed-use, and public service facilities, Moody Nolan is guided by its mission to improve every life the firm touches through responsive design — pairing empathetic listening with innovative thinking — to find harmony between client, community, and environment. Acknowledging the firm’s sustained professional excellence, The American Institute of Architects (AIA) named Moody Nolan as the 58th recipient of the Architecture Firm Award in 2021; the highest honor the AIA bestows on an architecture practice. In 2022, the firm celebrated its 40th anniversary and was also named one of the most innovative architecture firms by Fast Company. For more information about Moody Nolan, visit www.moodynolan.com.

MillerKnoll Earns "Best in Class" Excellence in Supplier Diversity
MillerKnoll has been awarded the Excellence in Supplier Diversity "Best in Class" award by the Great Lakes Women's Business Council. The award recognizes MillerKnoll's successful integration of supplier diversity into their business practices, including WBE spend, capacity building, and advocacy of women-owned businesses. The Supplier Diversity team at MillerKnoll works to leverage diverse suppliers, improve spending, and build relationships to bring in new partnerships and talent.

IIDA NY’s Buffalo City Center Renovates Compass House
The International Interior Design Association New York's Buffalo City Center collaborated with Compass House, a homeless shelter for youth in Western New York, to renovate two gathering spaces. The renovation included scraping, painting, reupholstering furniture, and procuring new furniture. Despite challenges, the project was completed within the designated timeline, greatly improving the facility's ambiance. The staff and residents expressed gratitude for the transformative effect of the renovation, which better equips Compass House to serve its community.
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