Work from home is killing the U.S. commercial real estate market / Coworking Spaces Cheaper Than Office Leases In 97% Of U.S. Cities, Study Confirms / Gunlocke Unveils Brand Refresh / Employers who downsized office space say they now need to expand with hybrid work / Manhattan Offices Set Post-Pandemic Visitation Record / Will Offices Come Back In Fashion? Contrarian Buyers Are Betting Millions On It / How Air Conditioning Took Over the American Office / AI Can’t Design Your Office, but It Can Help You Score It / Remote Work Doesn’t Have To Be Hard According To This CEO / How Large, Adaptable Multi-Purpose and Event Spaces Are Transforming the Financial Services Workplace / How to Create a Multigenerational Workplace / Boutique Offices Emerge as Strong Option for Tenants Seeking Less Space / and much more…


The Working Space

Monday, September 9, 2024

Top News

Employers are increasingly looking to expand office space after downsizing during the pandemic, with nearly 40% of companies expecting to increase their occupied space, up from 20% last year. The shift to hybrid work has created a need for more conference rooms and collaborative areas, as many companies find their current spaces inadequate for high attendance days. Some are reconfiguring existing offices while others consider moving to larger spaces, often focusing on improving hybrid meeting capabilities and overall workspace functionality.

Gunlocke Unveils Brand Refresh
Gunlocke has announced a comprehensive brand refresh that honors its heritage while adapting to modern workplace needs. The updated brand materials, available in October, emphasize the company's commitment to quality, sustainability, and innovative design. Gunlocke's furniture is crafted to suit various work environments, reflecting a legacy of craftsmanship since 1902, and includes environmentally conscious solutions like the Silea casegoods.
A study reveals that coworking spaces are cheaper than traditional office leases in 97% of U.S. cities, offering significant savings for small teams. Notable examples include Sunnyvale, CA, where coworking is 70% less expensive, and Boston, with a 64% savings advantage. While most cities show cost benefits for coworking, exceptions exist in Oakland, Memphis, and Cincinnati, where traditional leases are cheaper. The trend towards hybrid and remote work models enhances the appeal of coworking spaces, aligning with modern workforce demands for flexibility and work-life balance.
Manhattan offices have achieved a post-pandemic visitation record, averaging 72% of 2019 levels in July, with Midtown buildings leading at 75%. Class A+ buildings saw a slight decrease in traffic month-over-month, while Class B and C properties remained steady. Newly constructed or renovated buildings are outperforming, despite some declines in certain submarkets.
Falling office valuations are raising alarms for banks regarding potential loan-to-value breaches, prompting concerns over an increase in nonperforming loans. High-profile property sales are expected to close at about 15% below asking prices, which could lead to technical defaults and force banks to restructure debt or appoint receivers. Vacancy rates are around 17%, with many older office spaces requiring modernization, contributing to the decline in valuations. Banks, previously supportive, may adopt a more aggressive stance in response to these changes.
The U.S. commercial real estate market is struggling due to the rise of remote work, with office vacancy rates exceeding 20% and predictions of peaking at 24% by early 2026. Many landlords face financial difficulties as loans come due, exacerbated by rising interest rates and declining property values. While some markets like Miami remain resilient, others are severely impacted. The potential for a financial crisis looms if numerous small and mid-sized banks fail due to defaults, although some experts believe the overall economy may withstand the fallout. There are opportunities for investors to purchase undervalued properties amid the downturn.
Investors like Menashe Properties are betting on a resurgence of office buildings despite current low occupancy rates and significant discounts on properties. While some believe remote work is a temporary trend, others express skepticism about the office market's recovery, citing structural changes and upcoming debt maturities. Distressed sales are increasing, with many properties sold at steep losses, indicating potential opportunities for savvy buyers. However, analysts warn that the market may still face challenges and that timing will be crucial for successful investments.
Vacancy rates for life sciences properties have tripled since early 2022, prompting developers to market these facilities as office space due to decreased demand. In major markets like Boston, owners are accepting lower rents for office space compared to previous lab space rates. The sector faces challenges from high interest rates and an influx of new properties, leading to a significant rise in vacancies. While leasing activity is increasing, most leases are for smaller spaces, contributing to the ongoing supply glut.
Andreessen Horowitz has closed its Miami office, a setback for Mayor Francis Suarez's vision of making the city a tech hub. The firm cited underutilization of the space as the reason for its departure. Despite the exit, Miami's office market remains strong, with traditional finance sectors dominating leasing activity, while the city's cryptocurrency ambitions have largely faltered.

Workplace News

AI is not yet capable of designing office spaces but can assist in analyzing data for optimizing office strategies. While 73% of corporate clients are reconsidering their office footprints, only 31% believe AI will transform corporate real estate in the next five years. Successful companies integrate AI with in-house teams to create decision-making frameworks based on criteria like cost and productivity. AI helps rank these criteria and run scenarios to inform decision-making, but human oversight remains crucial in the process.
To make remote work effective, companies should focus on output-based management, asynchronous communication, and building emotional connections. Key strategies include training managers, structuring meetings for personal growth, and fostering a supportive culture. The future of remote work is promising with advancements in AI and VR enhancing the experience, making it increasingly accessible and engaging.
Executives advocating for a return to office (RTO) may be misunderstood as villains; they could be addressing significant issues like loneliness, a commercial real estate crisis, and lost tax revenue caused by remote work. While remote work offers benefits such as increased productivity and work-life balance, it also contributes to mental health challenges and community decline. A balanced approach that considers the well-being of employees and their communities is essential for future workplace strategies.
The expansion of coworking spaces into suburban and rural areas is driven by technological advancements, a shift towards remote work, and cost efficiencies. These spaces can boost local economies by fostering entrepreneurship, reducing brain drain, and providing community support, while also offering environmental benefits through reduced commuting. However, challenges such as lower population density and connectivity issues exist. Solutions include government incentives, community engagement, hybrid models, and tailored infrastructure to maximize the benefits of coworking in these regions.
Londoners are spending more time in the office, averaging 2.7 days per week as of June 2024, up from 2.2 days in April 2023. However, this is still less than workers in other global cities like Paris and Singapore. London employers are mandating fewer in-office days compared to their counterparts, with an average requirement of 3.1 days. Despite this, there is a growing push for in-person work, with only 7% of desk-based workers not mandated to be in the office. A significant majority of workers recognize the benefits of face-to-face interaction, and younger workers (18-24) are leading the trend in increased attendance.

Feature Read

Air conditioning has transformed the American office landscape since the 1920s, evolving from a luxury to a necessity as it reshaped architecture and work environments. Initially adopted in theaters and factories, AC became widespread in offices post-World War II, driven by productivity claims and hot summers. This shift facilitated the rise of climate-controlled high-rises, particularly in the Sun Belt, while also contributing to urban heat islands and energy consumption issues. Today, AC is essential for comfort but raises concerns over gender inequities, energy use, and global access disparities.

Dealers

Revolutionizing the Workplace: Inside HB Workplaces New HQ Showroom
HB Workplaces' new headquarters in Draper, UT redefines the workplace by prioritizing wellness, flexibility, and community. The design incorporates biophilic elements, promotes a healthy work-life balance, and encourages collaboration through open spaces and a central café. The approach challenges traditional office dynamics, emphasizing people over trends and minimizing permanent structures for adaptability. Employee involvement was key in the design process, ensuring the space meets their needs and aligns with the future of work.

Tangram Interiors Unveils New Fresno Showroom Celebrating Local Landscape and Culture
Tangram Interiors has opened a new 6,500 square foot showroom in Fresno, CA, celebrating local culture and landscape with designs inspired by the region's natural beauty. The grand opening on September 12th will showcase functional spaces for both clients and Tangram's team, featuring various work areas and state-of-the-art technology. The showroom emphasizes community involvement, with locally sourced accessories and art, reflecting Tangram's commitment to sustainability and local culture. Key contributors to the project include MOZU Architect, Tangram designers, and GL Bruno Associates for construction.

Trends

Large, adaptable multi-purpose spaces are transforming financial services workplaces by fostering employee connection and enhancing brand identity. These flexible venues accommodate various activities, improve company culture, and require strategic design collaboration to maximize functionality. Recent projects showcase innovative designs that integrate hospitality elements, promote well-being, and create vibrant environments for both work and social interactions.
The rise of super commuters, who travel over 90 minutes to work, is impacting the housing market by decreasing rental demand and growth in major U.S. cities. Many are opting for affordable living in distant areas to save on housing costs, leading to significant rent losses in cities like New York and Los Angeles. As the trend continues, it poses a threat to the American real estate market, particularly as economic pressures encourage more individuals to seek lower rents.

Design

Companies are transforming offices into culinary and collaborative hubs to enhance employee morale, creativity, and productivity. The integration of gourmet food options and flexible workspaces has been shown to improve mental health and foster community. Notable examples include True Food Kitchen's headquarters, which features a test kitchen and multipurpose areas, promoting interaction and innovation. This trend emphasizes the importance of food and design in creating engaging work environments that attract talent and boost overall workplace satisfaction.
To create a multigenerational workplace, organizations should implement flexible and adaptable workspaces, provide user-friendly technology, foster a multigenerational culture, develop age-inclusive policies, offer diverse amenities, and ensure accessibility. These strategies will help accommodate the needs of various generations, promote collaboration, and enhance employee engagement in an increasingly diverse workforce.
The Transamerica Pyramid in San Francisco is undergoing a $1 billion renovation aimed at revitalizing the iconic building and its surroundings, which includes updating office spaces, enhancing amenities, and improving public access. The project, led by developer Michael Shvo and architect Norman Foster, seeks to transform the pyramid into a modern urban centerpiece amidst high office vacancy rates in the city. The renovation emphasizes the building's historical significance while introducing luxury features to attract tenants, with leasing prices reaching $200 per square foot, significantly above the city average.
Boutique offices are emerging as a strong option for tenants seeking smaller spaces, driven by the shift towards remote and hybrid work models. These offices offer adaptable environments with amenities, appealing to employees and potentially reducing costs for tenants. Urban locations with access to retailers and restaurants enhance their attractiveness. While not yet the norm, the trend indicates a future where boutique offices could become more prevalent, addressing the evolving needs of the workforce.

Green / Sustainability

Interface, Inc. has expanded its recycling capabilities at its Scherpenzeel facility in the Netherlands to enhance circular economy efforts by recycling post-consumer carpet tiles. This initiative supports the company's commitment to sustainability and carbon reduction, allowing used products to be reintegrated into the production cycle for new carpet tiles. The company emphasizes the importance of using recycled content and bio-based materials, having collected over 31,750 tonnes of carpet tiles since 2016 to promote a circular economy.

Latest Product News

Calyx Chromatyx offers printed porcelain solutions for healthcare environments, featuring antibacterial properties, eco-friendliness, and lifetime warranties. Their products enhance communication and collaboration in facilities like hospitals and clinics, with customizable designs and easy-to-clean surfaces. The Profile Porcelain Markerboard provides a durable writing surface that resists staining and ghosting, supporting a safe and efficient patient care environment. > Learn more
Allsteel's Two-Thirds Seating and Tables Collection offers adaptable, functional furniture designed for modern office environments, featuring movable pieces that encourage collaboration. The collection includes various shapes and sizes, allowing for easy reconfiguration and a customizable aesthetic. Designed by Joey Ruiter, it combines comfort with a sophisticated look, making it suitable for diverse work styles and settings.
The Good Plastic Company has launched the Translucent Collection, expanding its Polygood® line of 100% recycled and recyclable plastic panels. This collection, made from clear CD cases and industrial waste, emphasizes sustainability and circularity while offering innovative designs and enhanced durability. The panels are fire-resistant, UV-resistant, and waterproof, suitable for various applications. The company also provides a Take Back Program to remanufacture used panels, reinforcing its commitment to reducing plastic waste and promoting a circular economy.

DeskMakers Breathes Life into Workspaces with Hedge Dry Planters
DeskMakers has launched Hedge Dry Planters, a collection of maintenance-free greenery solutions designed to enhance workspaces with style and functionality. The planters, available in various sizes and styles, serve as decorative features and space dividers, integrating seamlessly into diverse environments without the need for soil or water. Crafted from eco-friendly materials, they aim to elevate the aesthetic appeal of commercial spaces while providing practical utility.
NaughtOne has launched the Truffle pouf, a playful and practical seating option available in two sizes, designed for both lounging and agile work. Made from solid Bio-Pur® foam, it emphasizes sustainability by using fewer fossil fuels. The pouf features a seamless one-piece upholstery that enhances its organic shape, allowing for customization with various fabrics and colors. Truffle is now available through NaughtOne and MillerKnoll certified dealers.
Altispace Acoustic Wall Panels combine aesthetics and functionality, offering effective sound absorption while enhancing visual appeal. Made from eco-friendly PET material, these precision-cut panels are versatile for various settings, easy to install, and customizable. They improve acoustics in spaces like boardrooms and classrooms, while their modern geometric designs add a stylish touch. Affordable and sustainable, these panels are ideal for both professional and home environments.
The Designtex Digital Studio Pattern Library is expanding with new patterns inspired by natural phenomena and meditative drawing practices. Designers can choose from a variety of options, scales, and color palettes to customize their projects easily. The tool allows for quick creation and ordering of samples, with a minimum order of 10 yards, ensuring high-quality results.
Spinneybeck and FilzFelt, in collaboration with Erwin Hauer Studios, introduce Design 406, a carved wall system that embodies Hauer's Modular Constructivism. This innovative design features natural materials and is available in five wood species, with options for color and upholstery, allowing for versatile applications in modern spaces.
The "Soho" desk by Kinnarps' Materia features an expressive design with natural materials, promoting a harmonious workspace for creativity. Designed by Jesper Ståhl, it combines Scandinavian purism with functionality, offering options for oak veneer or beige laminate tops. The desk supports sustainable production practices and includes optional accessories like a soft-closing drawer and a USB-C port, catering to modern office and home office needs.
The Phase lamp, designed by Relative Distance, is a high-tech replica of the Moon that uses precision optics and over 15,000 NASA satellite images to create a realistic lunar light experience. Priced at £30,000, it features two backing colors and captures the Moon's phases in real time. Users can easily sync it to the current Moon phase without needing an app, aiming to provide a calming presence in contrast to modern technology.

Industrial Design

Steelcase is reintroducing Frank Lloyd Wright's furniture from 1948, specifically the Rockford Collection, which includes a lounge chair, ottoman, and side table designed for a wheelchair user. This collection highlights Wright's intentional design approach, balancing aesthetics with functionality, particularly in accessible design. The revival of these pieces reflects Wright's commitment to user-centered design and invites a renewed appreciation for his work, despite his admitted struggles with furniture design.

Workplace Wellness

Arcadis redesigned Ottawa’s World Exchange Plaza (WEP) to create a flexible, post-pandemic space that enhances social connection, integrates nature, and promotes environmental resilience. By incorporating native plant species, sustainable materials like locally sourced timber, and diverse seating options, WEP fosters both daily interactions and larger gatherings. The design blurs the line between urban life and nature, improving wellbeing while reducing environmental impact. With features that enhance social engagement and mitigate climate effects, the plaza is set to become carbon neutral in 27 years, offering a model for future workplace design.

Trends in Commercial Projects from Around the Globe

Duolingo's new NYC office emphasizes neurodiversity and employee comfort, featuring a gallery, coffee bar, and various workspaces designed to cater to different sensory needs. The office promotes optionality for productivity, with spaces ranging from quiet reading rooms to energetic cafeterias, reflecting a shift from traditional office designs to environments that support well-being and collaboration.
Mercedes-Benz's new headquarters in Istanbul, designed by Boytorun Architects, features bright, collaborative spaces that reflect the vibrant energy of the city. The office encourages a mix of working styles with flexible environments, communal areas for socializing, and a design that fosters interaction among employees. The use of color and open layouts contrasts with traditional corporate aesthetics, promoting a sense of community and innovation.

Westinghouse Electric Company Engineering Services Hub
Ware Malcomb has completed construction on a new 14,000 sq ft engineering services hub for Westinghouse Electric Company in Kitchener, Ontario. The facility includes various collaborative spaces and is strategically located near customers, universities, and major transport links. The design emphasizes a tech-oriented, inviting atmosphere, supporting diverse work arrangements and collaboration.

FCA Transforms Fox Rothschild’s Minneapolis HQ
FCA transformed Fox Rothschild's Minneapolis headquarters by consolidating the space from 100,000 to 39,750 square feet, reducing private workspaces and enhancing collaboration areas. The design prioritizes a high-quality experience, featuring a grand café, open collaboration spaces, and a conference room with views of Target Field. Aesthetically, the office reflects Minnesota's parks and lakes with a modern industrial style, utilizing warm wood and flowing felt elements. Completed in May 2024, the project exemplifies a blend of innovative design and functionality, supporting a positive work environment.
Ester Bruzkus Architekten transformed a former factory into a community-focused workspace for Relaxound, emphasizing varied working atmospheres and social interaction. Key features include a mix of communal and private spaces, sound-absorbent materials, and a design that fosters collaboration and relaxation. The office integrates natural elements and encourages a sense of unity among staff, moving away from traditional cubicle layouts to create an inviting and functional environment.
A new tech headquarters in Los Angeles features a hospitality-driven design, resembling a resort rather than a corporate office. The space encourages collaboration with various meeting areas, a grand staircase for connectivity, and ample natural light. The design incorporates both residential and hospitality elements, promoting a welcoming atmosphere for employees, with amenities like terraces, barbecue stations, and even an indoor soccer field.

Latest In Real Life WFH

Brett Williams, founder of the $1M one-man design agency Designjoy, offers unlimited design requests for a monthly fee. He has pioneered the "productized service" model and created a course to help others achieve similar success. His workspace includes an XDR display, which he finds essential for productivity. While he enjoys the freedom of running his agency, he faces challenges like the inability to take breaks. His typical day starts at 10 AM, balancing work with family time and leisure activities.

Upcoming Industry Events

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

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

THE LATEST: ORGATEC 2024: experience the workspaces of tomorrow in person
ORGATEC 2024, taking place from October 22 to 25 in Cologne, will showcase future-oriented office management solutions in the #OfficeXperience Focus Area. The event will feature interactive exhibits, workshops, and discussions aimed at addressing productivity, sustainability, and flexibility in modern workspaces. Various companies and institutions will collaborate to present innovative concepts, creating a community focused on enhancing office building management. Additional highlights include other focus areas like #TheCircularHouse and #InspiredAugmentedOffice, setting new standards for modern work environments.

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

MillerKnoll Announces New Head of Geiger and DatesWeiser
MillerKnoll has appointed R.J. Stelter as Senior Vice President and General Manager of Geiger and DatesWeiser, where he will oversee business operations and growth strategies. Stelter, with over a decade of experience at MillerKnoll, previously held leadership roles in dealer development and sales. Geiger and DatesWeiser focus on high-quality design and craftsmanship, with DatesWeiser known for custom furniture solutions. MillerKnoll aims to create a sustainable and equitable future through its diverse brand portfolio.

Omni Workspace welcomes Phillip Brown Jr. as General Manager of Turnkey Project Services
Omni Workspace has appointed Phillip Brown Jr. as General Manager of Turnkey Project Services, effective September 3, 2024. With over 13 years of experience in the contract furniture industry, Phillip will oversee operational strategies, client acquisition, and revenue goals. His leadership is expected to enhance efficiency and contribute to Turnkey's growth. Omni Workspace, which manages several brands, focuses on delivering superior products and services across various industries.

Nienkamper Welcomes new North American Sales Director
Nienkamper International Inc. has appointed Sam Empringham as the new North American Sales Director to lead strategic growth plans and provide leadership in the sales network. With over 18 years of experience in the contract furniture industry, Sam's expertise is expected to drive the company's growth. President and CEO Ann-Marie Snook welcomed him, highlighting the timing of his appointment as ideal for Nienkamper's expansion.

HON Unveils Integrated 3D Product Configuration Powered by 3D Cloud
HON Company has launched the HON Collection Configurator tool, powered by 3D Cloud, which allows users to configure multiple seating products simultaneously, enhancing the furniture buying experience. This tool simplifies office chair configuration, offering features like Augmented Reality visualization, detailed product lists, and real-time pricing updates. The collaboration aims to streamline the design-to-order process and improve sales efficiency, catering to various product lines. For more information, visit the configurator landing page.

HPFi New Representation in Carolinas
HPFi has appointed Reps Southeast, led by Todd Norris, to represent its products in North and South Carolina. Todd brings over 34 years of experience in the commercial furnishings market, including independent sales and manufacturing. HPFi's Vice President of Sales, Doug Gaines, expressed enthusiasm for the partnership and the focus on market growth in the Carolinas.

Stylex Demonstrates Continued Growth with the Addition of New U.S. Territory Managers
Stylex has announced the appointment of Daniel VonderBrink as Vice President of Sales for the East and Jonathan Pugh as Vice President of Sales for the Central region, enhancing its leadership structure to support growth in U.S. markets. This change follows Stylex's acquisition by Flokk and aims to strengthen client relationships and market strategies while transitioning from a seating company to a comprehensive provider of workspace solutions.

Versteel Launches CET Commercial Interiors Extension
Versteel has launched a CET extension that allows design professionals to visualize, customize, and specify Versteel products within their layouts. The extension includes popular items like Troupe Gathering Tables and Sky Adjustable Height Tables, enhancing workflow for architects and designers. Users with an active CET license can access the extension via the CET Marketplace, reflecting Versteel's commitment to integrating technology with craftsmanship.

Equity Council’s Introduction to the Action Labs
The Equity Council is hosting an Introduction to the Action Labs on September 24, 2024, from 6-8 PM at Allsteel in New York City. This event aims to educate attendees on advancing Justice, Equity, Diversity, and Inclusion (JEDI) efforts within organizations, focusing on workplace identity. The 2024-25 Action Lab series will explore the intersectionality of identities and promote diversity in the design industry. Admission is free, and attendees are encouraged to invite senior leaders to support JEDI initiatives.
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