Blurred Lines

Robots and artificial intelligence in the workplace. GenX wants and needs. CoWorking. What impact will self driving cars have on office buildings? Is my industrial conversion office space “authentic” and true to my company’s brand? Oh, and I want privacy on demand.

Largest number of attendees in history – over 3,000.

Learning pavilions spread thought out the convention floor with short 15-20 minute sessions. Think TED Talks for CRE.

Those are just some of the topics discussed at the annual confab of all things corporate real estate which is hosted by the trade organization CoreNet Global. The meeting was held in Seattle, Washington which is fitting given that we were collectively at the feet of the mighty Amazon. As the entire world knows, AMZN is in the market with one of the largest space needs in modern corporate real estate history known as #hq2. I was looking around for Alexa everywhere….

Real estate executives said the “lines” created by office walls and geographic boundaries are starting to come down – or become blurred lines. With the softening comes even more challenges to CRE’s (corporate real estate executives): information and security risk, highly empowered workers with big demands and the need for space to adapt very quickly. The modern workplace must be flexible as to location and then inside the physical space flexible as to different types of work.

Here are the things I heard on some of the very hottest topics:

Robots and AI

  • Robots and facility automation will continue to rapidly evolve and relieve humans of low payback activities
  • Estimates are $90,000 per year to operate a robot who can operate 24/7 and replace a human security guard.
  • We will continue to see the evolution of the building as much more than sticks and bricks. Will seen the emergence of the space as a service provider. In fact, the building itself becomes a machine – automatically changing around furniture, lighting, provide comfort and productivity of every kind and deal with weather.

    The famous Pike Market on a chilly Seattle day.

  • Artificial intelligence (AI), which is really code to support machines will become smarter and smarter and specific to corporate real estate. Think of a corporate version of Alexa or Siri.
  • High tech drives the need for high touch as people. Rise of the robots means people need to spend more time together
  • Robots in the future will be digital “sherpas” so that we don’t have to carry digital tools like laptops
  • Digital twins in 5 years that are far smarter that Siri will talk to other digital twins for meeting coordination and low level task production
  • Some wondered with all this automation, and the simultaneous happening of the gig economy how does corporate America inculcate culture and values?

Gen Z: Influencing the Real Estate Footprint

Some observations from a panel of Gen X’ers:
  • Industrial spaces converted to office is a solution, but what you are really talking about is an input into the process. Its less about the generation and more about where people are in their life’s journey. Millenials are just younger baby boomers. As people get older, there are consistencies with what they want. For example, young children are a great equalizer in terms of what people want.
  • More face to face interaction helps Gen X with knowledge transfer.

    Yes, I did catch the fish. Yes, I did wash my hands. No I didn’t eat sushi after that point.

  • What do people DO when they are at work? That tells me as a Gen Z a lot about the company?As a Gen X, culture is a lot more important to me than the physical layout.
  • Culture is driven by the people in the space, not the design of the space
  • People are most happy when they go to work (as in a place) every day if they have a friend at work.
  • What has not worked? – You can try too hard. If being hip and cool is not consistent with your corporate culture then it won’t ring true. When someone comes into our offices do they get a sense of how they work from the people and the space? If so, that is
  • Watch cutting vs. bleeding edge. Make sure your risk tolerance  is consistent with technological risk.
  • Brand is more than paint on the wall, carpet and color – its the actually embodiment of the mission. Failure: “I saw this really cool thing somewhere else, but didn’t stress test in their own organization” before we installed in our office.
  • How are you signaling to your people that (1) the work you do is important and (2) we care about you.

    Fruit at the Pike Street Market

  • We are talking less about efficiencies now and more about experience. More expensive to have brain drain than savings from densification. Leading a move discussion about efficiencies only is likely to fail. I don’t care if my company is saving a dollar on my back. I want to work someplace warm and front. Space needs to serve people through the entire arc of the day.
  • We are catering way to much to then new generation (GenZ). We (as corporate America) should be planning for people that are already there. Keep hearing that Gen Z wants what baby boomers want…pengilum will swing. Most important thing is to be in the workplace listen to senior folks on the phone. If I could sit there for 2 hours a day and listen it would be great.

Automation in Cars

  • Using fleet car services will fundamentally change the arrival and departure experience in office building. Currently, 90% of arrivals enter through a garage. The new experience feels much more like a hotel motor court.
  • Will the Roof become the new lobby with flying cars?
  • We heard that developers are starting to plan building with higher garage clear heights so they can be adaptively reused when personal cars are no longer a “thing.”

 CoWorking

  • Why do we in corporate America care if employees like coworking? War for talent – 73% of organizational leaders are concerned about the availability of skilled labor
  • Coworker is not just the struggling entrepreneur – average age is 38
  • Cushman & Wakefield client party at the Museum of Pop Culture. It’s an amazing space.

    First place is the office, second place is the home, third place is Starbucks, place 3.5 is the car in the Starbucks parking lot for conference calls, and fourth place is coworking.

  • Targets by coworking providers are no longer as much individuals – chasing corporate America
  • New term: a “Jelly” – organic group or people who glom on to each other and hang out – like in a Starbucks or other quick service restaurants.
  • Todays employees want choice, community and flexibility
  • 77% of facilities are in an urban location and 62% looking to expand and move to larger locations.
  • Several years ago, question was is this a fad? with 62% of centers looking to expand, this is not a fad. Will disrupt the industry
  • Average number of member is 75 members
  • Seeing the emergence of the “big box” retailer – A solution that is focused on targeting corporations to provide space.
  • WeWork is the largest tenant in New York City and one of the largest consumers or real estate in the world.

Privacy and Productivity

  • One of the biggest complaints in open workplaces is privacy and the ability to have quiet and private phone calls.

    Tower of Guitars at the Museum of Pop Culture

  • Young people stated the need for “real time privacy.”
  • Ripping out all private spaces and forcing collaborations totally ignores introverts. Millennials complain amongst themselves about being in a open environment.
  • Open Plan, Friend or Foe? An open plan can be really bad. So can an office. All not created equal. Like saying all automobiles are the same.
  • A new trend is “activity based” planning. Developing new ways to connect in open plan design based on what you are doing. Design is in a progression and is progressing.
  • Wellness is fundamental to productivity. A sick workforce is no workforce.

In sum, the energy is high and the feeling is optimistic. Most directors of corporate real estate have a pep in their step, but are drowning in emails and assignments to expand.

I surmise from the conference that most everyone is growing quickly and thinking about how to keep the workforce engaged, happy and healthy. Improving the quality of work-life balance and overall work experience are what sought after employees are seeking in companies – current and future.

All is well with the CRE world in 2017. The good times will continue in 2018 as well and beyond.

Whistle while you work – wherever that might be. And step right over those blurry lines!

 

8 Days Without Email

“Is email still a thing?”

That’s what a friendly and oh so innocent Millennial asked me recently. “Dude, you have no idea how much a thing it still is,” I said. “It’s the lifeblood of corporate America.” You can Tweet, Snap and Post your heart out, but until your boss retires and you take over the world, you’ll need to send her an email for most communication needs. “Bummer,” he muttered as he ambled off.

In 1971, Ray Tomlinson sent the first email as a test in his Cambridge, Mass lab. My, how things have changed in the 46 years since. According to a Radicati Group study, executives can expect an average of 126 messages sent and received per business user per day by the end of 2019, with a total of over 2.9 billion people on planet earth using the email tool to communicate and set meetings.

I conducted an informal poll over lunch the past 6 months or so and found that most executives report receiving over 200 messages per day. So if we ditch the weekends, which no one does, then my friends are getting 50,000 messages a year over 50 working weeks. If it takes us an average of 1 minute per message, then we are spending 833 hours a year, or almost 40% of our working hours managing this beast.

It’s getting a little ridiculous out there. Despite barrels of digital ink being spilled on how to manage, keep up with and prune email, the stuff just keeps growing like electronic Kudzu.

Just Make It Stop!

A fishing village in the Cinque Terre portion of the Italy coast. The village is 1,000 years old. A few years before email was invented….

So, I did make it stop, for a brief respite anyway.

You see, Karen and I planned a 25th wedding anniversary trip to Italy, so I began to dream about unplugging from email. The last time I stopped the digital river of information was in 2012 when I took a backpacking trip in New Mexico with my son. I wrote about it in one of my most popular blogs called West Bound and Down | 12 Days without an iPhone. Given the clicks, I wasn’t the only person thinking about this issue.

But here’s the thing: if you know you are coming back to a huge backlog of messages, how do you relax? And maybe you will be tempted to peek early in the morning. I’ve heard stories of people getting up in the middle of the night on vacation or slipping off to the bathroom to have an illicit session of checking email. Ugh.

The Duomo in Florence taken from top of the bell tower

So I made a tough call. I was not going to ever read a single email sent to me while I was traveling on my vacation. All of them were going to hit the trash can with a punch of a few keys in a mass delete action. Bam!

I’m Really Out of the Office And On Vacation. For Real.

I penned my out of office with a guilty grin. Here it is:

“Thanks for your email. I am currently out of the country on vacation. Karen and I are in Italy celebrating 25 years of marriage, 4 kids and 1 very lazy dog. The kids and the dog are at home. We wish them luck.

I return to the office and real life on <date>. My plan is to mass delete all emails while I’m away, so kindly email me again after my return and I will return your message with a big smile on my face. I appreciate your  understanding and patience during this much needed downtime. So does Karen.

Pisa needed construction management!

If you need help now, then contact my teammate <name> who can get you taken care of.”

That’s it. And you know what, it worked!

Hey Karen, watch out for the wave behind you!

We spent 8 glorious days refreshing our relationship and exploring the big world out there. I got around 1,800 messages during my time away and I gleefully hit delete. There were about 4 issues that needed my immediate attention when I got back, but I missed all the emails on all the meetings, issues and problems that I couldn’t attend or attend to.

I clearly remember the relief of allowing myself to be present on our vacation AND not having to worry about digging out when I returned.

Vinyards near the ancient village of San Gimignano

Do I have a great team to back stop me and allow for this break to occur? Absolutely! Do I have understanding and cool clients? You bet! Am I so important that I need to be continuously connected and available at all times? Nope, not at all.

And unless you are in charge of national security for the United States or some other ridiculously high stress gig, you aren’t either. Heck, even firefighters and cops have days off from emergencies.

I Dare You

Today I attended the  funeral of a good friend, Scott Selig. Scott passed away at age 47 from an aggressive form of cancer. The loss of my friend has given me needed perspective and even more resolve on the email issue. As Scott himself said in a moving speech before he died, “put down the phone and enjoy life”.

I dare you to put up appropriate boundaries around your personal time.

Another view of the Cinque Terre. This village was founded by pirates 997 years ago. Ahoy matey!

I dare you to talk to your clients, colleagues and friends and explain that you need downtime too.

I dare you to confront your own addiction to this world of hyper responsiveness and over communication in which we live.

Be bold on this issue and your spouse, your family and ultimately your circle of friends and business colleagues will thank you. They will notice your new found focus and crisp response to issues because you have allowed yourself permission to rest.

Ray Tomlinson passed away a few years ago, but if he were still with us today, I bet you he’d give 2 thumbs up to email breaks. As Steven Covey said, even the best lumberjack has to sharpen his saw to be effective.

Time away is what intelligent executives use to freshen up, relax and reflect. In the times when you are getting away, email is toxic and will defeat the purpose. Be courageous and self confident in stopping the digital intrusion.

Do it. You won’t regret the digital break, I promise.

Office Party? Atlanta Market 2018 Forecast

2017 was a mighty fine year for Atlanta office real estate. Macro events such as tax law changes, a roaring stock markets, very healthy corporate profits and strong employment numbers helped corporate America have a pep in its collective step, and Atlanta was no exception.

As I look deeply into my crystal ball and based on reading, and conversations with economists and market experts, I’ve begun to true up some predictions for 2018 in seven areas:

Thanks Dow Jones Industrials! You Rock!

Development
The goal in 2018 for corporate America in 2018 is employee engagement. Read another way, employers want you to want to come to the office. On the development side, this is dramatically impacting what architects are drawing and where building is occurring. Infill development will continue to thrive. Buildings will continue to strive to look “authentic,” like Hines’ T3 development which will consist of a 200,000 heavy timber frame and wood building planned at Atlantic Station. Authentic design can be achieved using the right materials or by retrofitting an older building – the organic approach to real estate.

The Emergence of the City Center
Maybe the 1950’s are coming back to life in reimagined small town America. Seven city center projects are proposed or under construction around metro Atlanta including the Braves Stadium know as the Battery, Avalon in Alpharetta, City Springs in the City of Sandy Springs,  Assembly in Doraville and others. People like working in a dense environment, but want to enjoy the cheaper housing and larger yards of the suburbs. Some have said the city center concept is the 21st century mall.

Rental Rates
Next year, rental rates on most classes will stop climbing as fast as they did in 2017 and concessions start to return in certain markets like Central Perimeter. I also believe there will be an uptick of subleases as growing companies are forced to move their operations in order to expand. There’s been an increase towards the end of 2017 and we believe there will be even more of this activity in 2018. The one exception to this forecast is newly delivered class A which is the hottest product in our city. Corporations with a pocket book will continue to drive rates in sexy new product to the highest our town has ever seen.

Office Product Types
As always, the market will continue to be a tale of the haves and the have nots. Rental rates notwithstanding, the haves will remain the most popular among tenants that can afford them and investors who pine for the latest and greatest. Take Three Alliance for example. The building experienced a rapid lease-up and has now traded for an historic price. Class B product with inefficient floorplates and lack of support amenities won’t experience near the rental rates of trophy Class A. Expect to see a trophy tower launch in an urban market with much more infill urban development/redevelopment. Finally, urban industrial product is becoming more attractive for redevelopment into creative loft office.

Tenant Demand
Last year, corporate America was catching its breath and approaching with caution because of uncertainty around administration, tax policy and the general business environment. However, with the Dow up 5,000 points in one year, which has never happened in history, the business economy is, and will remain, robust. I believe there will be continued organic growth and M&A activity in 2018. In board meetings and planning meetings, which are taking place right now, I believe businesses are planning for expansion in 2018. In 2017, many companies were a question mark, and that has turned into an exclamation point for 2018.

Capital Markets
In 2018, we anticipate cap rates will remain steady for suburban product. In the suburbs, there were misalligned expectations between sellers and buyers. Sellers forecasted continued rental rate increases, but buyers didn’t agree.  One can anticipate further cap rate compression in high rise urban and “cool” infill product – where she stops, nobody knows.

Technology
Next year will also be the year that the “internet of things” (IOT) begins to have a real impact on commercial real estate. It will rapidly improve the operating efficiency of commercial real estate, and it will be interesting to see what sort of role it will play for building owners and managers, as well as tenants. Building systems will let us know when they need service and save on labor cost. Maybe they’ll bring you coffee at 2 in the afternoon, too.

I saw a beautiful sentence in the Wall Street Journal recently: “investors have abandoned defensive positions, throwing caution to the wind.”  As you complete returning all those gifts back to Amazon, let’s hope Santa is in a good mood all year in 2018. This economy is the gift that keeps on giving.

Let’s keep this ball rolling, shall we?