We Interrupt The Normal Bookmarks Blog Post to Bring You Some POSITIVE Economic News

January 7th, 2019

For a number of years I’ve curated updates in this space on the CRE world. Today, we take a short break to focus on a different topic – the economy. I’m frustrated that some media outlets harp only on the negative news at every turn. This is one of the best economies of our lifetime – please read beyond the trending and check out the good news out there. #factsmatter #don’tjustreadtheheadlines

Credit: iStock

The Labor Market Would Like You All To Stop Panicking Now Please

“Job gains were led by the healthcare industry, which added 50,000 jobs in December, as well as construction, which added 38,000 jobs. Construction employment increased by 280,000 jobs over the year.” www.bisnow.com 

'The Labor Market Would Like You All To Stop Panicking Now Please': Economists React To December Jobs Report On Twitter

Fed Chair in Atlanta Boasts About Economy

“…Powell said he remains upbeat and has not made up his mind about further rate hikes this year.

“There is no preset path for policy,” he said. “We are always prepared to shift economic policy and to shift it significantly.”

The Fed is “listening carefully to the message that the market is sending,” he said.

Powell spoke Friday after release of the monthly government report that showed a gain of 312,000 jobs in December – about twice as many as had been expected. The report also showed wages rising. While the unemployment rate ticked up to 3.9 percent, that increase was caused by a surge of new workers, he said.

That report was evidence that the economy is chugging along steadily and can probably more easily handle more rate hikes.”  www.ajc.com

 

Strong U.S. Job and Wage Growth Provides Assurance on Economy

“All the while, the economy kept cranking out jobs. U.S. employers added a net 2.64 million jobs to their payrolls in 2018, the best year since 2015. Payrolls have grown for 99 straight months, by far the longest stretch of steady hiring on record.

The unemployment rate ticked up to 3.9% in December from 3.7% but remains low by historical standards. The increase owed in part to more people entering the workforce, some of whom get counted as unemployed while they’re looking for work.

Stock prices, already moving up on the economic news, jumped even higher after Federal Reserve Chairman Jerome Powell said the Fed would be patient about further increases in rates this year.”[WSJ Paywall] www.wsj.com

 

Businesses across many sectors have been searching for workers as the labor market has tightened.
Businesses across many sectors have been searching for workers as the labor market has tightened. PHOTO: JOE RAEDLE/GETTY IMAGES

U.S. Stocks Surge on Powell Remarks, Jobs Report

“U.S. stocks bounced back from their worst two-day start to a year since 2000, soaring Friday after fresh signs of economic strength eased fears that slowing growth around the world could drag on the U.S. expansion.

The Dow Jones Industrial Average jumped nearly 750 points as better-than-expected hiring in December suggested a healthy labor market. Stocks rose further after Federal Reserve Chairman Jerome Powell said economic data suggest good momentum heading into the new year, but that the central bank is “prepared to adjust policy quickly and flexibly” if necessary.

The combination mitigated investors’ worries about an economic slowdown. Those fears sent waves of volatility sweeping through stock and bond markets in recent weeks…” [WSJ Paywall] www.wsj.com

Q and A on the Big December Jobs Report

“The big news is that the jobs market apparently didn’t get the memo that the U.S. economy was barreling toward a recession. In fact, the jobs numbers came in a lot stronger than expected. Payrolls were up 312,000 in December, compared with expectations for about 180,000, and bringing the full count of jobs added for 2018 up to 2.6 million jobs, the strongest year for job gains since 2015. Wage growth accelerated slightly and, at 3.3 percent (before inflation) for mid-level workers, tied an earlier cyclical high. Weekly hours edged up slightly, jobs gains for the prior two months were revised up, and 70 percent of private industries added jobs on net, a high share for that metric.” www.washingtonpost.com

Your success blesses others. I wish you a great a hugely impactful week!

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!