Office space enough for ‘we’ and ‘me’
A collision of generations is occurring in the workplace, and the millennials, that pesky generation born between the early 1980s and early 2000s who seem to affect everything from the way we eat to the places we sleep, is winning.
“There are four generations in the workforce today, but the only one that matters is the millennials,” said Justin Lossner, an office specialist with JLL in Des Moines. “They are really driving this workforce change, so people are paying attention to them.”
What the millennials want is room to move around the office. In old buildings and new, cubicles are coming down and open spaces are emerging, maybe with an office nearby that might even have a door to allow some quiet time.
Building professionals such as Brad Schoenfelder, vice president of development for Ryan Companies US Inc., calls those little corners “me” spaces. Big, open rooms that invite collaboration are “we” spaces. Even for an aging baby boomer, a view of those open, airy and light-filled spaces can be inspiring. And they better be, because they are the norm.
The Business Record hosted a roundtable discussion in March to talk about trends, issues and challenges in the Greater Des Moines office market. The panel convened a couple of days after CBRE|Hubbell Commercial released its annual commercial real estate surveys. On the office front, the numbers showed a relative flat, stable market with signs of growth.
It is interesting to note that one speculative office building, something of a rare sight since the boom leading into the Great Recession, has been completed and filled with tenants in West Des Moines, and construction is about to begin on another spec office building in the city.
CBRE|Hubbell Commercial office specialist Bill Wright said it is unlikely that there will be a rush to construct such buildings, but noted that they are an indication that some vitality is returning to the office market. Our panel agreed. In addition to Lossner and Schoenfelder, the panel was made up of Aimee Staudt, director of development for Knapp Properties Inc. and Bryan Shiffler, manager of Shiffler Associates Architects, the designer of Ashworth Place, a speculative office building that opened recently in West Des Moines.
Knapp Properties is hoping to build an office campus on nearly 40 acres it owns in the Kettlestone corridor in Waukee.
Ryan is the general contractor on Principal Financial Group Inc.’s $250 million renovation of its campus in downtown Des Moines as well as on the new construction of the $156 million Krause Gateway Center, which will be the new headquarters for Kum & Go LC. Ryan also bought the land and constructed the building for Merchant Bonding Co.’s new headquarters in West Des Moines, and it will be the general contractor on a residential, retail and office building in the East Village.
One of Shiffler’s most recent projects was the design of Ashworth Place, the speculative office building whose tenants were placed by JLL.
It is interesting to note that recent designs, such as the Merchants Bonding headquarters in West Des Moines, are pleasing to the eye, while others trigger the imagination. The Shiffler-designed Ashworth Place building fits the latter category, and that was by his client’s request.
“My client wanted a unique image,” Shiffler said. “And it’s a great problem to have as an architect — a client who wants something that will stand out and create its own identity in the marketplace. The architecture today is bold, and angular, it flexes its muscles in space, so that’s what Ashworth Place really tried to do.”
And businesses, as they accommodate four generations working in the contemporary office, want all the flexibility they can get out of a structure.
“People need a variety of workspaces and the choice of where and when they want to use those. That’s really what you are seeing in the marketplace today,” Staudt said.
That marketplace is growing, the panel agreed.
Schoenfelder said: “2016 is looking very good; 2017 will still have some momentum; beyond that it is anybody’s guess. People are starting to see the future looking a lot brighter.”
A key takeaway from the discussion was that “we are talking about office space again. I think we’re going to see new projects in the office market, and I think that is an encouraging thing,” Shiffler said.
Justin Lossner – Agent and vice president, JLL
Bryan Shiffler – Manager, Shiffler Associates Architects
Aimee Staudt – Director of development, Knapp Properties Inc.
Brad Schoenfelder – Vice president of development, Ryan Companies US Inc.
Kent Darr – Senior staff writer, Business Record
Chris Conetzkey – Editor, Business Record
In March, the Business Record hosted a roundtable conversation about the Greater Des Moines office market to discuss the trends, issues and challenges business owners and real estate professionals should be aware of in 2016 and beyond.
Our panel of experts consisted of Aimee Staudt, director of development for Knapp Properties Inc., Bryan Shiffler, manager of Shiffler Associates Architects, Brad Schoenfelder, vice president of development for Ryan Companies US Inc., and Justin Lossner, a vice president and office specialist with JLL.
Among other things, we learned that millennials are shaping office designs and configurations. Most important, there was a strong sense of optimism among our panel of experts that the national attention directed toward the Des Moines metropolitan area is simply a reflection of local enthusiasm about the economy, the culture and the path to the future.
Watch the Video:
Want to watch the roundtable in its entirety? Go to www.businessrecord.com/AREM
Tell us where you think the office market is headed?
Schoenfelder: If you look at the last couple of years, you’ve seen a tremendous amount of multipurpose that has come back to the office market. What I’m encouraged by is that you’re starting to see some speculative office space; that’s a sign that people are starting to feel really confident about what the future looks like. We are a community that is really fortunate to have a lot of Fortune 500 entities like Principal Financial Group Inc. and Wells Fargo & Co. who keep investing in some of their existing structures. … If you look at our economy, we still have low unemployment. ... I think that’s going to continue to fuel what you see now happening in the office market.
Staudt: For some time, we talked about vacancies in the downtown market with the downturn in the economy, but what we have seen are a lot of conversions that have happened with office space into residential that have taken a lot of that out. We have seen some really good things (like) what Brad referred to with Principal and with Kum & Go coming downtown. I think that has created a lot of excitement for an office moving here. Unemployment is still good, interest rates are still good, construction costs are high … but I think slow and steady growth is what is coming down the pike.
Shiffler: I think that architects are the canaries in the coal mine. Our personal business turned negative in November of 2007, and that was 30 days before the employment number nationally turned negative. It just stands to reason that if America isn’t working, we are not building office space. But I agree with Aimee and Brad. I think we have turned the corner, especially in the Des Moines marketplace. We are running on all cylinders right now, and that is helping prop up the commercial market space.
Who is in the market for office space?
Lossner: At JLL, we’re seeing 3,000 square feet on up. We’re kind of seeing it in all phases. Ten years ago, everyone was looking out west, but I think the workforce has shifted a little bit and downtown product is really something that has interest (because of) the fact that there is a lot of housing and a lot of momentum. The folks that we are talking to today that might not have looked at downtown in the past are looking there today, not that they’re ignoring the suburbs because there is still plenty of activity out there.
Panelist question via Schoenfelder: What is driving the shift in focus to downtown?
KEY POINT: Growing downtown population
The downtown population is now approaching 10,000 people, which is driving businesses back into the downtown office market.
Lossner: I think our downtown is unique from the standpoint that you’ve had these huge companies, Wells Fargo and Aviva, build these beautiful campuses out west and they created this huge immediate void downtown. Wellmark is another example. It has taken a lot of time to figure out what that space should become.
You add in the recession, you add in these 80- to 100-year-old buildings, the Des Moines Building, the Equitable, the list goes on and on, and much like other cities, we are seeing all of these buildings go through a transformation. It’s kind of a multipronged deal where housing has taken off, and retail has taken off because of that. Buildings like the Des Moines Building, no matter how many square feet of office space, are now full of apartments. It’s a lot of different things.
Add into the fact that it’s a changing workforce. There are four generations in the workforce today, but the only one that matters is the millennials, which is kind of arrogant to say, but the point being that they are really driving this workforce change and this workplace change, so people are paying attention to them. Principal and these huge companies are investing money to find out what is driving their needs and what is making them happy and productive.
Shiffler: But don’t you really think that in the late 1900s corporate America chased employees out to the suburbs trying to make it convenient for them, and now, especially in Des Moines, with the downtown population approaching 10,000 people, corporate America is coming back downtown. … More and more people want to work and live downtown, and it creates the need for office space.
Schoenfelder: I think you touched on it with the four generations, and everybody really focuses on millennials. I think what millennials have done is really challenge the norm, and most of the national companies that we work with, what they are really trying to do is determine what is our employee demographic, what do our employees want? And so, because of that adjustment for millennials, they are doing a much better job of looking at the entire workforce and asking, “What does that profile look like? What’s important for us and how do we adjust for that? We have the millennial group and then we have the seasoned workforce and those are the four generations.”
Is this collision of generations a good thing?
KEY POINT: The Internet
In the past, workers didn’t necessarily know what the office spaces looked like at other companies -- the Internet has opened eyes and helped drive office changes.
Shiffler: I think we live in a great time for design. There are TV stations that are dedicated 100 percent to design. The Internet certainly has made it easy for workers in one corporation to see how workers in another corporation live. I think the challenge is to create interesting spaces that will help attract millennials.
Staudt: When you are approaching the design and construction of buildings, the idea now really is to improvise. You are seeing a lot more emphasis on teamwork and collaboration. Millennials want to work whenever, wherever; they don’t necessarily want to spend a lot of time at their desks. But you are also seeing that everybody has to have some of that quiet space for focused work. People need a variety of workspaces and the choice of where and when they want to use those. That’s really what you are seeing in the marketplace today.
Bryan, how did generational changes affect your design of the Ashworth Place office building in West Des Moines?
KEY POINT: Flexible layouts
Designing flexible, open office layouts can make it easier to adapt and change in the future as trends continue to ever evolve with even the next generation’s needs.
Shiffler: My client wanted a unique image. And its a great problem to have as an architect — a client who wants something that will stand out and create its own entity in the marketplace. The architecture today is bold and angular, it flexes its muscles in space, so that’s what Ashworth Place really tried to do. And then you combine that design attitude with trying to be flexible for corporate America: big spans, fewer columns, maximum flexibility around the core. We really created the floor plan, then the aesthetics were added.
Schoenfelder: For the corporate office user or the office user in general, I think the big struggle they have is how do you create more of what we refer to as “we space,” which is that collaboration area that might be a break room or a place where you might go sit with another colleague, (while) at the same time those decision-makers are trying to balance out how to deal with what we refer to as “me space,” that’s my space where I sit and use it as my head-down focus area. That’s really sort of a push and pull. As a developer and owner, too, we look at it as we want to keep finding ways to spend less money, but I think the important thing is trying to figure out what’s the right blend of spending the money in the right places so it gives you flexibility. As we are looking at trying to own a building, it’s really saying what is it going to be like in 20 or 30 years, and things will change a little bit. You always want to make sure that the architecture is timeless and authentic.
Lossner: As we talk to developers, it’s trying to communicate that vision of flexibility and access to technology, coupled with design that if this isn’t here in 10 years, is it something that can be repurposed? That draws in the whole cost discussion. Construction costs are challenging these days, whether it’s taking a space that has been a traditional office with cubes and converting it to open space, that construction cost is driving everything.
Brad, how did Ryan approach the renovations of the Principal campus and the American Enterprise Group headquarters?
Schoenfelder: When those buildings were originally built, they were classic designs by world-renowned architects. What they needed was a refresh to bring them to what people are looking for. What was popular then isn’t what is popular today. For me, that goes back to what are you going to do with the bones of those buildings when you are building something new. What is it costing to renovate those spaces? Costs have gone up just a little bit, but that is insignificant as you look at the investment that those companies are putting back into their people, and into their workspace, and that is why you are seeing the amount of office renovation that is going on in our community. You have people like Merchants Bonding Co. and a few others who are saying now is the time to really invest in what we want for the next 50 years. Even though prices are starting to increase a little bit, interest rates are staying low and so your financial decisions are more focused.
Why did the office cube fall out of favor?
KEY POINT: Reduction in average office space per worker
The average amount of office space per worker was 275 square feet in the early 2000s. By the end of this year, it will be 150 square feet per person.
Shiffler: We have had the opportunity to react to the cube. The traditional cube farm was regarded as boring and claustrophobic, and even though open office systems were designed to be flexible, the reality is that they really don’t move much. I think what we are seeing today are more open office environments that are much more flexible so that departments can rearrange as departments grow or contract; you can shift these systems to best account for its purpose.
Staudt: Technology has changed that too. You don’t have the big monitor anymore, you don’t have the file cabinet, everything is electronic. Some of that is getting smaller and smaller, so rather than trying to fit everyone into a tiny cubicle, you are starting to see some of that open up. You are starting to see emphasis on collaboration and teamwork and creativity, and those things are happening in a space where you can engage with people rather than in a space where you are isolated.
Lossner: Me space is critical, especially if you’re on the phone with a client or have a need for confidentiality. If you are a project-based organization, it’s all about flexibility. Unplug the laptop, go to a corner where you can work quietly if you have to. If not, you mentioned collisions; you’re in that open area where people are kind of bouncing around and floating ideas on a regular basis.
Shiffler: The American corporation continues taking workspace away from workers. In the early 2000s, the average amount of office space per worker was 275 square feet. In 2010, it was 225 square feet; in 2012, I think it was 175 square feet, and it doesn’t stop. By the end of this year, it will be 150 square feet per person. While they are making workspaces smaller, they are in fact adding. They are adding back in amenity space, workout rooms, quiet rooms, conference rooms.
Schoenfelder: In the recession, people were saying how do we build less office space and how do we repurpose as we go. Can we figure out a little less space, with the convergence of technology? Your decision-makers are trying to figure out how to do it with less space.
Shiffler: I totally agree. I think it is a reaction to the Great Recession. It was a shot across the bow of corporate America. If they can save some money on their physical environment, they are going to do that by squeezing more workers into the same size space but giving back more amenities. They can still save some dollars long-term.
Schoenfelder: We have about 10,000 square feet of space, and as we grow, we were talking about how can we figure out what to do with the same amount of space, and we said how about if we have less space but we put it all against the windows. People are being creative.
Aimee, Knapp Properties envisions a corporate campus for land it owns in Waukee’s Kettlestone area. Will the design attempt to accommodate the natural surroundings?
Staudt: We are very excited about Kettlestone. We have about 39 acres there situated around around some ponds. They are stormwater retention ponds that were created for the entire development. Waukee went out there and said: We want to take this area that is going to open up from the interchange and we want to create regional amenities. We want to have bike trails; we want everything to be connected. So we are trying to incorporate walkability; we are trying to incorporate sustainability; we are trying to incorporate some of these concepts that we are talking about with office development into the built environment. We are really excited about that. We’re going through thematic planning for how that might develop. With this gorgeous outdoor space, is there a way to draw some of the working space in so that even in spaces that (are designated as public spaces), can we bring some of that inside and outside of the building? I envision people going outside to work when it’s nice. … You don’t often get the opportunity to share the outdoor environment in that way.
What elements make the downtown attractive to office users?
Lossner: Your space is no longer your cube. I don’t have just 100 square feet; I have 2,000 feet where I can pick up my laptop and my phone, and if I want to sit over there, I sit over there. It’s walking to whatever new restaurants are open in the Gateway.
Staudt: We’re enlivening downtown to give people more of a reason to stay, not just using the streets to get out of downtown.
Shiffler: We moved our offices downtown, and I was worried that I was going to increase the commuting for our employees. But they love it: They love being able to walk to Starbucks for coffee; they love being able to walk to a local restaurant for lunch.
What were the effects of the recession on the office market?
Lossner: I worked on the East Coast and it was dramatic. In suburbs, people transitioning to a flex-rate type office. The flex market stayed strong. The biggest shift in the last three years has been the demand for Class A space. That’s a testament to the narrowing of the vacancy rate.
What are your final thoughts or takeaways on the office market for 2016 and beyond?
Schoenfelder: 2016 is looking very good; 2017 will still have some momentum. People are starting to see the future looking a lot brighter.
Staudt: We have a lot of great projects coming online. We have great momentum in housing and retail, and it is all coming together to make for a wonderful time in Des Moines. You don’t know what the next trend will be. Just be flexible and take the long-term view.
Shiffler: I think this is a good time to be an architect, this is a good time to be in construction. I think corporate America has asked itself how can I attract the next generation of workforce, and the answers are we can pay them more money, we can give them something meaningful to do or we can give them an attractive work environment. So as an architect, the challenge is how do we come up with the next generation of exciting workspace.
Lossner: When I was graduating, we were asking, “Do I go to Kansas City, do I go to Minneapolis, do I go to Chicago?” I’ve seen this whole transition happen where now Des Moines is offering competition to those other cities. I’m super-positive talking about downtown or Ankeny or any of these other locations that have different fits for different companies. The good thing is that there is momentum. It’s a fun time for everybody to be involved.