Many of today's office designs and layouts are shifting from a sea of Dilbert-like cubes to open formats, thanks to advances in mobile technology.

"The biggest trend changing the entire work environment is technology--wireless technologies, in particular," said Bob Porter, studio director at Vocon, a commercial design and architecture firm in Cleveland. "This new generation of workers has grown up totally on computers, so they are much more mobile. Therefore, workspaces become more fluid, dynamic and flexible."

Open offices commonly house multifunctional, wireless, shared spaces. They are typically designed with lower-paneled workstations and common rooms, rather than corridors and private offices. They involve modular furniture and, often, more natural light.

While the open-office concept is not new, advanced technology offers more efficiency and inventive functions than ever before. Large public corporations and small private firms alike are clamoring for such spaces, and real estate managers are realizing the advantages of these open layouts.

THE INCREDIBLE SHRINKING OFFICE

Over the last five years, the average office space per employee has shrunk by more than 20 percent, according to surveys conducted by Marcus & Millichap Real Estate Investment Brokerage Co. According to its information, the average rentable square foot per employee is currently estimated at 190 square feet.

However, with alternative work strategies, the average rentable square foot per person might range between 100 and 150 square feet, resulting in savings for tenants, said Dan Cooke, senior vice president of strategic consulting for Jones Lang LaSalle.

Brad Blankenship, vice president of global real estate advisory firm, The Staubach Company, once helped a client save $3.4 million in real estate and operating costs over its 15-year lease term by transitioning from a 100 percent closed, hard-wall office to a 50 percent closed, 50 percent open environment. This savings came from adopting an open design and scaling down 30,000 square feet.

"The two greatest costs of any company are salaries and compensation, and real estate costs," Blankenship said. "If you can reduce your real estate costs, you're reaching into the big numbers."

Eric Beichler, managing partner at Mohr Partners, a corporate real estate services company, said most of Mohr's clients--and the office market in general--have transitioned to a one-third hard-wall and a two-thirds open-office ratio. He said the tremendous movement frequently occurring at corporations, with their hiring spurts and downsizing, spurred the need for flexibility, and in turn, open-office spaces. "It really changes the whole landscape of how you deal with contraction and growth at companies," Beichler said. "The flexibility gives you a lot more opportunities to make changes internally without having to move."

OPEN OFFICES REPLACE OPEN-DOOR POLICIES

Such a shift in office design stems from vast advances in more compact and mobile technology.

The widespread use of laptop computers, wireless technology and voice communications available over the Internet, referred to as voice-over IP, has increased flexibility and openness in offices. Thus, sharing conference rooms and unassigned workstations is gaining popularity because people can set up virtual offices almost anywhere, Beichler said.

"It becomes much easier for employees to work where they want and still be connected," Cooke, of Jones Lang LaSalle, said. "Technology around data lines has really opened it up for people to work most anywhere."

Open-office workstations are centered on a wired workstation spine--the central axis and chief support of the workstation. Spine connections eliminate

the need to provision individual offices, and they can accommodate a variety of easy-to-change workstation setups.  

Marc Margulies, principal of Margulies & Associates, an architecture and interior design firm in Boston, said his office and many offices the company designs have transitioned from having individual walls to having a spine powered with a series of components that can be readily and flexibly arrayed.

"People are trying to move as far away from the rigidity and isolation that goes along with [individual offices] to gain a higher degree of collaboration and flexibility for both work and space purposes," Margulies said. "This more flexible concept really meets those needs."

TECHNOLOGY'S SMALL FOOTPRINT HAS BIG IMPACT

The constantly shrinking nature of computer hardware has also played a major role in open-office design, said Brigitte Preston, design principal at lauckgroup, an interior architecture firm in Texas. She said the proliferation of flat screens has had the biggest impact on workspace size.

The use of flat screen monitors enabled Preston to save space at Green Mountain Energy headquarters in Austin, Texas, by furnishing the area with 120-degree, boomerang-shaped workstations, rather than 90-degree corner units to save space. Using 120-degree workstations can drastically increase the number of workstations capable of fitting on a floor or, instead, decrease the amount of space needed overall.

Replacing space-consuming file cabinets with electronic databases is another technological development contributing to decreased office space requirements. Architect Tom Polucci, vice president and director of design for interiors at HOK Chicago, said traditional file cabinets can have a big impact on real estate costs.

A workplace strategist employed by one of Polucci's clients determined every file cabinet costs the company $1,000 a year in terms of its footprint and the rent the company pays for the footprint. A request for 30 file cabinets then translates into $30,000 a year in rent, he said.

Polucci said more clients are using electronic filing systems with saving space in mind. He said the elimination of paper records via databases has allowed companies to save money by maximizing office space and reducing the need for large file rooms.

"To best utilize the square footage you have, you want to make it more for your people than your stuff," he said. "You become much more effective. People are using technology not just for storage but for the accessibility of information."

TECHNICAL AMENITIES NEED ADAPTABLE HOME

Building owners and managers must realize advanced electronic and telecommunication technology presumes the presence of physical building requirements to support them, industry experts said.

One significant building advance is a raised floor system housing all the data, phone and electrical cabling--historically stored in ceiling trays. Underfloor systems can benefit real estate managers because they smooth the transition from tenant to tenant. Modern carpet paneling atop underfloor systems enables a company to remove floor coverings and gain access to the underfloor to reconfigure cabling if necessary.

Koll Development Corporation in Addison, Texas, is currently creating prototype LEED-certified office buildings called Intellicenters, which combine open floor plans with sustainable design principles. One of the trademarks of these buildings is their 14-inch raised-access flooring.

"Raised flooring gives you access to cabling and power, and allows end users that have a lot of change in their space and their people to accomplish that efficiently, quickly and for little cost," said Mike Rosamond, senior vice president at Koll.

Advances in acoustic technology systems have also paved the way for effective open-office space designs. Preston said raising the heights of workstation panels never really increased privacy or reduced surrounding office noise, as initially intended.

White noise technology, which emanates low-frequency sound throughout the office via a sound system, is often a good solution. Fiberglass ceiling tiles can also manage noise levels. Preston said sound masking can cost approximately $1 per square foot.

"The biggest paradox in workspaces is people usually want to collaborate, but on the other hand, people also want acoustic privacy," Preston said. "When you put those two things together you usually have a combination that is exclusive. A lot of times [white noise technology] really is a good solution."

DON'T WORRY, BE HAPPY

While advances in mobile technology are making the open-office trend much more viable, Cooke of Jones Lang LaSalle said people still want--and need--to come into the office, and the trend is not indicating a slowdown in the office market.

"I originally thought we would see less of a need for space, overtime," said Cooke. "But that is certainly not the case. We have not seen any type of impact that would suggest [they] are reducing the need for space; they just provide different and more flexible uses of space."

As a result, real estate managers in the office sector can embrace, rather than reject, the open-office concept and the mobile technology making it tick.

"People who are working in a modular environment are not necessarily leasing less space," said Blankenship of The Staubach Company. "Their companies are growing and they may actually need more space. But they're using their space more efficiently."

One common challenge facing property managers is wiring and rewiring the spaces for new corporate tenants' technology needs. But because open-office spaces are in high demand, they are often more appealing to prospective tenants and actually require less preparation for new tenants.

Typically, a tenant is responsible for pulling the cable and wiring out when leaving a space, but with the new wiring systems, a property manager will often make an agreement with a tenant to leave enough slack in the line for the next tenant, Beichler of Mohr Partners said. That makes the space even more attractive because the tenant saves money when rewiring the office.

"A lot of people are taking these open-office spaces as-is," Beichler said. "Ultimately, that means more money to the landlords because they don't have to put as much money into it. They're probably carpeting, painting, cleaning and maybe reworking the reception area. That is why open spaces are easier to lease."

SAVING SPACE, SAVING MONEY

More money going into real estate managers' pockets sounds ideal, but investors must also consider how much they will have to spend to keep up with innovative design and advanced technology. Many industry insiders said both the build out and operation of open-office spaces cost less. Blankenship said a hard-wall plan will probably run real estate investors between $22 and $23 a square foot because of excess materials like drywall, doors, hardware and light systems, while an open plan can be built for $16 per square foot.

Modular furniture systems and technology are the two highest costs associated with open-office formats. Technology, however, is also one of the highest costs of running a hard-walled office, industry experts said.

Of course, changing everything about the way a company works, and designing offices accordingly, can be costly. If a company overhauls its hard-walled space--considering HVAC, zoning issues and electrical complications--the costs of designing an open office can run high.

"The initial cost to accommodate that new way of working may be a little bit more expensive," Blankenship said. "But you save in long-term flexibility--in cost for churn and movement of employees."

When Cooke of Jones Lang LaSalle worked for Agilent Technologies, he helped transform the environment from a full-service office with individual workstations into a mobile environment, allowing almost 80 percent of the company to work remotely.

Cooke said when the office was packed with employees working on-site daily, the company spent around $7,500 to $8,000 per employee, per year. However, when Agilent reduced the footprint of the workstations and set up a mobile environment where employees could come into the office when necessary and work in unassigned, shared workstations, the new cost was between $3,000 and $3,500 per person, per year.

"Open offices offer huge value and huge cost savings," Beichler said. "If you need to hire four employees, you could have four cubes up, wired and ready to go. It is buying flexibility and peace of mind that you have the ability to contract and expand."

Many real estate experts said technology not only promotes the open-office format, but it is also crucial for effectiveness.

"The key is not just the physical environment and space, it is the support and services that go along with that," said Cooke. "If you can get that piece, the rest of it falls into place."

Diana Mirel is a contributing writer for JPM. Questions regarding this article can be sent to kgunderson@irem.org.

By: Mirel, Diana
Publication: Journal of Property Management
Date: May 1 2006 12:00AM 2006
Subject: Interior design (Analysis)
Location: United States