The place to begin is by determining your company’s business objectives and strategic vision.  What are the end goals and how should they be accomplished?  Once these questions are answered, these criteria should be expressed in the Corporate Mission Statement.  The Mission Statement will elucidate the firm’s core ideology and the vision of its goals.  Once the strategic vision is defined, the company can begin to design and create a “smart office” that will bring the strategic vision to life.

• Corporate Culture – The Strategic Vision is the blueprint for the management’s concept of its corporate culture, defining how management and employees work, interact and conduct their business. The success of numerous companies has been attributed to their corporate culture. Apple and Netflix have a less structured management strategy which fosters creativity, problem solving and employee freedom.  Spotify uses the principles of agile management which groups employees in teams to tackle company issues.  Cisco has downsized their offices by adopting a mobile office environment, thus reducing the ratio of employees to work stations to six to one.

• Office Amenities – If the goal is to find, hire and retain talented employees, the office amenities are instrumental to achieving that goal. Google is most famous for its employee friendly corporate culture, offering amenities such as gourmet food, massages, laundry service, on-site doctors, flextime, and yoga.  Their new London office will have an outdoor roof garden, football and a ride-in bike garage.  While the elaborate perks that Google offers are not possible at all offices, playful perks such as foosball, ping pong and pool tables are doable; as are access to food and coffee throughout the office.

• Work, Life Balance – Today’s corporate culture encourages employees to blend their work life with their personal life. They should love coming to work.  A relaxed dress code is standard, pets are encouraged and bikes are everywhere.  The workplace should offer vitality and wellness by encouraging healthy food, exercise and access to natural light.  Child care and personalization of work space are encouraged.

• Office Design – Collaboration occurs at shared food or bathroom lines, coffee bars, and other community areas. Transparency is created by using glass walls and perforated materials which provides natural light as well as increased employee communication.  Areas for small private meetings which offer quiet escapes are equally important as the situation rooms for larger meetings and town hall-type events. The office furniture contributes to the office’s flexibility by offering standing desks, sofas, lounge chairs, coffee tables, and other options that create comfortable, collaborative areas throughout the office.

• Branding – Many tools are used to express the company’s brand. While branding for the clients is a standard practice, branding the office is equally important when recruiting new employees. Today’s offices are additional tools to attract and retain employees; pride in the brand should be evident in the office.  A famous example is the design of Pixar’s Animation Studios.  A fun atmosphere was created using a Hawaiian theme, motor scooters and a playful atmosphere.  The brand has been instrumental in the success of Pixar’s animated movies.

• Accessibility – Most business plans want an office central to the location of its employees that provides easy access for all employees. The office should have close proximity to highways for employees who drive or carpool and also be near to public transportation for those who do not.  Alternative transportation is accommodated by providing charging stations for electric and flex vehicles as well as access to bike friendly roads with onsite bike storage.  Additionally, if the company mission statement’s goal is to attract millennials, then the surrounding neighborhood should have the cool factor.  Good restaurants, bars and coffee shops should be available nearby as well as access to shopping, cultural and entertainment hubs to satisfy the social needs of its millennial employees.

The new 21^st century office has evolved.  It is being determined by the company’s goals, objectives and values that define the corporate culture and its brand.  These decisions determine the office’s location, design, amenities, furniture and vitality. These characteristics enable the company’s office to become a tool to help the company grow and achieve success.

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This approach appealed to the social instincts of the millennial generation who were rapidly becoming the dominant workforce in the marketplace.   This approach was soon adopted by all the major tech firms including Google, Amazon, Facebook, Oracle, etc. 

As more and more tech companies adopted this approach to office space they began to realize the benefits of collaborative office space:

• Reduced Footprint – Traditional office spaces are designed based on allocation of 250 – 300 square feet per person, (“SFPP”). Some industries such as legal use even more – up to 350 SFPP. However, the collaborative office space has moved away from the individual workstations and caves, (private offices).  Instead of 36 or 42 square foot workstations the employees are now sitting at benches.  Allocating 2 feet per person, a 48 square foot area can accommodate 4 employees.  Instead of a 10’ X 12’ cave for one manager, that 120 square foot area can accommodate up to 3 – 4 managers. This represents a 20 to 40% reduction in space. Although the cost per square foot remains the same, the reduced square footage represents 20 to 40 percent of rental costs over the term of the lease.
• Google Space – Google has taken collaborative space to the next level. So much that now this type of space is also called Google space.  Their addition of perks such as gourmet food, massages, swimming pools, workout equipment, rock climbing walls, rooftop gardens, and bike storage rooms are bait to attract top talent.  As a result, the need for head hunters and staffing companies has been minimized since top talent is now pursuing Google and other companies that have followed their lead. The reduced use of headhunters and staffing companies represents additional savings for these companies.
• Longer Work Hours – Google space has become so attractive to Millennials that they don’t want to leave.  They are working longer and longer hours.  Since they are being fed gourmet food and have their dogs at their side, they no longer have to leave for supper.  By improving the work/life factors, millennials are converging their office life and home life.
• Fewer Sick Days – Wellness has become a major component of collaborative space. Healthy foods, walking areas, gyms, and bike storage have become staples of Google space.  Keeping the millennial employees physically active and eating healthy promotes wellness resulting in fewer sick days.
• Innovation – The very nature of collaborative space is to promote creativity and innovation. Since all tech companies thrive on innovation, collaborative office space has become a major contributor to their success.  This article in IT Wire discusses improving productivity by redesigning office layouts and improving communication by collaboration.
• Brand Promotion – The design of collaborative office space includes the promotion of the company’s brand. This helps to sell the company and its products to potential clients as well as prospective employees.  The building in which the company is housed as well as the space design contribute to the marketing tools for today’s tech companies.

These factors are the reasons that all of the world’s major tech companies are adopting collaborative/Google space.  The benefits are too overwhelming to ignore: innovation, hiring and retaining talent, increased productivity, brand promotion and reduced costs.  Tech companies are universally embracing this approach as their office space has become a key component to the success of their company.

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Traditional companies, such as law or accounting firms/insurance or financial brokers, negotiate leases that reflect the economy at that particular time.  The economy has been the traditional driver of commercial real estate.  An important component of the economy is the unemployment rate as this discussion in Bankers Toolbox illustrates.

If the economy is good that means that companies are hiring, growing and have a positive outlook towards their short term future.  These traditional companies will take longer leases so they have stability and take more space so they have room for expansion.  They may upgrade to a better building with a better location or better amenities.  As they are doing that, they are taking space off the market which tightens supply.  As the supply of office space tightens, and few new buildings are coming on the market – prices will rise.  So when the question is asked – “how’s the market?”, that question has to be clarified by how’s the market for whom?  A good market generally means there is a lot of activity, caused by the good economy, which is good for landlords.  A bad market generally means there is little activity, caused by a poor economy, which is good for tenants.  The good market drives prices up and the poor market drives prices down.  These are the laws of supply and demand.

The tech companies, on the other hand, are all about creating new products and bringing them to the market.  If the product is successful and takes off, the tech company will hire to meet the demand and expand its R&D to develop more products.  This change in the status of the company can happen very quickly.  And when it does, they will need more space immediately. Thus the tech companies need for space is not economy driven but is product driven.  Of course a good economy can help product sell; but a good product can also be an economic driver.

This can happen at any time to the tech company.  Therefore the proper negotiation of the business terms becomes paramount.  Flexibility and expansion capabilities are of key importance.  This includes an option to cancel the lease, options to expand into adjacent space and even includes a right of first refusal on other space in the building.  The sublease and assignment clause must be carefully negotiated so they can be utilized by the tech company to easily leave the space.  A larger landlord with a large portfolio of buildings may be desirable because they will want to keep the growing tech company in their portfolio.  They can release the growing tech company from its lease allowing them to move into a different building within their portfolio.

All of these options are to accommodate the tech company’s rapid growth and hiring.  Of course the rents and other costs must be contained so as to not saddle the tech company with a financial burden which will detract from their true mission of developing products.  Most landlord’s strategy is to reap the highest rent toward the end of the lease due to increases and pass-through’s.  That gives the tech company an opportunity to negotiate much lower rental costs in the earlier years of the lease enabling the tech company to put its money into product development.  The best technique to drive these deals to the tech company’s advantage is to negotiate on multiple buildings simultaneously.  This will force the landlords to compete for the tenant.  This is best done by a broker who specializes in tenant representation because they never represent landlords and have no conflicts of interest.

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Traditional users of office space, such as companies in the legal, accounting and financial industries, design their offices to emphasize the hierarchy of their managers and employees and to accommodate each person’s task.  The purpose of contemporary office space for today’s tech companies is to promote the corporate identity, brand and culture, to serve as a bargaining chip in the competition to attract and retain employees. In addition to this, the space’s design should foster creativity, productivity and wellness.

To accomplish these goals, the space must be carefully planned, utilizing a design that expresses the culture and brand of the company.  This will help to keep the employees in touch with the company’s core values and goals, while also helping to impress clients.  Transparency and open floor plans are standard; offices along the windows are a thing of the past.  This promotes a flat hierarchy structure enabling everyone to feel equally respected while encouraging communication.  The office should feel like a home away from home; sometimes better than home.  This supports the work/life balance that appeals to millennials, enticing them to stay at work for longer hours.

“The design should promote collaboration and creativity which fosters innovation” as stated by Thomas J. Allen in The Organization and Architecture of Innovation. This is accomplished by creating areas where chance encounters will occur.  These can be small conference tables or huddle areas for each team, offering the ability to collaborate on ideas, proposals or documents.  Areas with sofas and chairs can also provide opportunities for people to meet and share ideas.  The space should accommodate multiple eating and gathering areas as well as play areas incorporating games such as fooz ball, miniature golf or ping pong in the play area is quite typical. These allow the employees to relieve stress as well as improve relationships.

Steve Jobs has said that nobody should be more than 150 feet from food.  The kitchen no longer has just a table and chairs.  It is large, open and has various seating areas.  Rather than a water cooler as the primary meeting place as in traditional offices, coffee bars are sprinkled throughout the office.  Some offices create a collaborative environment through mobility.  Rather than have individual cubicles, employees simply plug their laptops and other mobile devinces into any available workstation.  Of course these types of offices need privacy or phone areas and should provide heads down areas for focused work.

Wellness is another key tenet of today’s offices.  Every desk should have access to natural light and the entire office should be aesthetically pleasing and fun.  Decorating the environment with artwork, sculpture and murals as well as plants distributed throughout the office can accomplish this.  High ceilings can promote the feeling of a work space without boundaries.  Even office furniture can add to this feeling through the use of work stations that can go from a sitting to a standing position. Studies have shown that employees who are encouraged to stand once every hour are more productive than their more sedentary counterparts.  Another consideration is the use of sound proofed materials and white or pink noise to muffle outside noise.  By promoting wellness productivity is enhanced.

This radically different type of office design will foster collaboration and productivity.  It will attract the millennials and appeal to their lifestyle.  Expressing the corporate culture and brand will appeal to clients.  This new approach to office space design is being used not only for the tech companies but is being adopted by more and more of the traditional companies.  The world of office space as we know it is changing for the 21st century.

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