As a researcher in commercial real estate, it’s not often I find a documentary film director turning their camera to an everyday interior feature of our industry to tell a compelling story, but that’s exactly what Three Walls delivers. It’s a Canadian filmmaker’s look at the birth, growth and journey of that building block of the modern office layout: the cubicle. Watch the 25-minute film here.
Its blurb reads:
With equal doses of deadpan humour and historical insight, the Canadian filmmaker Zaheed Mawani tackles the rise of the cubicle and the matter of why its inventor, the US designer Robert Propst, came to hate its implementation. Along the way, we hear office workers who spend their days fantasising about breaking free from their three-walled lives, cultural critics who lament the soullessness of the modern office, and even a few cubicle defenders.
The short film is a well-made, balanced and very watchable surprise, even managing to be poignant about the topic. While often overlooked, or assumed as a permanent fixture of the office, the cubicle can inflame passions these days as information technology, desuburbanization, and millennial worker demographics are all conspiring to reshape the office layout, and with it the expectations of its workers and managers. It’s not just tech companies that advocate for “openness” as a basic expectation, running counter to cubicles. But something like a backlash against that trend has been forming for some time now, with advocates for more enclosed workspaces saying that worker collaboration is less valuable than worker concentration.
No matter which side of the debate you end up on, Three Walls will make you think about cubicles in a whole new way.
At RE/Journal CRE Forecast Conference this week at Chicago’s Hyatt Regency, the proceedings kicked off with a one-on-one with Howard Tullman, CEO of 1871, the non-profit startup hub located in Chicago’s Merchandise Mart.
1871′s reputation as a hotbed of technology startup innovation companies is for real, and Howard’s philosophies are apparent in all details down to the office layout, which became a topic of conversation naturally enough.
1871 currently sports 325 companies with nine unique incubators and accelerators that use markedly different floor plans reflecting in part key commonalities to the tenant companies, whose business lines exceed the boundaries of just high technology.
Visibility — particularly visibility of project leadership by the newest tenants plays a key role in 1871′s office layout.
Newer arrivals begin by climbing a kind of ladder, settling into a class of workspace that offers the least ameneties, but is still in full view of the nicer digs nearby. The trick is that the nicer space is where tenants whose businesses pass success milestones are moved, producing a kind of conveyor belt of visible success that drives the “Leadership [means] that people need role models and so we live it every day. We figure if they’re watching [mentor and more advanced businesses] and seeing how we are executing and what our responsibilities are, that’s the best way we can model the commitment that we expect from them.”
“I think where we’re headed is a new kind of community. When we talk to our workforce [aged 25 to 55] this idea of proximity [to the workplace] is really significant. They don’t want to own a car — that was a popular talk at the auto show recently [...] the idea is that the workers want to be close to where they work.”
A return to focus
Tullman went on in the session to describe a real trend in office layout and work patterns toward focus and away from “openness”.
“Openness I think we’re going to see the next few years is going to go away. Kids today think they can multi-task, but multi-tasking means you’re doing a lot of things poorly. So what we’re discovering is [...] they go away so they can focus and get something done. This idea of being in a n open area with constant disruption is going to change and it’s going to change pretty soon.”
Wall unit makers, take note.
Laura Heller at Fierce Retail reports on Target’s foray north of the border ending painfully, including a $1.6 billion loss and the closure of 133 stores. After purchasing nationwide retail chain Zellers and its 220 stores in 2011, it opened an additional 124 units in a single year. The aggressive expansion was not rewarded with expanded profits.
“With the benefit of hindsight, I wished we wouldn’t have opened up so many stores as we did at once,” Mark Schindele, president, Target Canada told theMinneaplis Star Tribune a couple of months ago. “We probably should have scaled back from what we did to get it moving in the right direction.”
Losses at Target Canada total roughly $1.6 billion to date, reported the Star Tribune.
“When I joined Target, I promised our team and shareholders that I would take a hard look at our business and operations in an effort to improve our performance and transform our company,” said Brian Cornell, Target chairman and CEO. “After a thorough review of our Canadian performance and careful consideration of the implications of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021. Personally, this was a very difficult decision, but it was the right decision for our company.”
Vegas rents are rising, cheap oil from the fracking boom is having unintended consequences in Houston, and home ownership’s biggest cheerleader, Freddie Mac, says renting is less popular than we thought. Quelle surprise! It’s all here in the latest Commercial Real Estate News Roundup for January 14, 2015.
- 2015 seen as year for commercial real estate to accelerate, Las Vegas Review Journal, Jan. 6, 2015 – Rent gains in Class-A and -B properties, big tenants looking to penetrate Las Vegas means the CRE outlook is “let it ride”.
- Six Trends in Commercial Real Estate to Watch for in 2015, Urban Land, Jan. 5, 2015 – Most notable trend in terms of investment: the idea that bonds and equities have had very strong run-ups that commercial property hasn’t yet matched…but is expected to.
- Foreign money floods Boston real estate market, Boston Herald, Jan. 12, 2015 – Every since the earliest days of the tea trade, offshore capital has found a home in Boston. But not as much as today!
- Incubator mindset leads to a perfect office space, Inman, Jan. 8, 2015 - The benefits of the shared-space tech-style office layout – the tug of war over the “correct” way to lay out office space will continue as long as startups thrive.
- Sand Hill Road office sale may set new national price record, San Francisco Business Journal, Jan. 12, 2015 – Make sure you’re not drinking coffee of any liquid when you read the square footage price in this story.
- Low Oil Prices Threaten Office Sector in Houston, National Real Estate Investor, Jan. 9, 2015 – The other shoe drops along with world oil prices. Will Houston’s office space sector make it through an oil bust?
- Atlanta industrial real estate market had its best year since the late 1990s, Atlanta Business Chronicle, Jan. 9, 2015 – Only 1997 and 1998 performed better than 2014 in Atlanta industrial space, says CBRE.
- Investors buy 390 acres near airport; business park envisioned, Austin Business Journal, Jan. 12, 2015 – Getting down to business near Austin’s airport
- D-FW industrial construction is the highest in more than a decade, Dallas Morning News, Jan. 12, 2015 – New building boom in the Dallas area being reported for industrial including three million-plus sq. ft. projects.
- Retail plazas dominate December commercial real estate sales, Buffalo News, Jan. 9, 2015 – Erie county around Buffalo seeing quote a bit of shopping for shopping centers.
- Economy Watch: Retail Recovery at a Snail’s Pace, Multi Housing News, Jan. 8, 2015 – Malls vacancies on the the rise, but community centers and neighborhood vacancies are improving
- Shopping-Center Owners Start Year With Optimism as 4th-Quarter Rents Rise, WSJ, Jan. 6, 2015 – Meanwhile, national shopping center rents left a gif wrapped under the tree for landlords.
- Utah Mall’s Travails Expose Property Weak Link: Mortgages, Bloomberg, Jan. 12, 2015 – Gateway shopping center’s early days during the 2002 Winter Olympics are a distant memory as debt downgrades pile up.
- How Long Will Renters Keep Renting? National Real Estate Investor, Jan. 6, 2015 – Freddie Mac says a lot of things, but these days they’re saying that renters don’t actually like renting.
- Houston ranked a top city for multifamily construction, Houston Chronicle, Jan. 6, 2015 – Apartments in Houston are taking off like the proverbial oil well gusher.
- OpenPath Investments Brings Unique Socially Responsible Platform to Multifamily Housing, Multifamily Biz, Jan. 8, 2015 – Sustainability and social outlook actually leads to healthy returns -and here’s an example.
There’s something nationally emblematic about the visual history of Chicago’s commercial real estate. Browsing a photo collection spanning the decades you can find a midwestern sensibility mixed with a gritty urban down-to-business look that speaks to a certain American outlook on business and enterprise. From the pre-WWII dawn of neon signage to elegant mid-century futurism to 1970s earth tones and softer typefaces, the look of American commerce in every era is about reaching and accommodating people. Its’ a fascinating journey, and Craig’s Lost Chicago is ready to take you on a ride through the decades of Chicagoland’s restaurants, retail and industrial property history.
- Craig’s Lost Chicago: Restaurants
- Craig’s Lost Chicago: Retail
- Craig’s Lost Chicago: Industrial (includes packaging)
It’s always a pleasure to write about RPR, the incredible business advisory tool offered as a member benefit by NAR to its REALTORS®. In fact, I did just that at the recent RPR presentation at NAR Expo in New Orleans. But it’s double the pleasure when the pitch for RPR is summed up in a cool new animated short video targeted right at the commercial professional. RPR makes the work of matching the right locations to your clients’ business requirements easier and faster than ever before. Enjoy this clip — and create an account on RPR right here.
When malls die, when NIMBYs endorse commercial development, when law firms get rid of law books, and when Dixieland gets its industrial groove back: it’s all here in the Commercial Real Estate News Roundup for January 7, 2015.
- A Minneapolis start-up threatens to upend commercial real estate, Minneapolis Star-Tribune, Dec. 22, 2014 – Crelow.com — the Priceline.com of commercial real estate has emerged in the Twin Cities. Innovation, disruption, et cetera.
- The state of Washington commercial real estate, in charts, Washington Post, Jan. 2, 2015 – Chart-heads can hit the “deck” to their heart’s content in with Evergreen State commercial RE data.
- 5 ways technology is overhauling commercial real estate, Baltimore Business Journal, Jan. 2, 2015 – A industry that boils down to trustworthy people who know about places making deals with trustworthy people who need places isn’t being “overhauled” by technology any time soon. Streamlined? Sure. Here’s how.
- The business case for green cleaning in commercial real estate, Portland Business Journal, Dec. 29, 2014 – Property managers can add value with sustainable cleaning techniques.
- Can a commercial development be used to block Big Oil? Grist.org, Dec. 29, 2014 – To local consternation, export-bound North Dakota crude oil shipments are routed through a community in Washington state. The solution? A different commercial development.
- Clouds appear in the crystal ball for Dallas real estate in 2015, Dallas Morning News, Jan. 1, 2015 – Dallas grapples with a near future marked by commercial development uncertainty.
- 10 challenges and opportunities for hospitals in 2015, Beckers Hospital Review, Dec. 30, 2014 – Are there too many hospitals or too few? The lack of consensus may surprise you.
- Law firms in D.C. are shrinking, leaving behind vacancies in real estate market, Washington Post, Jan. 4, 2015 – As the legal industry leaves behind the rows of bound books in favor of digital alternatives, vacancies are climbing across the legal office sector.
- Manhattan Sees Robust Office Growth, WSJ, Jan. 4, 2015 – If you can make it there, you can make it anywhere. But can you pay the freight on the office space to administer whatever you made?
- Office Market Sees Tepid Recovery, WSJ, Jan. 4, 2015 – 4Q national office market vacancies steady year-over-year at at 16.7%.
- Is the Coast Clear for New Zoning Mixing Residential, Industrial Uses? NBC San Diego, Jan. 2, 2015 – San Diego looks to a Houston-style wild-west zoning regime offering maximum flexibility.
- Atlanta’s Industrial sector continues to improve, Atlanta Business Chronicle, Dec. 30, 2014 – Following the national industrial-sector uptick trend and led by multi-tenant occupancy, Atlanta is making, shipping and storing stuff like gangbusters.
- Memphis Industrial Market Rebounds in 2014, Memphis Daily News, Jan. 5, 2015 – CBRE Memphis reports a fifth quarter of net positive absorption.
- The Economics (and Nostalgia) of Dead Malls, New York Times, Jan. 3, 2015 – The era of malls is over, if photo feature editors have anything to say about it.
- Retail Cap Rates Stay at Historic Low, Globe Street, Jan. 5, 2015 – Low risk, high demand are the watchwords in Chicago retail, says Globe St.
- Retail Investment Sales Booming, NREI, Dec. 30, 2014 – At NREI the only argument about national retail sector is wether the national market trend over four years is up or way up.
- The Retail Market: Recovering with Measured Expectations, Nevada Business, Jan. 1, 2014 – Lagging behind multifamily and industrial, Nevada’s retail sector is nonetheless on the rise.
- The Central Question: Can Portland build a different type of neighborhood? The Oregonian, Jan. 2, 2015 – Repurposing the warehouses of the Central Eastside in Portland, OR is looking more and more like a multifamily play.
- Douglas Emmett Acquires 468-Unit Multifamily Community in Honolulu for $146 Million, Multifamily Biz, Dec. 31, 2014 – A REIT goes shopping for Hawaiian apartments.
- Flip or Hold: Best Real Estate Moves for 2015, US News & World Report, Jan. 1, 2015 - Spoiler alert: holding edges out flipping as a investment strategy in 2015, says this US News piece.
December 26th saw a joint SEC filing from the parties indicating that the Zillow-Trulia merger was being delayed yet again. February 15th is the latest date given for the final deal, the third such date given in the merger’s progress. The reason seems to be the parties are waiting for the Federal Trade Commission’s blessing with regard to antitrust.
With this major consolidation in the property listings space hitting turbulence yet again, it’s a good time to take a look at how commercial brokers and listing platforms relate.
While patrolling this marketplace and doing a little research, I had the good fortune to come across an article from Harvard Business School that spells out four fascinating business case studies about platforms — those businesses that get in between you and your customers — and how to prosper with them.
In Mastering the Intermediaries: Strategies for Dealing with the Likes of Google, Amazon, and Kayak, Benjamin Edelman does a terrific job exploring the historical options businesses have had in dealing with intermediaries such as as listing services. It’s a fast read and absolutely worth the time.
In a refreshing push-back against all things currently trendy in office layout, ad agency creative Lindsey Kaufman takes to the pages of the Washington Post today to rail against the now-popular “open office” design. Inspired by the tech industry, the open office configuration takes away partitions and emphasizes shared space for a whole host of now-familiar reasons. Kaufman writes:
Despite its obvious problems, the open-office model has continued to encroach on workers across the country. Now, about 70 percent of U.S. offices have no or low partitions, according to the International Facility Management Association. Silicon Valley has been the leader in bringing down the dividers. Google, Yahoo, eBay, Goldman Sachs and American Express are all adherents. Facebook CEO Mark Zuckerberg enlisted famed architect Frank Gehry to design the largest open floor plan in the world, housing nearly 3,000 engineers. And as a businessman, Michael Bloomberg was an early adopter of the open-space trend, saying it promoted transparency and fairness. He famously carried the model into city hall when he became mayor of New York, making “the Bullpen” a symbol of open communication and accessibility to the city’s chief.
Calling out the “false sense of improved productivity” that bosses take away from office layouts lacking dividers and partitions, Kaufman cites a study published last year in the Journal of Environmental Psychology that finds nearly half of all office workers attribute lack of sound privacy to frustrating distractions leading to poorer performance.
Further, the study finds that the open office provides a solution to a problem that basically nobody ever had — ease of interaction with colleagues. As anybody who’s heard the pitch on the open office layout can recall, office layouts that divide workspaces with walls or partitions tend to interfere with “collaboration” and “the free exchange of information and ideas” about the workplace mission. Hogwash, says Kaufman:
The New Yorker, in a review of research on this nouveau workplace design, determined that the benefits in building camaraderie simply mask the negative effects on work performance. While employees feel like they’re part of a laid-back, innovative enterprise, the environment ultimately damages workers’ attention spans, productivity, creative thinking, and satisfaction. Furthermore, a sense of privacy boosts job performance, while the opposite can cause feelings of helplessness. In addition to the distractions, my colleagues and I have been more vulnerable to illness. Last flu season took down a succession of my co-workers like dominoes.
As the new space intended, I’ve formed interesting, unexpected bonds with my cohorts. But my personal performance at work has hit an all-time low. Each day, my associates and I are seated at a table staring at each other, having an ongoing 12-person conversation from 9 a.m. to 5 p.m. It’s like being in middle school with a bunch of adults. Those who have worked in private offices for decades have proven to be the most vociferous and rowdy. They haven’t had to consider how their loud habits affect others, so they shout ideas at each other across the table and rehash jokes of yore. As a result, I can only work effectively during times when no one else is around, or if I isolate myself in one of the small, constantly sought-after, glass-windowed meeting rooms around the perimeter.
Adjust your noise-cancelling headphones and read Kaufaman’s entire piece here.
Photo credit: Wikipedia
In a recent CNBC video, Sears CEO Eddie Lambert issues a shocking, yet apt comparison between Sears retail properties and those imposing telephone company central office buildings that house the landline telephone network. Both are windowless bunkers, and both are temples of the way things used to be instead of the shape of things to come. This clip captured some conversation following on this notable utterance from the bridge of a troubled retail ship.
Because I like a challenge, here are my thoughts for rescuing Sears and bringing crowds back into the stores. Two words: classic showcases. Restoration Hardware, the chain mentioned by Jim Cramer in the clip, employs throwback and vintage product design, but the irony with Sears is that what’s cool now at Restoration Hardware used to be Sears’ bread and butter inventory in past decades. If I was the turnaround consultant of record for Sears, I’d advise them to dig into catalogs past and reintroduce midcentury-modern merchandise styles using a series of in-store events across departments to create buzz.
Of course, not every vintage product works. They should skip the vintage landline telephones.