‘Workplace experience’ defines office space needs

It’s a concept that focuses on ergonomics, good lighting, top-notch HVAC and a menu of amenities


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Fall is a traditionally busy period in the real estate business. Year-end, 2½ short months away, is often the end of the tax year, and tax planning can be a powerful motivator in real estate sales and transactions.

Tax laws are continually changing, and one needs a professional to keep abreast of the latest rulings. In a current transaction, the definition of “personal property” makes a big difference in both the seller’s basis (and hence taxable liability) as well as the buyer’s basis, where more personal property is excluded from real estate transfer tax and is eligible for greater depreciation.

It is a difficult task for brokers to listen to the accountants and lawyers talk eloquently about the current definition of personal property for hours on end! (At my age, drinking coffee to stay awake during these afternoon conference calls causes sleeping issues later in the evening.)

Regardless, more than five years into the Great Recession we are finding traction. Parties, whether buyers or sellers, cannot wait any longer for the markets to clear and the future trajectories to manifest themselves. While employment numbers are reputed to be strong, in fact, there are fewer jobs (equal to what we had in 2007). The absolute number of jobs may be back to the 2007 number, but the quality is less – lower pay, fewer hours and less paid benefits.

In the real estate sector, what is most significant is that the amount of space (in square feet) per worker is shrinking. In the 1980s, the average office worker occupied about 250 square feet, which included hallways, bathrooms, conference and break rooms and storage. In the 1990s, this shrunk to about 200 square feet per employee (again, for office workers).

In the early 2000s, figures of 165 square feet to 170 square feet per office employee showed up in print. Today, the number is even lower, augmented by mobile technology, “hoteling,” telecommuting and other work styles.

A firm employing 100 office workers in 1985 might have leased 25,000 square feet, but today, that office of 100 workers might only occupy 10,000 square feet to 14,000 square feet. So overall demand for generic office space is off, and many former office buildings are being converted to other uses. The most popular is flex-tech space – with open concept and easily reconfigured for workstations, research and development, light assembly, showrooms, etc.

This virtual flexibility is facilitated by wireless networks, small mobile technologies and increased productivity, where two workers do what three or four used to do. In addition, there is flex time, especially for technology workers.

My son’s firm just implemented flex time (albeit on a 90-day trial basis). You can set your own hours as long as your work is done and you do not hold up any of your team members – and, oh yes, you need to get at least 40 billable hours each and every week. Personally, I am keen to see how this experiment plays out. This, of course, is a young technology company with lots of young, energetic workers.

This brings to mind some of the most recent commercial real estate literature that highlights it is now about the “workplace experience” and not the workspace.

We will be seeing a great deal more about this concept, which focuses on ergonomics, good lighting, top-notch HVAC for environmental control and a menu of amenities and extras to make the workspace enjoyable and relaxing (as much as workspace can be).

Bill Norton, president of Norton Asset Management, is a Counselor of Real Estate (CRE) and a Fellow of the Royal Institution of Chartered Surveyors (FRICS). He can be reached at wbn@nortonnewengland.com.

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