Western Real Estate Business

MAY 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

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44 • May 2018 • Western Real Estate Business www.REBusinessOnline.com CORPORATE REAL ESTATE FACES AN AGILITY TEST Changes in technology, workspaces and generations have made the ability to remain nimble a top priority for many of today's corporations. By Nellie Day A n office used to be something you occupied for eight-plus hours a day, five days a week, until you were allowed to go home. The bosses were given large perim- eter spaces with ample windows and doors that locked, not to mention re- served parking spaces. The rest of us sat on uncomfortable chairs and spoke softly into our office phones as to not disturb our cubicle mates, all the while trying to look busy when our bosses emerged from their studio- like private offices looking refreshed and revived. The bane of working in an office environment was so preva- lent across most industries and orga- nizations that it was even parodied in the all-too-real movie "Office Space." Fortunately, that movie captured the reality of office existence nearly 20 years ago. A lot has changed since then. One of the primary — and nec- essary — changes to U.S. corporate culture is a renewed emphasis on sat- isfaction. Companies now take their employees' needs and wants serious- ly. On the same token, employees are committed to supporting companies they believe in. Many are proud their performance contributes to something larger than themselves, adding mean- ing and fulfillment to their lives. Before we cue the "Kumbaya" mu- sic, however, we also know this new office environment has a dollars-and- cents incentive. Efficient work spaces mean lower real estate costs. And hap- py employees are good employees — something that cannot be overlooked as companies vie to attract and retain the top talent. With all this in mind, many companies, corporate real estate experts and third-party consultants have undertaken a litany of research to determine the best strategies for tomorrow's successful corporate real estate needs. CBRE partnered with CoreNet Global to carry out one such survey, which resulted in the Agility Man- date. The partners included 87 organi- zations primarily in the finance, tech- nology, government, manufacturing and pharmaceutical industries. These organizations emphasized a need for strategies that add bottom-line val- ue through immediate responses to changing business and economic con- ditions. The study identified three areas where it was critical for corporate real estate departments to become more effective partners in the agile trans- formation of their broader organiza- tions. These included: portfolio agil- ity, the ability to rapidly adapt, scale and reposition the organization's real estate portfolio to support shifting en- terprise needs; digital and technology agility, the ability to execute a vision for corporate real estate technology today while monitoring and account- ing for technology that may be avail- able in the future; and organizational agility, the ability to easily scale the organization's core real estate team to serve business needs. Portfolio Agility Some of the top initiatives that supported portfolio agility included negotiating flexible space options in leases, seeking shorter and/or more flexible lease terms, supporting an en- terprise-wide flex-work program and delivering free-address work environ- ments, respondents noted. "New workplace guidelines for ef- ficiency have altered the way com- panies plan for density, and more oc- cupiers are incorporating third-party 'agile space' into their overall real estate strategy," says Brandon Forde, CBRE's executive managing director of advisory and transaction services. "While frequently used for individu- als and small teams, some compa- nies are testing this strategy on larger groups of employees, now increas- ingly viewed as consumers, because the offering typically provides the aes- thetics, amenities and experience that appeals to today's workforce." Professional services firm Ernst & Young (EY) recently took its employ- ees' comfort and satisfaction into its own hands through some workforce due diligence. The EY Global Gen- erations Study focuses on work-life challenges across generations. Not surprisingly, the study found that flex- ibility was one of the most important workplace perks among the non-cash benefits. This motivated EY to make some swift changes to accommodate its growing Millennial workforce — a cohort that is particularly strong in Salt Lake City, where Millennials comprise more than 80 percent of EY's 150-strong team. EY's study showed today's Millen- nials want flexibility to meet their pro- fessional and personal goals, as well as a work environment where the space and technology encourage commu- nication, collaboration and creativity. So the firm relocated its Salt Lake City branch to a more tech-enabled space at the Gateway Tower West building at 15 West Temple. The firm's new branch features about 14,500 square feet of office space and new construction. The variety of work settings and technologies can accommodate headcount growth and utilize office space more effectively. The new office's features include an open layout, more collaboration rooms, tech-enhanced work spaces, workstations and collaboration rooms with sit-to-stand options, a coffee hub with café-style tables, and panoramic views of the Salt Lake City valley and downtown area. "This new space is truly aligned with the innovative design and fea- tures we experience when visiting the offices of many of our clients, the lead- ing entrepreneurs and tech companies driving growth in Silicon Slopes," says Shawn Goff, managing partner for Ernst & Young's Salt Lake City of- fice. "I know that our new office will encourage even more collaboration and allow us to continue delivering on our purpose of building a better working world, developing high-per- forming teams and providing excep- tional client service." Ernst & Young is calling this new of- fice space strategy EY@Work. This en- vironment is designed around how EY people work, not where they sit, al- lowing workers to choose which space to use based on the task at hand. The new work spaces also remain fluid. An employee is able to sit in a virtual collaboration room while working with colleagues in other locations be- fore moving to a private room to take a confidential call. The firm's technol- ogy also supports work in transit, at home or from client sites, enabling people to connect to colleagues wher- ever they are based. Digital, Technology Agility CBRE and CoreNet's survey noted that only 10 percent of respondents described their corporate real estate digital and technology strategy as "highly agile." While about half of respondents said they maintained a funding mechanism for these types of endeavors, the survey noted this may not be enough. The most agile organi- zations, it asserted, were the ones ac- tually monitoring emerging trends in technology and creating sophisticated business analytics and dashboards to inform the C-suite. "The mid-term planning horizon for long-term real estate decisions is uncertain at this stage in the economic cycle, and exponential technology ad- vances are further challenging how and where work gets done," says Julie Whelan, CBRE Americas head of oc- cupier research. "Focusing on agile processes today will help occupiers better prepare for inevitable change in the future." Adobe is one employer taking this lesson to heart. The software company noted its global employee base grew by more than 30 percent between July 2015 and July 2017. As one may imagine, much of this growth was based around technology initiatives, including Adobe's transformation to a cloud-based business, its expansion within the digital marketing category and a few acquisitions, including ad- vertising technology company Tube- Mogul. Naturally, the firm needed to house this growth, anticipate future growth, and ensure its workspaces were as technologically sound and forward- thinking as its software products. So Adobe sought to add capacity to its San Jose, Calif., and Lehi, Utah, facili- ties. The expansion will also allow the firm to increase the percentage of em- ployees who are housed in LEED-cer- tified buildings. That percentage stood at 78 percent prior to these efforts. "Our people are our most valuable assets," says Donna Morris, executive vice president of customer and em- ployee experience at Adobe. "Expand- ing our facilities will allow us to hire additional talent to research and build Ernst & Young's new Salt Lake City branch features about 14,500 square feet of office space and new construction. The variety of work settings and technologies accommodate headcount growth and utilize office space more effectively.

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