Hans Hansson | February 27, 2017

Retail shop windowThe counties of San Mateo and Marin reported rates of 2.7 percent and 2.9 percent. San Francisco reported unemployment of 3 percent, while Santa Clara County reported unemployment of 3.3 percent.

Although the Bay Area is in a healthy state, we are constantly seeing understaffed businesses. Lines wrap around corners for our favorite dining spots, while tables are available inside. It's next to impossible to find help in clothing stores like Nordstrom's or even your local retail shop. Car wash operations in San Francisco are closing mid-week just because they can't find enough workers to keep their business open.

Local restaurants complain that they cannot hire full time employees and instead rely on part time workers. Part time employees will often take a couple of shifts here and there, but leave key shifts open, leaving holes in coverage.

Our Biggest Hurdles

So, what is the cause and what can be done to fix it?

  1. The biggest problem we have are wages. The minimum wage in San Francisco is $13.00/hour, which simply isn't enough to support overall costs to live here. As of this year, the average apartment rent within the city of San Francisco, CA is $3,871. Real minimum wages have pushed beyond $15.00 an hour throughout the Bay Area, but it's still simply not enough.
  2. The next challenge is that most employees of entry level jobs typically come from high schools and universities. Most students don't live in the city anymore to save money and are more interested in securing strategic internships in their desired professions versus taking a job that will simply provide a base income– not a career.
  3. Local government requirements on businesses are also job-killers. The rise in "paternity leave" as a benefit has cut business margins down further at a time where both rent and wages continue to increase. In addition, building and zoning requirements a re prolonging the process for new businesses to get up and running. They end up spending a lump sum of time and money with uncertain results, so they pass on opportunities to lease in new locations. For example, we see San Francisco's Post street downtown with a large number of vacant spaces and Union street with over 18 vacant stories just this year.

What Needs to Change

  1. Government needs to adjust regulations. We need the government to take note and make real changes in regulations that take too long to comply with an are too expensive.
  2. Create real job programs within our inner cities. We need programs that highlight opportunities that are available to the most unemployed or underemployed and then create job training that fits training to jobs. An example of this is how Germany trains people to enter retail jobs. Germany requires interested citizens to go through extensive training on how to service and sell in retail. These training programs would need to be promoted to our high schools, where young students would be interested in an entry level job opportunity.

    These entry level jobs teach the basics of learning how to work. From serving clients to selling to inventory, handling cash and credit cards, to learning how businesses operate, training would be beneficial for both the employee and the employer.
  3. Government needs to partner with retailers. If government and businesses form a partnership, they can be proactive together and help find more employees. If we don't, businesses will not be able to run operations and will eventually fail – which will affect everyone.

Change is in order. Otherwise, we will continue to see a steep progression in understaffed businesses and will eventually see these operations close shop.

Photo Credit: Matthew Paul Argall Flickr via Compfight cc

Hans Hansson | February 9, 2017

SalesmenThe Strengths and Weakness of a Great Salesman

I was recently involved in a very complicated real estate deal that involved four top real estate agents. We all had to read and study various documents before we came together to discuss.

In our discussion, it was clear that all of us had scanned the various documents and picked up an understanding of parts of the document, but not all of it. All bullet points were read and discussed but the details were clearly not. In my opinion, this is exactly why good real estate attorneys are necessary, as they are trained to review such important details that real estate agents tend to overlook or misunderstand.

Real estate agents, like all great salespeople, have a certain skillset that sets them apart from the pack. However, it's important to understand their weaknesses as well.

Outstanding salespeople have the following strengths:

  • Think quickly
  • Abe to develop proposals and solutions "on their feet"
  • Ability to multitask
  • Have tremendous energy and come across as relatable and personable
  • Are always "on the go"
  • Never down on themselves
  • Able to adapt in any situation
  • Can make strangers their best friends
  • Enjoy challenges that rely on quick decision-making
  • Compete to win

Great salespeople also have the following weaknesses:

  • Get anxious and unable to sit still
  • Has a hard time paying close attention to details
  • Can develop a plan, but often won't follow- through with execution
  • Often won't dive too deep into a conversation, as great salespeople move on quickly between conversations
  • Don't expect files to be perfect
  • Not the most team-oriented and work better solo
  • Can't take no for an answer, which can sometimes lead to tarnished relationships

In today's larger firms, individual sales efforts have been replaced by collaborative sales teams. Collaborative teams can mix and match strengths and weaknesses to create a more effective sales approach, while also allowing these firms to have better control over the client. However, organizations such as Salesforce, are beginning to understand that these teams fail in the same ways that individual top salespeople can perform.

Many companies don't provide professional sales training. And those that do, most of the time the training is incomplete, outdated, and/or focuses on the wrong things. That's why enterprises like Salesforce are working hard to partner with colleges and universities to incorporate sales training into classes. In the past, sales have never been a part of a college's curriculum. Schools have always regarded sales as a skill that wasn't "teachable" and therefore not a profession to educate. Yet, the top firms are asking for sales training because the employee pool lacks qualified candidates.

The fact is that the great salespeople were naturally gifted with the ability to sell. These skills can be enhanced through education, but the basic skills are built into salespeople from birth.

Those who "fall" into a sales position may be good at building strong relationships, but they also may lack the "sales DNA" – a skillset that supports successful sales outcomes. If you have salespeople, and you have repeatedly had to coach them on the same issues, it's more than likely sales DNA that is causing the problem, not a skill gap.

Corporate America wants to streamline sales efforts and has ignored the very nature of what great salespeople are all about. They have ignored a study of salespeople's strengths and weaknesses and have tried to change the way the sales process is performed.

All of us in sales and those that rely on sales must grasp each of their salespeople's strengths and weaknesses to create environments where each of us can excel. In today's world, we need great salespeople more than ever and with a pool of qualified candidates quickly declining, those who have the sales DNA can truly "knock it out of the park."

Photo Credit: aqeelarif Flickr via Compfight cc

Hans Hansson | January 31, 2017

The White HousesIn 1981, President Reagan took office on a program of heavy domestic spending and fixing international trade disparities that were threatening American jobs. The economic problems of that time were very different. Interest rates were in the high teens, unemployment was in the double digits, and we were marred in a recession.

Today, we have historically low interest rates and unemployment rates. However, we also have the largest growing gap in our country between the rich and poor, with a quickly dwindling middle class.

President Reagan began with tax cuts which emphasized development through accelerated depreciation. Thus, commercial real estate projects of all types began to take place throughout the country. The idea was, "If you build it, they would come." In other words, if you spend money on development, then you will create jobs through the development process.

He also threatened tariffs on foreign automakers that were flooding the US with automobiles while killing American jobs in Detroit. To maintain business at home, Reagan put his foot down saying that they had to either build cars here in the US, or be willing to face heavy tariffs. This lead to the largest expansion of automotive growth, not in Detroit, but in states like Tennessee.

Coincidentally, the Chinese followed this same strategy to a whole different level, building out whole cities from scratch, but with no tenant or industry in mind to support them. Despite odds, this strategy worked to successfully accelerate China's economic growth.

Eventually such a program would be hard to sustain. And politically, the desire to have government join in on these domestic successes usually kills this kind of cycle. Case in point, as the economy grew at unprecedented rate in 1986 Congress passed a revised tax reform bill that essentially took away all the benefits to promote domestic growth and by 1991, we were back in a major recession.

Today, President Trump states that he wants to improve the lives of the middle class by promoting domestic job growth. "We will follow two simple rules: buy American and hire American," Trump said during his inauguration speech.

Just as we saw under President Reagan. We will likely see major tax cuts and threats of heavy tariffs. The intent would be to encourage US businesses to manufacture here at home and bring back American companies who are currently manufacturing overseas. Already we see GM, Chrysler, Ford, Apple and Amazon already announcing plans to either move some manufacturing back to the US, or keep existing plants here that were scheduled to move overseas.

How will "Made in the USA" efforts effect commercial real estate?

It should create an explosion of growth. Every foreign company that decides to manufacture here to keep US business will need offices, warehouses, and manufacturing facilities. We should see office growth in the large seaboard states, while manufacturing and warehouse space grow through the core of the country. Already states like Kansas are seeking spec warehouse development - which has been unheard of since World War II. We also may see a spur in college education as Americans entering the job market will need to be specially trained to in these fields.

Like anything, there of course will be potential pitfalls. With our current low employment rate, this means that as better jobs become available, we need to count on not just the unemployed but also the underemployed job markets.

Already we see both big cities and rural areas employers offering lower paying customer service work and not finding employees to fill positions. Everyone from Wal-Mart to McDonalds will be struggling to find help, which means that we could see more empty stores and a consolidation of these services.

If history repeats itself, then domestic spending could work. For how long? That will depend on whether congress continues to buy in.

Photo Credit: martinalonso4895 Flickr via Compfight cc

Hans Hansson | January 16, 2017

Interest Rates in 2017With a new administration entering office and discussion of corporate tax cuts, regulation cuts, and domestic job growth continue to be top of mind, we can rest assured that interest rates will finally rise. The question is how will this affect the real estate market?

Historically, low interest rates have helped the real estate market in accelerating growth in-turn for historically high prices. A lot of these high-water marks in pricing have occurred because of more affordable payments, therefore higher prices were justified.

If interest rates were to jump to 5 or 6 percent in the next 18 months, how would that effect commercial real estate prices? Certainly, cost of funds mean higher costs to finance. However, higher interest rates could also potentially drive down prices, since people would be seeking higher cap rate return adjustments to new interest costs.

Today you could purchase an office building for a 5 percent cap based on a 4 percent loan. If interest rates were to go up to 7 percent, which is more towards historical average, you would then have to buy the same asset at an 8 percent cap.

An example of how that could affect values is if you had a building generating $100,000 of net income and you purchased the building at a 5 percent cap today, then the building would be worth around two million dollars. If the same building were sold at an 8 percent cap, then the building would be worth $1,250,000 to $750,000 negative net difference.

If this is true, then raising interest rates could do real harm to real estate values, correct? Well, maybe.

There are still a few deciding factors:

Dollar Value
It appears that the dollar will continue to see stronger values against all other international currencies. If Japanese buyers for instance cannot only earn 1 to 2 percent in their country on investments, then a cap rate of 5 percent for an office building may look like an attractive alternative investment.

Economy Growth
If our economy grows, commercial real estate leasing should also be in higher demand. Office, industrial, and retail tenants will look to expand. But if the demand is not met with supply, this will shoot up rental rates, which means higher net income to capitalize value.

Foreign Investments
Foreign investments however do not necessarily lead to ultimate adjustment of values. In the 1980s, the US was faced with a similar marketplace. Overseas buyers would purchase many of our trophy properties throughout the United States– including buildings such as the Rockefeller Center– only to see their building values tumble down when they needed to sell. At that time, no strategic buyers were willing to pay the cap rates lower than the current interest rates.

It's still too early to tell what direction the market will take until our new administration implements plans for the economy. My guess is that we are going to see much higher interest rates, but more foreign demand – which will curve any price value reductions due to higher interest rates. Only time will tell...

Photo Credit: FutUndBeidl Flickr via Compfight cc

Hans Hansson | January 9, 2017

Bbuilding trustThe moment that a stranger sees you, his or her brain makes millions of assumptions about who you are at the speed of light.

Are you friend or enemy? Do you have power and respect? Are you trustworthy or should you be avoided? These tiny and quick calculations are what build out a stranger's perception of you– all within the first seven seconds of seeing you.

In business interactions, particularly in sales, first impressions are imperative to one's success. While we can't stop strangers from making wrongful assumptions about us, we must know and understand that the human brain is hardwired this way and that there are decisions we can make to work in our favor.

An initial meeting with a potential client will be deemed successful or a fail based on the following criteria: eye contact, handshake, body language, the genuinity of your smile, facial expressions, what you say and more importantly, how you say it.

Within these seven seconds of interaction, your door for business will either swing wide open or slam shut. Yet, today face time as widely been replaced with impersonal emails, text messages, video-conferencing, and even instant messaging. How does one establish trust without ever seeing the individual you are selling to?

Trust achieved through written words is possible, but is far more difficult to do. In order to win one's trust entirely, you really need to show them your worth, which will require face-to-face interaction. Through written words, you can write a strong message to your potential client up front, which will help set the building blocks to earn trust. Your message will need to catch their attention and point to a pain or pleasure scenario that the client is familiar with. You can then follow-up with a proposition that will address a solution to their problem.

Attention spans continue to get smaller, so these actions will need to be accomplished in 111 words or less when reading your note, or the opportunity will be lost.

Building trust over the phone is done in a very similar process. Within the first seven seconds, you have to utter something intriguing that will keep your listener listening. Sales trainers often call this the "big fat statement." Not only what you say is important to keep the conversation going, but how you say it. Tone of voice is a big make or break in sales calls. Once you've got their attention, you will need to zero in on your sales pitch, which will create the pain or desire that the client is looking to learn more about to address their needs.

Another way to achieve trust comes from others selling who you are. If someone is respected and they refer another person there tends to be immediate trust, which is secured but needs to be maintained through action.

A salesperson's biggest reason for failure is that once trust is established, they fail to deliver on their promises or ensure that their client is still happy with the service. Some people will give second chances if the effort to perform was there, but if promises were made and not followed through– trust evaporates.

There are four key components to building long-lasting trust between yourself and your client:

1. Honesty
The truth always comes out. Failure to be honest with your clients will eventually show through either in a discussion or an action and will ultimately cost you the trust and client you've worked so hard to secure.

2. Reliability
You need to be reliable. If you say you are going to do something, you better do it.

3. Consistent
Be consistent in your actions. You can't do something right one time and then fail immediately after. You need to be consistent in your approach so that the potential client will feel confortable with you and therefore trust you.

4. Confident
Finally, you need to speak with confidence. Someone that speaks with a hesitancy will have the other party start to question your ability or your motives.

Ideally, a face-to-face meeting is the best approach for strangers to instill trust in you. To many, this is considered an "old school" approach, but nothing beats a personal touch. Video-conferencing is the next best thing if for whatever reason you are unable to meet your client face-to-face.

Without trust, your chances of closing a deal decrease and the ability to create a long-term relationship with a client is greatly diminished. You might be able to sell one time, but you will not develop the kind of relationship that will garner long-term sales plus referrals.

Photo Credit: visitBerlin Flickr via Compfight cc

Hans Hansson | January 4, 2017

SF building codesOn the heels of the recent tragic Oakland fire, the San Francisco Board of Supervisors is working to protect our artist community by preventing enforced building code inspections in an effort to avoid artist displacement and to protect similar use of buildings.

San Francisco needs to protect our artist community who have been struggling to pay the sky-high rents and with limited living space options. However, if we fail to enforce building codes and inspections, we will increase the potential risk of causing a similar tragedy to occur in San Francisco. It was confirmed recently that Oakland city officials revealed no building code enforcement inspector had been inside the warehouse that caught fire in at least 30 years– imagine the danger we will dismiss by preventing annual building inspections in our city.

The reality is that most of our city's artist collective often times do not practice safe building code compliance. They habitually pack premises with people over-occupancy, using high-voltage entertainment systems, hosting not only unpermitted/illegal living quarters, but large concerts, raves, and other mass events.

Furthermore, there are state codes that our local officials are required to enforce. To arbitrarily choose not to enforce certain codes over others is against state law.

It's also important that we consider the fair factor. If we don't enforce codes and zoning laws on artists, then why is the city going to enforce zoning laws of tech tenants who are often using illegally zoned buildings in properties that they had earned legal building permits? What about zoning issues that effect retailers who have to go through an extensive variance process in order to secure their new storefront?

What about homeless housing? Buildings such as the old Laguna Honda Hospital could house hundreds of homeless people, but because the building is not seismic and does not meet today's code compliance, it's legally uninhabitable.

The underlining issue here is building usability. It's one thing to allow building owners to rent properties to anyone, regardless of use, safety and code compliance. But to allow a specific group of individuals to bend rules in order to prevent its demise is an issue.

The city has set up codes and regulations that all building owners need to comply with in order to carry out safety, a balance in building use, and a positive impact on neighborhoods. The city cannot simply identify one group and then somehow say that these rules and regulations to not apply to another group. It's not only unfair– it's illegal.

Photo Credit: torbakhopper Flickr via Compfight cc

Hans Hansson | December 14, 2016

Business Plan 2017What Worked, What Didn't, and What Will Change?

Driven salespeople annually review past results and plan ahead for the future. They keep track of past execution and compete with themselves to perform better each year. As we close out one year and begin yet another, it's time for self-reflection.

Most sales organizations will require each employee to complete an independent business plan at the beginning of each year. Most plans ask you to outline how much you expect to produce, the steps you will take in order to hit that goal, and what your personal and professional goals will be for the coming years.

If you are in a sales organization, they may also require monthly or quarterly reviews of your plans in order to make sure you are on track to meeting your goals and objectives.

However, if you are an independent salesperson or real estate agent, reviewing goals likely falls on you. A sales manager may ask you to develop a plan and meet for an occasional update, but since you are independent, your results are almost always dictated by you.

Every year, people look to the new year with hope and confidence. Often times, they see the new year as a way to wipe the slate clean from past underachievement. The problem is that if you do not develop a realistic and strategic plan to make fundamental changes, you will not see results by the end of the year. Here are four new year resolutions for salespeople who want to be successful in 2017:

1. Develop a SMART plan.
When writing a business plan, it's important to incorporate SMART goals– specific, measurable, agreed upon, realistic and time-based.

Creating a realistic plan is a key component– what goals are aligned with your skillset and strengths in order to be realistic and achievable in the long run? Every salesperson should internally evaluate who they are, what their strengths and weaknesses may be.

For example, you may set a goal to complete a hundred cold calls a day. But if your personality is similar to mine, your time may be better spent working on new opportunities through your existing relationships, rather than securing a couple of leads from a day's worth of playing telephone.

2. Commit to being committed.
Along with being specific, measurable, actionable, realistic and time-based, business plans will only be useful when there is commitment and intent behind it. Once you determine your strengths and weaknesses, address a plan that aligns with your strengths, you need to determine whether or not you are prepared to commit the necessary time in order to complete your necessary tasks.

3. Address your weaknesses.
Now that you have highlighted strengths and weaknesses– address them. Do you have strengths that offset your weaknesses? Not all weaknesses can be improved, but some can with time, reflection, and active work to progress. There are also a number of tools that exist which can help improve weaknesses, such as taking advantage of calendars, to-do lists, and spreadsheets. If getting to meetings on time is an issue, set up alarms ahead of your meeting, noting when you should leave the office and account for traffic. Today, there are smart technologies such as Siri or Amazon's Alexa that can remember to remind you and even call a cab to get you to where you need to be on time. If you find the right tool that can help improve your weaknesses, get in the habit of using it and it will eventually become second nature.

4. Review, assess and adjust as necessary.
Once your business plan is written with SMART goals, you've reviewed what is realistic and unrealistic, you've addressed your weaknesses– it's time to execute. Part of execution is making sure your goals are actually working. I'd suggest evaluating and reviewing your plan on a regular basis, at least once a week. Sometimes you'll see some results, but not as much as you intended, so slight adjustments to your plans will change the outcome for the better. Consistent evaluation of your plan will help keep you honest and can reveal holes you may not have noticed before.

Ensure that 2017 will be your best year yet by following the tips above. When you combine intent with a solid plan, followed by committed actions– you drive straight to success!

Photo Credit: barnimages.com Flickr via Compfight cc

Hans Hansson | November 30, 2016

Castro StreetDear San Francisco Mayor Ed Lee,

Several years ago, one of our citizens and small business owner, Juliet Pries, had an idea to open a "prohibition style" ice cream parlor and soda bar on Cole Street in San Francisco. She secured the location for her new store, only to spend nearly two years earning the necessary permits to legally open. Through the City's Planning Department, the process for her to open her doors for business took so long that she actually took measures with the City to create a streamlined process and help small businesses open their doors sooner.

As you may already be aware, the process to change a space requires a considerable amount of upfront costs, including architects, consultants, attorneys– not to mention the time and effort it takes to secure the necessary support of the local community in order to successfully open a new store. In addition to these typical obstacles, business owners are expected to pay landlords the respective rent before business is in full swing, further challenging owners financially with having to sign a lease and make rent payments without the guarantee that they will even get approved.

In the instance of The Ice Cream Bar on Cole, the commercial space was converted from non-food use to a food use place. Although this is considered a legal use for the property, it still required what is called a "variance" so that the impact of this switch is gauged through the application process and public support. Today, San Francisco is so backlogged with these types of applications that the process easily takes six months or longer to complete.

Luckily, The Ice Cream Bar was able to open its doors and has since experienced incredible support from the Cole Valley community.

I've had the pleasure to know Juliet and see her business' success. I can say without a doubt that she perfectly eligible to expand her business into other locations, although she is currently not thinking about expanding.

San Francisco's Castro district is quickly changing due to formula retail restrictions that have been set in place. Formula retailers are establishments with more than 11 locations worldwide and standardized features or a recognizable appearance. The restrictions have made it extremely difficult for businesses to open on Castro Street.

The public review process is very challenging for business owners. It comes at a tremendous cost and is more complicated than a simple variance. As a result, vacancies have heavily increased on Castro street.

In support of small businesses, particularly in the Castro, Supervisor Scott Weiner encouraged the opening of ice cream stores back on Castro, where ice cream stores had disappeared over the years. About a year ago, a local landlord had approached my friend Juliet with a Castro location in mind, which he knew would be well supported by both Supervisor Weiner and neighborhood groups.

At the time, Juliet was confident that with the city would provide a quick permit process for businesses like hers and she believed she would be able to move in hassle-free. Unfortunately, that did not happen.

I had happened to be in the neighborhood when I saw Juliet in front of her new store reviewing her plans. She told me she was expecting to be open by the fall in 2015. Months later, I saw the space was still vacant and no construction had taken place. I was disappointed to see that she had still not opened and inquired about the delay. She informed me that PG&E took over 11 months to upgrade the electrical service, which of course without it, she could not secure a final occupancy permit.

This story is one of many that I experience as a commercial real estate broker in San Francisco. It speaks to the overly regulated governmental environment that destroys business opportunities in favor of public interest.

There is no real reason why the City's Permit Department and Planning Departments take months to make concrete decisions. Consequently, vacancy rates are continuing to climb. On Union Street today, one of the most popular neighborhoods of retail blocks, there are a total of 18 commercial vacancies. On Geary Boulevard, there are over 30 vacancies. These vacancies have a direct effect on the surrounding businesses and cultivate a hub for homeless.

I ask you, Mayor Ed Lee, and the Board of Supervisors to please create a proactive program that will hire proficient people to streamline the process for all construction and occupancy permits. No permits of any kind should take more than 30 to 45 days to complete, including the public hearings. Our great city should not hinder growth, but assist it. Please step up to resolve this problem.

Photo Credit: torbakhopper Flickr via Compfight cc

Hans Hansson | November 17, 2016

Commercial BrokerageAs the year starts to wrap up, we start to look to the new year and beyond, imagining what lies ahead down the road.

During this year's CCIM conference in Atlanta, principals from various commercial real estate brokerage and service providers discussed the future of commercial real estate brokerage. All were in agreement that there are numerous challenges that will effect traditional brokerage firms and their brokers.

  1. Large firms will be forced to play in smaller markets: Firstly, because more money both nationally and internationally are seeking investments in second and third tier markets, larger firms are going to be forced to service smaller markets and compete directly with established local brokerage firms.
  2. Brokerage firms will behave more like consulting firms: Relationships are going to be key to success as technology addresses the needs of clients in research while brokers will become more involved in the company's strategic planning. As a result, brokerage companies could begin to act more as consulting firms rather than brokerage firms as they assemble the necessary talent to address companies in strategic execution.
  3. Technology can't replace a broker: A broker will become more important to address acquisition and disposition decisions as companies shed in-house real estate departments in favor of hiring third party brokerage firms to handle all of their real estate needs.
  4. Shifts in business models in order to attract new talent: Another important challenge discussed was hiring qualified talent. Real estate is losing young talent to tech as real estate falls into a legacy career category. In addition, today's graduating students are more inclined to seek employment in fields that promote a more collaborative environment instead of the one-on-one individual broker model, where a broker's success relies on his or her own individual efforts.
  5. Firms will begin to offer salaried positions: Although new talent entering the workforce are qualified with college degrees, most aren't interested in commissionable employment. They are seeking salaried careers. This means brokerage firms will need to change their business model from today's independent contractors to hiring agents as full time employees.

We are already seeing large corporate brokerage firms move toward a salary plus bonus model. Independent firms that represent high net worth individuals or smaller partnerships and syndications are less likely to have to worry about such changes. But it's clear we will see the landscape of commercial real estate continue to shift in the near future.

Photo Credit: Dick Thomas Johnson Flickr via Compfight cc

Hans Hansson | November 11, 2016

Office DesignFor those of you way too young to remember the Bewitched television series from the 1960's and 70's, each week we watched scenes of Darrin Stevens working out of his advertising office in New York.

Darrin's office included two or three exterior windows, a very large desk, a large cabinet for storage, a decorative throw rug over wall-to-wall carpeting, and more importantly– a bar. When he would leave his office, he had a secretary and her desk directly outside of his door. His boss had an even larger office that included sofas, a large conference table, and of course– a bar. This was a typical professional office of the 1960's through the 70's.

With the introduction of personal computers in the 1980's, we saw office sizes shrink, drinking while working became frowned upon, the office bar was completely eliminated, and the private secretary became a secretary for everyone– serving multiple executives instead of one.

In the late 90's and early 2000's, the "open plan" office grew popular and we saw a decreased need for private offices, with the exception of top executives of course. In sales, the top producers were rewarded with private offices, while the rest of the team was pushed into open bullpens.

Today's office space is nothing like the past. Offices are more of a combination of home and sweat shops, rather than Darren Steven's 1960's advertising agency. Back in the 1960's, the average per square foot allocation per employee was over 225 square feet per person. Today, the average is 125 square feet down from 200 just three years ago.

Top office designers suggest that offices today have to compete with the flexibility offered to all employees at most businesses, and therefore offices need to simulate homes, rather than offices. Larger offices include full services for their employees including all day catering, personal training at their onsite gym, transportation to and from work, and even offers to have your car serviced while you work.

During a recent Gensler Architectural presentation, I learned that some offices need to include facilities for pet care, child daycare, and even senior adult daycare. It's become a benchmark to have businesses take care of all employees' personal obligations off the table in favor of having workers continue to work.

The other major shift that came into play is the use of the smartphone. With phone calls being replaced with texting and emails to conduct business, offices do not have to be as insulated for sound as they once did before.

In fact, the quietness of an office, particularly a sales office, is no longer a factor. With built-in music speakers in the walls, and television monitors mounted on walls throughout an office, there is also less need for private office space and an increased need for sofas and communal lounge areas.

Today, private executive offices are practically extinct, as executives are now taking seats in the open area with all other employees in order to create a more collaborative work environment and a utilitarian office.

It's way too early to tell how these new office environments will play out. With tech firms, this has been the norm going back to the Dot.com days of the late 1990's. However, for conventional businesses, this is a major shakeup and its long-term success will take time to measure.

Photo Credit: Paintzen Flickr via Compfight cc

Real Estate Blog Top Sites Blog Flux Directory  Real Estate blogs   Top Blogs
Credits: ©2017 by Starboard TCN Worldwide Commercial Real Estate
Powered by bBlog | template by Starboard TCN Worldwide Commercial Real Estate, inspired by dmig