4 ways millennials’ preferences are redefining offices
As millennials become increasingly prominent in corporations’ influential leadership roles, the preference of young workers for urban and creative office space is driving a reconsideration and renovation of offices. Millennials’ general lack of enthusiasm for the conventional office is evidenced by their demand for flexible jobs with telecommuting options and the nationwide proliferation of innovative co-working alternatives. Companies looking to reinvigorate their offices to attract, retain and inspire top talent are following the leads of explosively growing tech companies, integrating fun design features. At the same time, developers and property managers are implementing WeWork-style programming and building-wide amenities. As millennial workers exert their influence, these are the four most noteworthy trends on the horizon for offices.
Offices become open, fun and flexible
The way technology has altered how information is stored and accessed has freed up office space and combined with enhanced virtual communication to make employees’ physical presence in the office less essential. “Because everything is electronically housed on servers, you don’t need the storage space you did before with file rooms and cabinets for documents,” RSM principal Michael Schwartz said.
Now, storage spaces can be repurposed for expanded kitchens, breakout and conference rooms or even game and leisure space that foster interaction and collaboration. Many conventional tenants are mimicking disruptors and redesigning spaces with open floor plans, demountable walls and recreational space.
Tenants prioritize proximity to transit and housing
“We’ve seen that in Chicago, people used to want to be by the lake, but now they want to be by the transportation, to get close to the 'L,'” Schwartz said. This is an inversion from previous generations, when proximity to rails was a detriment to a building’s appeal and the rents it commanded. Millennials are also triggering a reversal of historical migration patterns as an increasing number go carless and favor a live-work marriage in urban communities. “You’re seeing a lot of new developments in the West Loop of residential and office,” Schwartz said.
Suburban office complexes struggle
Isolated or remote suburban offices are having difficulty modernizing to reposition themselves. They typically have low millennial appeal, and a single anchor tenant’s decision to vacate and relocate to the central business district can have a devastating impact on a property’s bottom line. “For suburban offices, where you have to hop into your car, those can be very problematic these days,” Schwartz said. “In Chicago, McDonald's is moving into the city, and the McDonald's University out in Oak Brook is going to leave a giant hole. Similarly, United Airlines years ago moved from Elk Grove Village; so suburban office complexes are really going to hurt.”
Another shift is from large, expansive footprints with numerous private offices to highly amenitized, condensed, collaborative space, which means companies can lower their rent expense even when headcounts are stable or growing. “For RSM specifically, being a national accounting firm with 100 offices in 65 or so cities, we’re seeing a downsizing of space in many areas,” Schwartz said. “We recently announced a new lease in our New York office, where we’re downsizing from 140,000 square feet (SF) to about 93,000 SF.”