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Commercial Basis: Death of the Private Office?

Thought Leadership // Feb 10, 2016

open plan office by Michael Moran

‘Commercial Basis’ explores how technology, branding and demographic preferences are shaping office and retail real estate in New York City. As these forces break down the barriers from where we live to where we work and shop, Lead Commercial Specialist Alex Cohen will assess the impact on real estate values and opportunities.

Technology has changed why we need to go to an office. Most of the work we used to do by ourselves at a desk, whether in a private office or a large bullpen, can now be done almost anywhere because of the pervasiveness and capabilities of mobile devices. However, advances in technology do not mean we no longer need any private space at work or that it’s just as productive to sit daily in a different spot (à la hoteling) rather than in a dedicated work space.

A New York based money center bank recently eliminated all private offices in its headquarters and most employees will not get their own assigned desks in a new homogeneous “open plan” configuration. While the rationale for this dramatic change is to encourage employee interaction and reduce occupancy costs, the likelihood of success of either goal is questionable at best. A friend of mine is a relationship manager for high net worth individuals at this money center bank. He relies on support from staff in a range of departments to best serve his clients. He can’t depend on calls or e-mail to ensure he receives the proper internal support and prefers to meet with colleagues in person from whom he needs a work task completed. Under the new bank’s space regime, my friend has no idea from day to day where the “hoteling” staff can be found.

Shifting staff out from private offices to open bullpen settings does force a certain amount of “bumping into each other” interaction. But unless there are sufficient meeting spaces of different sizes and configurations — both for formal conferences and for more informal brainstorming — real collaboration can be challenged in an open plan environment. Bloomberg L.P. is often looked to as a model for how its vast open plan configuration has eliminated barriers to interaction typical in a hierarchical office-intensive environment. But at Bloomberg’s Upper East Side headquarters, the shortage of conference rooms is so severe, staff is only allowed access to a conference room if they can prove they are engaging with an outside client or resource. So outside of a large central café area with few chairs, Bloomberg’s headquarters lack available places designed or allocated for staff communication and teamwork. From scientific studies of learning, we also know an open plan environment is just too distracting for individuals with conditions such as ADHD who need privacy and enclosure to focus on tasks and perform effectively.

We still need to go to the office in order to share ideas with colleagues and often to work as a team on initiatives and strategies. Eliminating private offices and other “densification” strategies generally reduce occupancy expenses per employee. But the employee productivity and retention implications can be profound if occupancy cost reduction becomes the main driver for a company to adopt one monolithic space figuration and little attention is given to the kinds of spaces employees and teams desire. Giving employees a greater say in the type of workspaces available may be part of the solution. We know that losing and replacing talented employees, particularly in a tighter labor market, can be extremely costly and that millennials demonstrate much less corporate loyalty than their generational predecessors, particularly if a firm is not aligned with their values and work style.

Co-working spaces, like Grind NY have been quite successful in providing their tenants a broad choice of work settings. At Grind NY, one can choose to work in a bright open bullpen, in a private, dedicated room, in a shared and demarcated quiet area of open cubicles, or in an enclosed team room for five to ten staff.  In addition, a range of collaborative spaces — from open cafés to AV-intensive team rooms — are available for a project or meeting-specific purpose. Perhaps this range of choices provides a more appropriate model for corporate America that a single monolithic office space program where “one size fits all.”


Photo credit: Michael Moran