Design With Staying Power

Building in flexibility makes tenant improvements greener and saves owners and tenants money.

February 1, 2010

Flexible, reusable buildouts make sense for cost-conscious owners and tenants. And they're eco-friendly, too.

As any office manager or broker knows, tenant improvements don’t come cheap. In 2008, landlords of downtown office buildings spent an average of $12 per square foot on TIs for a three-year lease and $20 per square foot on a five-year lease, according to the Institute of Real Estate Management’s Income/Expense Analysis. Not to mention what tenants add out of pocket.

With money tight, however, office building owners and tenants are looking for ways to spend less of their precious capital on expensive buildouts that just get thrown into a landfill when the lease expires. 

"Owners are getting more prudent about spending on tenant improvements. They also realize that minimizing the cost of construction buildout reduces the amount of security required to guarantee the lease," says Mike Watts, senior vice president with J.F. McKinney & Associates, a Chicago company specializing in landlord representation. "Landlords are also more acutely sensitive to the financial strength of prospective tenants who’ll be receiving tenant improvement dollars."

Janet Pogue, principal and director of workplace strategies in the Washington, D.C., office of the Gensler architecture and design firm, concurs. "Even corporations with very rigid design standards are relaxing those standards and not remodeling, especially if they are taking subleased space," she says. Businesses are also more willing to reuse furniture and even components like glass partitions when they redecorate.

That doesn’t mean that companies won’t make changes to freshen the space and brand it to fit their corporate images. But they will often substitute, color, paint, and graphics for more expensive constructions, says Tom Polucci, group vice president and director of interior design in the Chicago office of HOK.

Reuse for Sustainability

Even if cost were no object, the growing interest in workplace sustainability is making the reuse of interior materials more appealing to tenants. "More tenants are environmentally sensitive and are willing to reuse at least parts of an existing buildout," says Watts.

The U.S. Green Building Council even has a special LEED certification for sustainable tenant buildouts under which tenants get points for reuse of existing improvements. While the higher upfront costs of LEED certification may not be workable for a tenant, companies will make sustainable choices with shorter paybacks of two or three years, says Holly Briggs, principal and national interiors leader at Perkins and Will’s Washington, D.C., office.

Lighting upgrades, especially a shift from standard T-12 fluorescent bulbs to more energy-efficient and brighter T-8 light bulbs, are cost-effective ways to green a space without replacing the entire ceiling grid, says Susan Aiello, a designer with Interior Design Solutions in New York. Aiello is also seeing more submetering, in which tenants pay their utility costs based on usage. "It’s inexpensive and it rewards tenants who are careful with energy use," she says.

No Walls Equals Flexibility

Just as costly as initial buildout is reconfiguring a space when a tenant’s workers move around or leave. A 2002 IFMA study found that its corporate facilities managers moved 41 percent of employees each year, so finding ways to reshape spaces without extensive construction is critical.

How can walls make moves easier? Demountable partitions, which are modular and can be broken down into component parts, are a great option for tenants who need to change their layouts frequently. These products cost substantially more than standard drywall partitions but can cut reconfiguration costs by as much as 50 percent, says Briggs. Using furniture such as file cabinets and bookcases in place of partitions is another way to add mobility and lower costs, suggests Aiello.

Perhaps the ultimate in office space mobility is the "bench" system. Used more widely in Europe, workers sit along a bench, with a desk or table in front of them. Spaces are divided by short screens on the tabletop. When you need to adjust the amount of space per worker, the screens can be moved easily.

One helpful design trend is a move away from private offices with solid walls to a more open and flexible work environment with fewer walls and more chances for collaboration and teamwork. "While there’ll always be a need for personal offices in sensitive areas like legal, finance, and HR, companies are increasingly moving from ‘me-centric’ to ‘we-centric’" with the need for privacy based on function, not status, says Polucci.

Open-space offices not only promote interaction, they also put less strain on building systems, notes Polucci. Lower open wall partitions don’t block air flow so the HVAC system doesn’t have to be rezoned to accommodate new walls. A shift to more indirect ambient lighting, complemented by desk lamps for task lighting, means that fixtures can stay in place when cubicle configurations shift. A design trend that places private offices in the center of a space instead of around the perimeter also cuts lighting requirements.

Even private offices are getting more flexible, with storage units mounted on walls and desk options that can be placed more easily into different configurations and at multiple heights, says Rachelle Schoessler-Lynn, a partner at Studio 2030 in Minneapolis.

Advances in technology have also added greater flexibility and mobility to the office environment, says Jennifer Magnolfi, senior designer of architecture and building technology systems at Herman Miller Inc. in New York. 

"Building materials are becoming less rigid and building infrastructure more modular, making them more suited to support change. Technology controls can be integrated into products or distributed throughout the interior environment. This flexibility renders work environments more sustainable over time because systems can be upgraded instead of replaced. Wireless access to phone and Internet throughout the office not only makes moves easier but aids in spontaneous collaboration and constant communication." 

Plug-and-play utility systems installed under carpeting don’t require an electrician to change wiring when partitions are moved.

One Meeting Space, Many Uses

Business interest in collaboration is prompting interior designs that devote more space to meeting areas. 

But it’s nothing like your father’s conference room. From seating areas with comfortable living room–like lounge furniture to lunch rooms with booths and laptop ports, collaborative space is taking on a more casual look, says Chris Congdon, manager of corporate marketing at Steelcase in Grand Rapids, Mich. She points to one client that actually built a café as a department break area. "Some people actually worked there all day long," she says.

"There’s a growing recognition that not all work can be done in the same type of space so office designs have to support a variety of activities," says Briggs.

Informal, open meeting spaces with flexible furniture arrangements are doing double or even triple duty, says Charrisse Johnston, an associate at Gensler’s in Los Angeles. Tenants use these spaces as lunchrooms and for all-staff meetings or training sessions, as well as for impromptu small collaborations.

Also on the rise are mini-conference rooms, sometimes called huddle rooms. These small spaces function as everything from one- to three-person meeting rooms to quiet areas for concentrated work or personal phone calls.

A 2009 IFMA survey on employee workspaces found that 43 percent of its corporate members had huddle rooms in their facilities. The rooms can also function as temporary offices for consultants or "touch-down" space for visiting workers. To make these mini spaces seem less like phone booths, designers are adding benches where workers can rest and desks that can convert to small conference tables, and hanging LCD screens on walls for impromptu video conferences.

Unfortunately for building owners, adding more conference space doesn’t translate into more square footage use by tenants. Instead, individual spaces are shrinking. "We’re seeing more 8 foot-by-6 foot spaces for workers and offices going to 120 square feet from 150," says Briggs. Conference space is being carved out of unused hallways and lobbies, too. Tenants’ reception areas are shrinking and simplifying, with textured walls and paint replacing granite.

Design’s Value-Add

Finally, building owners should recognize that while tenants are eager to rein in the financial and physical cost of tenant improvements, the more sophisticated among them aren’t about to sacrifice good design. Open and sustainable office design is a vital tool for attracting the next generation of workers, who have become accustomed to window views, superior indoor air quality, and collaboration and mobile work during their college days, notes Aiello.

A 2009 study by the University of San Diego’s Burnham-Moores Center for Real Estate and CB Richard Ellis determined that 54.5 percent of employees in green buildings considered themselves more productive and took fewer sick days than they had in their prior workplaces.

The look and feel of a space is also an important business branding tool, says Congdon. "Branding a space is more than just adding a corporate color. It’s providing an environment that supports employee behavior that supports your brand."

Ultimately, sustainable, reusable office design doesn’t have to be expensive. Instead, a little money spent well can produce appealing space for tenants and considerable savings for office building owners.

Mariwyn Evans

Mariwyn Evans is a former REALTOR® Magazine writer and editor, covering both residential brokerage and commercial real estate topics.