February 12, 2014 - From the January/February, 2014 issue

FutureBuild: Lew Horne Transforms CBRE‘s LA Offices

CBRE has 500 office locations—300 in the United States and 200 in Europe and Asia. The company, which has acquired more than 90 different firms over the last nine years, is experimenting with new DNA for office design that prioritizes flexibility and health. A panel discussion on these innovations titled “Transformational Corporate Offices—Free Address and Paperless” took place at the VerdeXchange VX2014 Conference, presented as part of ULI-Los Angeles’ Futurebuild program on January 28. Panelists included Lew Horne of CBRE, Steve Adams of PwC WorkPlace, and Rob Jernigan of Gensler, with David Waite of ULI-LA as moderator. MIR has transcribed and edited these remarks, along with supporting excerpts from an October tour of CBRE Corporate Headquarters.


Lew Horne

“It’s about figuring out how to take technology, merge it with real estate, and create an environment where people can be more flexible, more mobile—where we can focus on working conditions around health and wellness.” -Lew Horne, CBRE

David Waite: Clearly, I think there are three paradigm shifts going on in the office environment: cultural, technological, and a move toward sustainability. Those are the three drivers, and you’re going to hear about each of those as they impact the decisions that have been made and the transformations occurring in the industry. 

We’ve identified probably six major trends in the exchange of “what happened to my cube?” The first is downsizing and rightsizing—smaller, individual workspaces, but more collaborative. The second is hoteling—actually, there’s a footnote to hoteling, because here we have Yahoo CEO Marissa Mayer calling all of her employees back to the office for more collaboration. Whether hoteling is going to be a long-term trend or not, it suggests otherwise. More amenities and more lifestyle features are clearly a trend. Standardization of the non-dedicated workspace goes to the question of one-size-fits-all. Is standardization really desirable or not, depending upon the client? Utilization of light and glass—clearly there is a major trend toward transparency. You don’t see professionals walled behind offices. 

Finally, of course, there is health and wellness. Who’s driving this? Is this being driven by the design, the architects who are evaluating these options and who are suggesting this next trend, or is it coming from clients and constituents? 

Lew Horne: As a part of my job, about two years ago the CBRE head of our facilities came to me and said, “Lew, you run the Southern California market region. We’re doing this concept, ‘Workplace,’ in Amsterdam. It’s really working well. But we need a high-profile office in the United States to do this.” 

It’s about figuring out how to take technology, merge it with real estate, and create an environment where people can be more flexible, more mobile—where we can focus on working conditions around health and wellness. 

The reason CBRE wanted to move in this direction is that financially it made sense. You reduce the overall footprint. We’ve got a 5 million square foot footprint across the globe. If we can reduce that by any measure, it’s a pretty good thing. We were also driven by the idea of being more collaborative with our 12 different divisions. CBRE is known for its brokerage, but we have a consulting firm; we do debt; we’ve got capital markets; we own Trammell Crow; we have a CBRE global investors group; we do corporate services work; we do facilities management and properties management. The way that we traditionally worked had really been in silos, in different offices where people did not communicate effectively with each other. There was this thought that if we could adopt or adapt the “Workspace” Amsterdam model, in a high profile office in Los Angeles, we might be able to change the way that the company thinks of space. 

We’re in this business. We actually have a workplace consulting team that’s about 20 professionals from all over the country that were out talking about all the benefits. Yet, at the same time, we weren’t able to showcase anything we’d done in the United States. We weren’t really practicing what we preached, or as they say in Silicon Valley, we weren’t eating our own dog food. 

The idea was that we had to go and show an example. I said, after considering the challenge, that I’d lead this on one condition. There are 200 people in Los Angeles whose lives depend on me in that office, and half of them are big producers—they walk around with their resumes in their pockets, and they have no ties to the company. They’re constantly being pinged by our competition because we’ve got the best corporate real estate professionals in the business. They’ve got choices. I’ve got to make sure the environment is good enough that they want to be here and want to be a part of our firm. I had to figure out this balance. And I said to our firm, “I will do it if I can see where it’s working physically.”

Part of the behavior change that we were looking for was to take the best practices of different offices that we saw around the world. We found about six or eight of them in the Amsterdam marketplace. Then I went and spent a day at Bloomberg at 731 Lexington. I was blown away. I walked out of that space and my heart was pounding. They had connected this thing up with great lighting. They were getting incredible densities, but you felt like you were a part of something bigger, and it was exciting. I thought, “We’ve got to figure out a way to put excitement into the space.”

It all started in Amsterdam—free address. There was a utility company called Aneco. I got really inspired by this concept they had in the center of the building called the “heart.” It was a wireless area where you could have a muffin and a coffee. Everybody started here during the day, including clients, and essentially it was a place where people naturally collaborated. 

We came back with the changes that we wanted and specific examples. I searched through Southern California and did not see many other offices that had really taken the extreme route that we did. So we—along with help from Rob Jernigan at Gensler—actually came up with a list of best practices from New York City, to Amsterdam, to Silicon Valley, up to Seattle, and in the Bay Area. 

Our space before probably looked like your space—very traditional perimeter offices, core support in the center. Our space today, in contrast, is set up in an open environment. We took the prestigious leaders and bigger brokers and put them out in the open area, then created neighborhoods with these clusters that actually give them the flexibility to focus on the workplace that’s designed around their work needs for the day. To do this, we had to digitize about 950,000 documents, and we threw away millions and millions of documents before we went through this process. 

The process took us about eight months to complete, but the net net net of it is that instead of the 72,000 square foot requirement, we actually moved into about 48,000 square feet. Four months prior to our move, our global corporate headquarters said, “Lew, we love what you’re doing. We think it’s a great area around thought leadership. We’d like to move our 9,000 foot headquarters into the space.” I was able to accommodate that requirement, and I didn’t change a wall or a window. 

In the last four months, we had 3,500 visitors to the space. It really has impacted the way people look at real estate, not only in regards to our firm—by the way, this will now be our global standard—but, I think, also throughout the community. We’ve seen a tremendous amount of interest, both from the landlord community and also in the occupier community. I’ve had 12 to 15 tours a day through that time with large groups. 

You may have seen some of the articles—we’ve been written up over 60 times in the global press. It’s really an exciting time. I think we’ve moved the meter relative to the market in the way people look at space. 

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Here are our numbers. We were at 61,000 square feet. We would probably these days need around 70. We had 191 people at the time, and we had 191 seats. Now we have 168 seats. We have 210 people. I think we can get it up to 260 or 270. 

The relevant piece, though, is the number of areas where we have to work. Rather than just three locations we actually have up to 16. Here’s the other piece that was interesting: 1,500 file cabinets. We knocked it down to 300. If you looked in most of those file cabinets today, you’d see that they are empty. 

Here’s what we’ve achieved: 100 percent free address. Our CEO is free address. I’m free address. Nobody has ownership of any kind of office space. Right now, I can tell you that the flexibility of the space has been unbelievable. We mentioned the WELL certification. We think we’ve got a big cost reduction here. People love the environment. 

Steve Adams: In the past few years, we’ve seen our LA office space drop by 22 percent in square feet, while our headcount is just going through the roof. The fundamental way we’ve been able to achieve those metrics is by understanding who actually uses our space. We’ve been hoteling since 1999—so we’ve got almost 2 decades of hoteling experience. That’s been a challenge culturally.

To answer the first question of “where did my cube go?”—we feel that your cube, my cube personally, has really turned into our space.

This is how people want to work. They want to engage. They still need a little bit of time for focused work and collaborative work, but we’ve really changed it from—to take somebody else’s moniker—“me space” to “we space,” from “my space” to “our space.” 

We looked at a report that I think came out in 2008 that Gensler issued talking about four work modes. They really resonated with us—we really saw that our people needed collaborative time but they also needed focused time. They needed socialization time. It was arguably, for a lot of partners, very difficult to understand why people needed to socialize around the water cooler and talk about Big Brother or whatever else was on their minds. And then we needed a learning environment, as well. We took that report to heart and tried to design our spaces with those four modes in mind, and we still do today. We try to make each of our spaces serve more than one purpose. If we don’t get two uses out of each of our spaces, we feel that we’ve failed at our design mission.

I often see and often talk to a lot of people who start with spaces. They start the process thinking, “What kind of desk should I put here?” or “Wow, that’s a cool chair.” But, arguably, you have to start at the other end. As Lew mentioned, the values of your company dictate culture, and this is a stepping staircase. If you understand values, cultures, and behaviors, you’ll naturally understand the activities you need to design to. We’re an accounting firm—we don’t require tremendous innovation. I don’t think you want someone innovating while doing your taxes. We don’t require as much innovation as a Google or a high-tech company in Silicon Valley. That’s a different kind of activity. 

For our activities, based on our behavior and our culture, we need specific environments, and then those environments can create those spaces. Taking a journey with your entire organization through this staircase, this progression, really helps you get the design right.   

Rob Jernigan: We are designing for multiple generations and one size does not fit all. We work the way we were taught. Some think that we can come in and create an office space and say, “Look at all these Millennials. Let’s create an office space for the Millennials.” Let’s remember, a lot of the Boomers are the more senior and the bigger bread-winners, and we do not want to put them in a space where they’re not successful.

There’s been a big paradigm shift. When you really look at the young people today, they’re looking for a career, not a job. I think it’s important that the young people today want community. Younger people are getting smaller residential units because they are looking for more out of the office, and the offices are providing more. They want empowerment; they want coaching; they want dialogue. 

This is also a great time for innovation. It took 60 years for us to go from the typewriter to the electric typewriter. 60 years. Can you imagine the rate of change that we’re going through today? The only constant: The world is changing, and how are we going to deal with that? The offices have to be different—they have to flexible, mobile, and of course, free addressing.

Less dedicated office space. We definitely believe in more “we space” and less “me space.” Through technology, we can make the “me space” more efficient and more effective. We do not recommend coming in and squeeze, squeeze, squeeze square-foot-per-person. That’s not what we’re trying to do. We’re trying to create more effective space. Let’s make sure that if we take away two square feet from the “me space,” one square foot goes back to the “we space.”

Effectiveness through choice. People want choice. Because of the new technology and the mobility, we’ve been untethered from our desks. We asked ourselves the question, “Why do people want to work from home? Why do they want to work from Starbucks? Why do they want to work anywhere except in this space we’ve provided them?” Because it’s horrible. Can you imagine saying “I spend eight hours of my life in that cube”? The pendulum swung too far. The issue here is—how do you really create great space, inspiring space? How do you create space that’s better than Starbucks and better than your home? It has the technology, it has everything you need to be effective. If you do that—and you’ll find out, in our case—they never leave, because it’s a great space, and people want to be in great space. 

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© 2014 The Planning Report | David Abel, Publisher, ABL, Inc.