21^st Centry Office Space

 Where is office space headed during the 21^st Century? That's the million dollar question if you want to stay competitive in the office rental market! Having a clear understanding of the factors that are affecting change in the office market will help us all make better business decisions about how to position ourselves for success over the next 15 - 20 years.

 Office space has been around for a long time. The first offices were seen around 3,000 BC, but commercial use did not become prevalent until the Italian Renaissance- the 14th to 16th centuries-, to accommodate the growth of Italian banking houses.

The high-rise offices of today are a relatively new phenomenon. The Home Insurance Building in Chicago was the First “Skyscraper.” It was built in 1885, at 180 ft tall with 12 floors.  One of the key structural elements that allowed for the construction of taller buildings was a steel frame that liberated the exterior walls from supporting the building.  These are known as “curtain walls” and weigh only one-third as much as a stone building.

 While structural design was very important to being able to physically build the skyscraper, the inventions of the late 19^th Century were the driving forces behind them.  Some of the new Inventions that revolutionized 20th Century office buildings include:

-        Light bulb - 1879 by Thomas Edison

-        Elevator - 1853 by Elisha Otis (with safety devices)

-        Telephone - 1876 by Alexander Graham Bell

-        Typewriter - 1873 by Christopher Latham Sholes

-        Flush toilet - 1885 first comprehensive sewer system designed (Chicago)

Without these inventions, the practicality of people actually working in a skyscraper would not have been a realistic possibility.

Typically, what we saw in 20th Century fundamentals of office space included:

Visual uniformity - You've seen one you've seen them all

 Operational inflexibility - Departmentalization

 Lack of human interaction with a focus on productivity

 Place dependent -
 The workplace was where work was  done


In present-day America, northern Europe, and Japan, at least 50 percent of the working population is employed in office settings, as compared to 5 percent of the population at the beginning of the 20th century

 21st Century Paradigm Shift

With the dawning of the 21^st Century we are beginning to see a paradigm shift coming about, generated from four distinct areas.  These factors are:

Demographic changes are affecting the workforce

Inventions are changing the way we work

Economic globalization is continuing expansion

Work attitudes and employment expectations

 Demographic changes are affecting the workforce

According to the U.S. Department of Labor, the U.S. Workforce will continue to increase in size, but at a considerably slower rate over the next 15 - 20 years. By the year 2020, the annual growth rate in the work force is expected to be a meager .3%.  But that won't be the only change.  We will also see structural work barriers to women and the elderly continue to fall away. The workforce composition will become more balanced by age, sex and ethnicity. The bureau of Census data shows that whites account for 76% of the workforce today. It is anticipated that by 2020 it will decline to 68% and in 2050 whites will account for only around 52% of the workforce.  The largest gain in the workforce will be by the Hispanic population, as shown in the graph below.

With the change in the demographics of the workforce, we can also expect changes in what businesses will want in their new offices, based upon the workforce they employ. 

Inventions Changing the Way We Work

As in the final years of the 19^th Century, the final years of the 20^th Century brought about many inventions that are now having a significant affect on the workplace.  The most obvious of those is the computer.  We take computers for granted now, and many in the current workforce can't remember a time without them, but it wasn't until 1974 that the first consumer computers were available. It was in 1981 that the MS-DOS Operating System made them readily usable, and 1985 when Microsoft Windows was introduced.

 Cellular phones have also had a significant impact on not only the way we work, but on our day to day lives. It wasn't until 1979 that cellular phones were invented.  The first commercial cellular system was introduced in October 1983, and it wasn't until 1988 that the digital cellular phone came out.

 The Internet, which we all take for granted now, had it's beginnings with Arpanet in 1969, but it wasn't until 1989 that the HTML browser language was developed to give us a graphical interface and easy access to information online. I still remember the great 1996 Browser War between Netscape and Microsoft, though many younger workers are totally unfamiliar with the loser of that war, Netscape.

 Email was the Internet "Killer Application" of the 1980s.

Wireless Technology is also a newcomer.  It was not until 1998 that wireless technology could exchange data between cell phones, handhelds and stationary computers, and not until 2003 that Intel announced its Centrino platform, which integrates wireless LAN technology into mobile computing platforms.

 All these are having significant affects on our workplaces and how businesses use office space.

 On the Horizon

And if these inventions are not enough, even more are expected in the not too distant future.  Nanotechnology is most likely to have the biggest effect on changes in the workplace and the world.  It measures, manipulates and organizes matter on the Atomic scale. Nanotechnology is one area of technological innovation that has the potential to equal or exceed the influence of the 20th century advances in computing and information technologies. It bridges the fields of biology, chemistry, physics, engineering and computer science.  In addition to applications in information technology, nanotechnology is expected to lead to breakthroughs in pharmaceuticals and other aspects of biotechnology, energy technology, and aerospace and materials technology, among others.  As a cross-cutting technology, nanotechnology will facilitate technological change that extends and enhances existing technologies—further computer power for semiconductors, as an example—as well as more revolutionary applications such as computers no bigger than a bacterium and new materials displaying exceptional  properties of strength.

 Further miniaturization, fiber-optic improvements, including increased and cheaper (free) bandwidth and bio-medical discoveries, will lead to longer lifetime of the workforce and older, skilled workers will continue to make important contributions to the future of the workplace.

 Economic Globalization

Is the world flat? Has Globalization leveled the playing field? You bet it has. One of the areas that we hear constant discussion about is economic globalization.  Most U.S. businesses expect their international sales to exceed 40 percent of their sales revenue in three years -- and most are nowhere near prepared to handle the surge. That at least is part of a new global business reality, as described by management consulting firm Accenture.  According to their recently released survey of the U.S. executives' perceptions, 75 percent of the respondents indicated that China was the most important emerging market. India was next with 48 percent. The executives admitted they were not prepared to support sales or procurement in these countries.

 With economic globalization has also come the outsourcing of jobs. How big of an impact does outsourcing have? In the accounting industry in 2003, 25,000 tax returns were completed by accountants in India, in 2004, 100,000 were, and in 2005 it is expected to be 400,000.  Most all of these are basic returns, or grunt work, which allow the U.S. accountants to focus on more complicated returns. The trend is clearly upwards and much of it because India graduates 70,000 Accounting majors each year who expect to earn $100 per month.

 The medical field is also taking advantage of outsourcing opportunities. CAT Scans and MRI are digitized and sent overseas to be read by foreign radiologists at a lower cost.  This not only helps keep the cost down but also allows for after-hours coverage and emergency evaluations when local radiologists are unavailable.

 Most of the major investment research companies are using Indian analysts to prepare reports.

 Companies like Microsoft have outsourced most of their “Help Desk” services to India.  The reason: rent and wages in India are 1/5 of those in the US.

The growing outsourcing opportunities generate quite a bit of concern for workers in the U.S. The fear factor is high.  Should we be worried? According to Forrester Research, roughly 3.3 million U.S. jobs are expected to be lost overseas by 2015.  In a workforce of 147 million, that is an annual loss of 0.2% -- not the sensational loss of jobs many industry specific news articles have led us to believe. Most of the jobs lost will be in import-competitive industries, in generally unskilled positions. Unskilled and low-skilled workers will be competing for jobs on a global platform and there will be a decline in earnings for less skilled workers. Education and maintaining a skilled workforce will become even more critical than before.

 On the positive side, economic globalization will expand markets for U.S. companies. The new jobs created in the U.S. will be safer, more stimulating and better paid. Consumers will have choices and lower prices, which will spur innovation and adoption of technology.

 Work Attitudes and Employment Expectations Changing

Changes in attitudes will also impact how office space is used.  Previous generations expected life-time work while the current generation has been brought up on insecurity and short term contracts. Future generation will develop “portfolio” careers as “knowledge workers” based on a freelance economy. They will be more mobile, more educated, better informed and influenced by a proliferation of media and choices.  The bottom line is that the 21st Century professional wants to work in 21st Century offices.

The 21st Century Office
A Change to 21st Century Office Design Fundamentals - The 4 N's

 According to Jeremy Myerson and Phillip Ross in their book “the 21^st century office,” there are four major architectural and interior schemes and ideas in office design and use.

 The first of these is the Narrative office-- the office as a brand experience. It brings the brand alive within the office and tells the story about the company.  In the service oriented economy of the 21^st century, some of the biggest global brand names are using their own office environment as a branding tool for employees, visitors, suppliers and investors. A growing number of business leaders see this as good motivational sense. They are treating office space as an opportunity to express what their brand really stands for, instead of just a place to do business like everyone else's.

The tube time tunnel, left, demonstrates the narrative theme.

Show reels are screened along the "journey" into the space to give both visitors and employees a heightened narrative experience.

  Playstation's fantasy world is simulated at the Sony HQ in London

In the competitive service-oriented economy of the 21^st Century, companies no longer want the place where their employees spend the vast majority of their time to look and feel exactly like everyone else's office. They want the environment to be uniquely loaded with the company's own brand signifier.

 The Nodal office is a digital technology-driven, knowledge-connecting workplace for the mobile “knowledge worker” of the 21^st Century.  It is a place for sharing knowledge, networking, coaching and training. The goal is to incubate ideas by providing a variety of space to generate and share them.

It is designed to provide virtual workers with a home base. It is the hub for business of a mobile workforce. This is similar to the 20^th Century versions of hoteling, hot desking or other forms of flexible work.

 One of the benefits, other than technology, is that the Nodal office counteracts the tendency of offices to operate at only a 50% utilization rate, as is the case in most 20^th Century offices.

In the people-centered service economy of the 21^st Century, new schemes of office design are appearing to encourage social interaction rather than to discourage it. The Neighborly office looks more like a community center with town squares, garden fences, quiet places and entertainment zones.  It encourages chance encounters from which good ideas flow and helps create a sense of community by encouraging social activity and interaction. The central design principle is to maximize social interaction, as contrasted to the command and control design of the 20th Century office. The focus is on comfort, congeniality, sociability and community.

 The Nomadic office is an office that is no longer place dependent. Much work now takes place outside of the traditional workplace and work day.  The technology driven 21^st Century work takes place 24/7. Technology has liberated work from the workplace.

The Nomadic office can be located at home, in airports and serviced locations. They are geographically dispersed to meet the needs of the workforce, and offer real choices in the balance between work and the rest of life.

 Conclusion

 The 21^st Century is going to bring about many changes in how office space is designed and used. These changes will come about from advances in technology and demographic changes in the workforce. Keeping up with the fast changing demands of 21^st Century will take attention to detail. While the changes we see will not be immediate, they will be continuous. With the long occupancy cycle of lease terms, the changes will take place over a longer period of time. Understanding the trends will position you to take advantage of new opportunities presented by a changing environment.

A research paper prepared for Office Business Center International
February 2006.  Please contact author for sources used.