MEREDITH Strategy & Design

We design great places and spaces that enhance the experience of  work. 
Our purpose is to help companies and organizations of every scale
more effectively achieve their goals
and capture value from what they and their people do.

Jim at meredithstrategyanddesign dot com

(248) 238-8480

The good news in Wilbur Ross's bad news about real estate? Radical "Attraction strategies"

branislav krapilak_garages12-735x459In double-barrel bad news accompanying the drop in the market today, both Wilbur Ross and George Soros offered dismal outlooks for commercial real estate, each stating that the U.S. sector is in the beginning of a huge, perhaps unprecedented, decline.

“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross... “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.” (via Bloomberg, 10/30/9)

The principal drivers of this are interlinked, with investment conditions and business demand influencing each other, and all of this is bad news. On the other hand, in way too fast of a reaction, I thought I'd try a draft of an approach Ross himself uses. Quoted in the Bloomberg article, Ross said,

“Our methodology is to make a great big list: What’s every thing we can think of that’s either wrong with the industry or that we just plain don’t like about it...Then we start work on another list. If we had control of this industry, what would we do to fix each one of those problems? Once we feel that there is a reasonable likelihood that the second chart kind of equals the first chart, that’s when we get ready to do something.”

I'd (over-) characterize almost every commission I've been part of for the millions of square feet of corporate space we've planned, designed and built or built-out over the past decade or more as driven by a set of values only nominally connected to what actually drives the performance of our clients' businesses. Through most of this time, our profession has made extensive use of programs and metrics around efficiency, productivity, effectiveness, and performance, yet with little reflection of a core understanding of the underlying businesses and with primary measurements related to amount of space.

In the happiest of cases, we've built new buildings under an optimism around business growth and scaled both by planning standards and credit equations. In more stressful times, we've made new workspaces driven by integrations, consolidations, and revised standards generated primarily by an interest in occupancy cost reductions. In relatively informed times, we've put together strategies and implemented programs to leverage potentials in technology advancements and acknowledge trends and benefits in mobility. In the best of cases, although these were very few, our projects were driven by an appropriately appreciated definition of sustainability for both the business and the property.

Now, I wonder, if this unfolding new collapse could present the critical conditions for a dramatic change in the way we think about occupying space for work? What might be the new answers to questions like these –

  • Could work look different now? The "look" of work has been shape by management concepts about command and control, attendance, entitlement, and hierarchy and made physical by cubes. The reality of work in most leading companies looks like teams and networks, visibility and activity, and its physical presence changes the definition of what "work" is. Will the predicted second wave collapse cause a closer examination of what the workplace is? What "activates" value?
  • Will there be a C(B)D anymore? With ongoing and building momentum reshaping how and where work is done, can we any longer zone for work separately from lifestyle? What will be the attributes of a building reprofiled for recovery after the crash, and can it have the same attributes, configurations and approach to tenants as now? Can a building be planned simply within its site, or will collaborative and coordinated community-based planning approaches provide a richer, more robust, more sustainable and more attractive domain for how work is done?
  • Will we care more about quality in cities? Will quality of environment mean the end of economic incentives to attract development to cities? That is, will owners, developers and cities work together to find the means to promote a broader perception of the value of place? Will quality of place demand a premium that outweighs any incentive intended to overcome the negatives? What will define quality? Will this example be a model in other places? Is this model relevant anymore?

Will this be end of "exit strategies" and the beginning of radical and aggressively positive "attraction strategies"?

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