Real estate workplace is now reflecting clients’ office space needs.
THIS ARTICLE WAS PUBLISHED IN THE ‘Q’ – THE REGISTRY’S PRINT PUBLICATION – IN OCTOBER 2015
By Neil Gonzales[dropcap]R[/dropcap]ob Bagguley was searching for office space with an open floor plan in which splashes of color and some new furnishings could be added.
The overall effect he was going for was “light and bright,” said Bagguley, the San Francisco-based executive managing director for commercial real estate firm Transwestern.
This office wasn’t for a technology client, however. It was for Transwestern’s own San Francisco division, which had been in the Embarcadero Center in the city’s Financial District since the Houston-based company first broke into the booming Bay Area market in 2012.
Bagguley found what he was looking for in the 26-story building at 101 Second St. in the surging tech haven of the South of Market District, and the San Francisco team moved there in early August.
Real estate companies like Transwestern are seeking office space for themselves in today’s style of their tech clients. They are doing so not just to appeal to customers but also to energize their workplace and use as an employment recruiting tool.
The office hunting reflects the industry’s confidence in its future growth and increasing profitability. According to a 2015 survey by the National Association of Realtors trade group, 75 percent of commercial real estate firms expect profits to improve in the next year. Nearly 80 percent of large commercial real estate firms with four or more offices project an increase in net income, the survey also said.
“The improving economy continues to fuel job growth, and while some markets are still recovering, the demand for real property is back,” the association’s President Chris Polychron said in a news release. “Prospects are looking good for the real estate industry.”
For Transwestern, part of the decision to find another space in San Francisco was to get that much closer to where the action is. SoMa, after all, is where many leading innovative companies such as social networking service Twitter Inc., mobile-payment company Square, Inc. and vacation rental Web site Airbnb are making a presence.
“It felt to me the energy of the city was moving south to the SoMa area,” Bagguley said. “I felt it would be valuable to move into that energy source for the business activity.”
Transwestern’s San Francisco branch now occupies 5,800 square feet on the third floor of the tower at Second and Mission streets known for its dramatic glass-clad, four-story atrium, which serves as an art pavilion and public space for tenants and visitors.
San Francisco-based POD Office worked on designing the office space, which has an open plan with collaborative areas that feature “nice easy chairs and tables where people can strategize,” Bagguley said. But the office still has rooms where private discussions can be held. It also has a digital conference room with the latest communications technology.
Many of the improvements reused existing materials although new furniture and carpeting were brought in, he added, and nothing was demolished. “I felt it was cost-effective. Sustainability is a key value for Transwestern.”
He said the office has become a kind of showcase for clients, telling them that finding new space doesn’t have to mean an extensive renovation.
The new digs in bustling SoMa have also impressed prospective employees. “I’m doing proactive recruiting,” Bagguley said, “and the reaction is: ‘We love the energy in the office and the energy in the area.’”
According to the NAR survey, 44 percent of firms—commercial and residential—are actively recruiting new agents with 88 percent citing business growth as the primary reason for doing so.
Cresa’s San Francisco division didn’t have to go far to find its new office, moving just a block down from its old location at 275 Battery St. But the difference between the two spaces is night and day.
“The old space has lots of gray, old carpet and cubicles,” said Christina Clark, San Francisco-based senior vice president for the Boston-based real estate advisor firm that exclusively represents tenants. “The new office is a warm tech space designed to our specifications.”
Those specifications include an open plan without high partitions so employees can talk with each other easily. “Even top producers don’t have a private office,” Clark said. “It really provides more collaboration. It totally changes the vibe.”
But the new office also has conference rooms when confidential conversations are needed, she said. The official move was expected Oct. 1.
Earlier this year, JLL moved its Silicon Valley office from Palo Alto to Menlo Park as the commercial real estate firm is in growth mode and expanding its client services in that region’s sizzling market.
Like Transwestern and Cresa, the company looked for a new office “that promoted both collaboration and confidentiality” with an open work environment and private rooms, said Andy Poppink, Silicon Valley-based managing director for JLL. San Francisco-based Tim Murphy Design Associates worked on the Menlo Park space, which also includes a large open kitchen and small fitness room.
“Our new space energized our team and is a recruiting advantage,” Poppink said. “We have also had the ability to host client events on site. What we are perhaps most excited about is that we are now able to utilize and display some of our new technology tools.”
Some in the industry may argue that focusing on physical space is misplaced because brokers and agents do much of their business out in the field, anyway, as in meeting clients and touring sites. Also, the industry increasingly is going virtual with many a broker now having mobile-tech capabilities.
According to the NAR survey, 41 percent of real estate firms expect to see increased competition from virtual businesses over the next year. Only 16 percent expect more competition from traditional brick-and-mortar firms.
All that may be true, Poppink said, “but there is a large, critical infrastructure of people that support [brokers and agents], and when the professionals need space for a client meeting or to demonstrate a new tool, having that support team working hard with them and having the space for those meetings are of critical importance.”