By Meghan Hall
Every year, CoreNet Global, a non-profit corporate real estate association, honors two of its members at its Northern California Chapter Corporate Real Estate Awards, generally well known as one of the most anticipated awards events of the season. This year, CoreNet Global’s Northern California Chapter is honoring two industry titans who have had their hand in the growth and image of some of the region’s most important companies: Ed Axelsen, senior director of corporate real estate and facilities at Splunk, and Carol Sandman, founder and principal of AP+I Design.
As CoreNet of Northern California’s media partner, The Registry presents an exclusive Q+A with both Ed and Carol on not just their work in the industry, but with CoreNet, and where the region’s commercial real estate industry in the future.
Ed, looking back over your career working for numerous big-name companies such as Netscape, Silicon Graphics and Twitter, what has drawn you to work specifically within the Bay Area’s “start-up” culture?
EA: Call me an adrenalin junkie. Or perhaps it’s in the nature of a start-up. As one of the first RE/Workplace professionals in the door, you are nearly solely responsible for every aspect of that business – and then some. It’s great if you have ADHD because of all the constant change and variety. J For example, I’ve had to manage the company Insurance program and Telecommunications (back in the day). Safety and Security seem always to be a job requirement – and that can make for some interesting times.
The Bay Area is a top market for start-ups and has historically produced a higher number of unicorns than any other region in the nation. Given this climate, what is it like working specifically with companies who are in their earliest stages of development?
EA: That’s tough question because my experience with larger companies has been very limited. But certainly, one’s exposure to company execs and decision making is much greater. Done correctly that positions you for a phone call when those execs move on to other companies. And, as I implied above, you have to switch from the tactical to the strategic sometimes several times a day. Finally, there is no five-year plan. Nor three-year plan. If you’re lucky you have a one-year plan – and even that is often inaccurate, so you need to able to react to a rapidly changing business climate. For example, when I started with Netscape they were already crowded. My CFO said we would double headcount in the coming year. But we actually tripled. You have to be able to deal quickly with changes and take them in stride.
Over the past several years, Splunk has announced leases in several notable Bay Area locations, including 250 Brannan Street in San Francisco, 500 Santana Row, and 700 Santana Row. Since you joined the company in 2016, what has been Splunk’s strategy when it comes to its physical growth? What does the company look for in assets it looks to lease? How does it place value on those assets?
EA: Splunk looks for a location that can attract and retain talent. Generally speaking, that means a location that is easy to get to, has some amenities within walking distance, has a flexible design, and an overall scale that could support future growth. We look at the cost in terms of the total cost of occupancy. 80 percent of that cost is in employee salaries.
How will these locations allow Splunk to scale beyond its current operations today?
EA: We locate in larger projects in urban centers that make expansion and/or relocation relatively painless when compared to a wholesale move to another area.
Company culture is a key ingredient in obtaining and retaining top talent in the Bay Area’s competitive hiring market. In your opinion, how does Splunk work to insert its culture into its workplaces? How do culture-related trends impact commercial real estate decisions at large?
EA:From an employee perspective, Splunk offices exhibit the genuine care that the company has for its people. We don’t cut corners in design or quality, and our break-room offerings also lend themselves to the notion that employees are seen as people. Our overall design is form AND function, a reflection of Splunk as a product and our spaces are polished and professional, yet fun–a very important aspect of Splunk culture. Also, we do not try to cookie cut spaces. There are some similarities among locations but also elements that are unique that represent the local culture.
Culture-related trends impact commercial real estate decisions at large when the supply of labor is limited by quantity and/or quality. This is especially true of smaller firms that are not large enough to create their own gravity (providing many of the their own culturally oriented elements).
What are the biggest challenges facing the commercial real estate industry in the Bay Area today?
EA: The cost of construction. This is perhaps a direct result of the cost of housing which is a result of the lack of housing for the workers. Also, NIMBY-ism is problematic – and the lack of developable land requires more infill projects which are also inherently more difficult to get done.
What advice would you give to younger professionals in today’s industry? Why?
EA: Don’t burn bridges. It is actually a relatively small community. And the longer one stays in it the smaller it seems to get. You will run across developers, landlords, contractors, and brokers that you feel have done you wrong. Keep it businesslike – you may need them in the future.
How can CoreNet assist in the growth of these young professionals?
EA: Continuing to have small group sessions where senior leaders from various companies, large and small, can share their experiences.
Is there anything else you would like to add that The Registry did not ask or mention? Is there anything else that we should be asking?
EA: Don’t grind for the last nickel in every transaction; people will remember you for your ability to be fair, and you’ll later be able to leverage that for the things that you either forgot to ask for or address changes as they inevitably arise.
Carol, when you first began AP+I Design Inc. in 1993, the region was just starting to see a rise in development thanks to growing tech companies. Today, it’s indubitably a leader in not just technological, but workplace innovation. How has this impacted the AEC community at large?
CS: Oh my gosh, it’s HUGE! When I started the company, simple tenant improvement work in the Valley was the norm unless the client was a very high-end law firm. It became clear in the early 90’s that Silicon Valley was definitely the place to be, not just for the architectural industry but clearly for technology as well. Over time, clients began to change in terms of what they were looking for, based on employee retention, evolving product development cycles and the pace of innovation. We began working with Google in 2006 and it was then that there were the first inklings of making the workplace something that was unique and different – a place that could draw and retain talent, foster collaboration and stimulate creativity.
What has changed and what has remained the same?
CS: I think one of the things that has changed is the capacity for growth now compared to then. Growth now can be enormous and back then, we weren’t dealing with the same kind of trajectories. Now we’re dealing with increased growth in headcount, R&D and amenities – especially amenities – over the last 10 years. There has also been a huge increase over the years in the partnering between disciplines. The prime can now be the architect or the engineer or the contractor – that isn’t how it used to be years ago. The architect was always the prime.
We are now better at aligning real estate delivery with the fast pace of the business – tech business cycles are inherently uncertain and the faster we can deliver to our clients the more closely we align with their business cycles
What are the biggest challenges that you believe the AEC industry has faced due to the Bay Area’s incredible expansion over the last 20 to 30 years?
CS: I can sum that up in one word – speed! Maybe two – speed and fees. Back in the “old days”, architects, engineers and contractors would collaborate to come up with a reasonable schedule that was presented to the client and all parties accepted it. From the client’s perspective, those parties were the experts and while there might be some slight tweaking, by and large the schedule was accepted. Now, as I think we all know, the project is needed faster, faster, faster! I think some clients are willing to compromise on quality slightly to achieve the speed they want to see.
As far as fees go, it can be very cut-throat out there compared to the 80’s and 90’s. It’s just a different time, and the AEC field has had to adjust to it.
Where do you think the region’s AEC industry is going next? Why?
CS: Interestingly enough, I think the AEC industry has changed significantly due to the involvement of project management firms over the last 10-15 years. This is not a bad thing – the PM firms have a significant value add helping the unsophisticated client or the client-too-busy to keep a handle on their project. However, there’s a big difference sometimes in how effectively the PM firm is able to manage both the client and the process. This is entirely dependent on the firm, and we are very fortunate to work with PM firms who almost always provide a great deal of value add.
What do you think will define a successful architect in the future? Do you believe it is harder to work in the AEC business today than it has been in the past?
CS: I think that there will always be, as have always been, “starchitects” who command the center stage with amazing, innovative and thought-provoking design statements. There will always be clients looking for the next, most amazing thing that these architects can provide. For the rest of us, I think success will be defined by a combination of innovative design AND customer service. In reality, nearly all of the architectural firms in the Bay Area are great firms who provide great design options for their clients. The differentiator will be how the client is served. This has been our hallmark since AP+I’s founding in 1993 and it will continue to be so.
I do believe that it will be harder to sustain a firm in our industry as evidenced by the many firms that have either gone out of business over the years or been gobbled up by larger entities. This means that the core values firms are founded on can be slightly, or completely, compromised. Having said that, I do know that there are many firms in the Bay Area, both A, E and C, who have morphed and successfully been able to embrace a new beginning and new successes.
No two projects are the same, and all are perhaps equally important, but if you could highlight some of your favorite projects to-date, what would they be and why?
CS: I have to say that as a building owner, designing our own Net Zero building was by far my favorite project. I’ve done hundreds of projects over my nearly 40-year career with clients large and small. And let me tell you, being your own client is NOT fun. But, we made it through and the building has been an incredible success. For me personally, I’m a huge conservation nut. Creating an environmentally sustainable work home was my number one goal. I’ve driven an electric car for 9 years, I turn off every light not being used, I recycle and compost like crazy. And all of this is incorporated into our workplace. Another one of my personal goals was eliminating paper towel waste in the restrooms. We have soap, water and hand dryer all in our trough sink and have no paper towels at all in the restrooms. I love that our waste basket is filled with only a few tissues on the daily! It’s cool, it’s sustainable and it’s how I want my company and my building to run!
Please tell the Registry a little bit about your involvement with CoreNet Global and the Northern California Chapter. How has the organization shaped your work and involvement in the industry?
CS: I’ve been an active member of the CoreNet Northern California Chapter since 2005, regularly attending meetings and annually attending the Global Summits. AP+I Design has been a CoreNet Northern California Chapter sponsor since 2010. I’ve particularly enjoyed the Women of CoreNet meetings when I’m able to attend them. I’ve tried to create awareness about CoreNet with others in the industry and have supported my staff members interested in participating in CoreNet through being on a committee. Additionally, I often offer up the Northern California Chapter monthly meetings to staff members and pay for their attendance to go.
CoreNet has been a gamechanger for me in terms of networking, learning opportunities and creating awareness about what’s going on in Silicon Valley. I’ve been fortunate to make many long-lasting friendships and business relationships through the organization and I wouldn’t trade my time spent involved in CoreNet for anything!
This year, you are CoreNet’s 2019 Corporate Real Estate Service Provider of the Year, for which you have been recognized for not only your firm’s outstanding work to your clients, but your commitment to your staff. In your opinion, how can the industry be proactive or more innovative when it comes to holding onto talent in the AEC community, especially in a competitive market like the Bay Area?
CS: I like to think that creativity in employee benefits, above and beyond the standard health care and dental benefits, etc., is a big retention motivator. We’ve tried to make our office be a place where people want to come every day because we all spend a significant part of our lives at work. We have a lot of activities that are super fun for employees to participate in. This creates a family atmosphere and contributes to holding on to our talent, who we truly, deeply care about. Fostering work/life balance is also critical to holding on to talent in the market we exist in. If you can’t offer that kind of support to your employees, you likely won’t be able to keep them in the long term.
Is there anything you’d like to add that The Registry did not mention? Is there anything else that we should be asking?
CS: The AEC community has traditionally been a male dominated field, but that has definitely been changing over the years. There are far more women in the industry now, and I’m happy to employ a significant number of them. As the CoreNet Service Provider of the Year, I centered my acceptance speech around empowering women and making sure that the men AND women in the room that night heard that message. I’m proud to have been a role model for women over the years and look forward to continuing to uplift women in all aspects of the AEC professions.