Bay Area’s technology firms are exploring ways to communicate their brand through space.
THIS ARTICLE WAS PUBLISHED IN THE ‘Q’ – THE REGISTRY’S PRINT PUBLICATION – IN JULY 2014
By Nancy Amdur
[dropcap]A[/dropcap] booming Bay Area technology industry is demanding so much office space that companies are considering options beyond the traditional campus, including high-rises and converted warehouses.
“When we look at the numbers in the Bay Area, it is 85 to 90 percent tech company growth, and it’s really about [those companies] looking for the kind of space that is attracting and retaining the best talent,” said Garrick Brown, director of research at Cassidy Turley Commercial Real Estate Services in San Francisco.
Finding the best office location can be a challenge for Bay Area firms. Tech and startup companies—along with many of their employees—often seek a San Francisco address, and office vacancy in the city stands at about 8 percent, Brown said. Further, there is 3.5 million square feet of office space under construction and 75 percent of it is already pre-leased, he added.
Some businesses still are moving into traditional sprawling suburban office campuses, such as Apple’s 3-million-square-foot headquarters underway in Cupertino, but they also are going vertical like Salesforce.com’s plans to take more than half of the 61-story tower being constructed at 415 Mission St. in San Francisco, or creating “cool” space by renovating converted warehouses or outdated properties.
“It really isn’t about one size fits all. Different needs have different types of buildings,” said Phil Mahoney, an executive vice president at real estate services firm Cornish and Carey Commercial Newmark Knight Frank in Santa Clara.
To stand out in a sea of potential employers, companies are carefully choosing the location, amenities and design touches to set them apart from competitors.
“All companies are trying to differentiate themselves, and space is a huge factor,” said Kelly Dubisar, design director at the San Francisco office of global design firm Gensler.
No matter where a company lands, access to transportation and amenities are essential pieces to office campuses, according to industry experts.
“Being on or near transit or having a shuttle to transit is very important,” Mahoney said, adding that companies also want to provide “amenities around the building or in the building” to help them recruit and retain employees.
Suburban office tenants might create an urban feel by offering a variety of restaurants along with services such as a dry cleaners. On-site amenities might include outdoor kitchens, walking trails and bocce or volleyball courts.
Companies in San Francisco scan the surrounding neighborhood for features such as a grocery stores, fitness centers and dining options before choosing a location, said Dominique Price, a design director at Gensler.
“A lot of square footage is being gobbled up by ping pong table rooms [or] massage table rooms—all these different amenities being offered to the worker—it’s an entirely different type of workplace where you’re not sitting in a cube or office isolated from your co-workers. You’re interacting with people all day long,” Brown said.
Amenities can be key in making a space stand out to potential tenants.
“You’re trying to create a touch point that someone can relate to,” said Nathan Carlson, a project director at San Francisco-based Swift Real Estate Partners, a San Francisco-based real estate investment firm. “It may be a patio or a fire pit—so when someone tours five different buildings, [he or she] can say, ‘I remember that one.’”
In 2011, when 3D design software firm Autodesk began updating its San Francisco office space at One Market, originally built in 1916 and incorporated into a larger development in 1976, the company worked with Gensler to help form a design that reflected its culture, Dubisar said.
Among Gensler’s design elements was creating a base color palette of charcoal and white with energetic splashes of vibrant colors. The company also added a variety of collaborative spaces and introduced wood slats to indicate a dynamic, multidimensional environment.
It is not only tech companies looking toward more innovative design features.
“We’re seeing this with every [type of] company,” Dubisar said. “Trends start with tech companies because of their agile nature and the experimental nature of how they work.”
But Dubisar adds that it is not always necessary to include entertaining amenities.
“Not every company needs to have ping pong tables and air hockey and slides. It’s understanding what resonates with your particular culture,” she said.
In fact, a building’s overall design is increasingly important. “The image of the building matters,” Mahoney said. “It doesn’t need to be the most pristine building, but a lot of [companies] want nice to very nice buildings because that’s the image they want to portray. They’re a first-rate company, their employees are first rate, and they want to take care of them in a first-rate fashion.”
“Everyone wants curb appeal to make [a building] inviting,” said John Marmesh, director of business development at San Jose-based TICO Construction, Inc., adding that Silicon Valley buildings from the 1970s and ’80s are either being razed or receiving significant interior and exterior renovations.
Tenants also are saving money by creating more dense space. In 2000, it was typical to house four employees per 1,000 square feet. Now companies are squeezing in six or seven employees into that space, Brown said.
Further, moving into a vertical office campus is becoming a popular choice due to high land costs, Mahoney said, while traditional office parks with several low- to mid-rise buildings also remain “very much in vogue,” he added.
Demand for office space throughout the Bay Area is not likely to wane soon as tech companies continue to introduce new products, Brown said.
“All these innovations are coming from the Bay Area,” he said, adding that at this point, he does not see any indication that they’re going to stop.
Photography courtesy of Gensler