Milwaukee Journal Sentinel’s Post

People just want a space where they can get their jobs done in peace, and hopefully dodge the company's next round of layoffs. With that in mind, what do you think about the return of the 🏢office cubicle? Annie --- Cubicles were the hallmark of a dull, soul-sucking job. Now they seem like paradise lost. Then he does something truly rebellious: Using a power drill, he tears down his cubicle wall, revealing a window view. His triumph of workplace defiance is complete. In a memorable montage from the 1999 workplace satire "Office Space," Peter Gibbons, a fed-up office drone, decides to take a stand. He parks his Toyota Corolla in his Porsche-driving boss' parking spot, saunters into the office in flip-flops, and guts a fish on his desk — all to the tune of Geto Boys' "Damn It Feels Good to Be a Gangsta." For years, the office cubicle was the four-walled avatar of corporate disaffection. Its bad rap was at least partly circumstantial — the rise of the cubicle through the 1980s and '90s coincided with sweeping company mergers, acquisitions, and downsizing that rewarded space-efficient office layouts that were easy to reconfigure. The most disposable workers were relegated to interchangeable, ever-shrinking cubes, while bosses maintained offices with obscene luxuries like windows and doors. ...READ More... #officeculture #workspaces #officedesign #cubicles #work Hon.

Dear Jonathan Gray: Why aren't you buying office? EOP flashback... "Gray was jittery about the bid. Not only would it be by far the biggest he had executed; it would be the largest LBO ever, and he was looking at writing a check for $3.5 billion or more, the most Blackstone had ever risked in a single deal." "It would be disastrous if Blackstone paid top dollar and then found itself stuck with overpriced assets it couldn’t unload." "For reassurance, Gray put in a call to Alan Leventhal, the head of the real estate investment firm Beacon Capital Partners, who had been a mentor and sounding board over the years. Leventhal had a pet theory that he had expounded to Gray in the past, and Gray wanted to hear it again." "Leventhal’s view was that, in the best markets, where it was hard to build new offices, you would make money over the long run if you bought buildings below their replacement cost, because prices had a natural tendency to rise where the supply couldn’t expand much." "'He gave me a pep talk. It was like a revival meeting,' Gray says. 'In life, sometimes you need a little confidence booster when you’re thinking about risking your entire career.'“ -- From "King of Capital" (Carey and Morris) Leventhal's "pet theory" may seem simple, but it seems to have merit... -- Replacement cost benchmark: World Wide Plaza was built in the late 1980s for about $650M. -- Why World Wide Plaza? It's a big NYC asset that traded at peaks and troughs over the last few cycles, so we have actual transaction values. -- NYC office value benchmark: SLG and VNO are NYC office REITs. Their shares are priced daily, which gives us an indication of broader NYC office values. Note: SLG is also a part owner of World Wide Plaza. ---- Takeaways ---- -- World Wide Plaza's historical transaction values seem remarkably anchored to replacement cost over the long term (assuming costs have grown at inflationary levels). -- In recent years, values have fallen by 25%+ while costs have increased by 25%, which could create the biggest disconnect between replacement cost and market value in a very long time. -- The entire office market has been painted with a singular brush, but we know that some assets are of much higher quality than others. -- Blackstone is sitting on a mountain of cash and needs to put it to work. Mr. Gray, we predicted (wrongly) that you would buy an office REIT last year. There are lots of reasons to think you and your team won't run back into office, but this cost vs. value framework (and your EOP experience) might suggest that you will. Only time will tell. PS - We think you will go down as the greatest real estate investor of all time. Want to plug into one of our classes via Zoom to speak to our students? We'll gladly schedule you for a 2025-26 cohort, so you can tell us how you put BREP X's funds to work. #creanalyst #blackstone #dearjon

As available space levels balloon in the suburbs, downtown Milwaukee continues to see steadily declining levels of available inventory. Downtown's availability rate of 16.1% is outperforming the suburbs for the first time in decade, and by the widest margin on record - 260 basis points! We continue to see employers seek out downtown for the broader array of higher quality office spaces and for the ability to better compete for younger talent that increasingly chooses to live in the urban core. Notably, Fiserv recently announced it has seen a staggering 56% year-over-year increase in job applications since moving to their new office at Hub640 earlier this year! Similar sentiments are being heard from other companies that have also made the move in recent years - something that is sure to get the attention of regional employers pondering future space decisions. For further insight into Milwaukee's office sector, follow the link below! As always, drop a line if you'd like to discuss this or any other #CRE or #urbanism trends around town. #milwaukee #office #analytics

Fundamentally, the first answer to this question that comes to mind is, 'the future is being together in our offices,' said Vice President Shannon Loew, the head of Global Corporate Real Estate and Facilities (GREF) at Amazon, on Thursday, providing insights about the future of office work. #FutureOfWork #FacilitiesManagement #OfficeSpace #WorkplaceTrends #CorporateRealEstate https://ow.ly/bp2w50Tos3I

Bloomberg LP is well known for not having private offices. A lesser-known cultural anchor is that everyone has the same-sized desk. There are practical reasons for standard sizes. Desks with the same dimensions are interchangeable, easier to move, repair and replace. But the conviction goes deeper and comes from founder, Mike Bloomberg. Mike’s view is that bigger desks, just like walls and offices, create barriers to communication. They obstruct the information flow that is the lifeblood of modern knowledge workers. “There are no private offices at Bloomberg,” he told the Hollywood Reporter in a 2015 interview. “My desk is exactly the same size as everyone else’s.” Mike’s corporate philosophy and conviction about desk size was tested during the 12 years he left the company to be mayor of New York City. When he returned in early 2014, the company had been transformed. It was perhaps three times larger and had moved into a new flagship headquarters on Lexington Avenue. The changes in the product, people and environment were profound and a lot to absorb. But at some point, Mike realized some senior executives and managers had installed larger desks. Others had turned conference rooms into private offices. He was not amused. He called the facilities department and over one weekend had those larger desks replaced with standard-sized versions, the same size he used. Desk size wasn’t a kind of faux equality signal. It was about communications and efficiency, issues he viewed as critical to success. He explained the decision to one of the sales reps: “When the top people get bigger desks, then everyone wants bigger desks. It stops people from coming up to you with ideas.” I had a meeting with Mike soon after he returned and he mentioned how angry he was about the big desks and private offices. He saw it as a kind of cultural erosion. It made sense to me. I had friends at other companies that rewarded managers with large private offices that sported couches and plants. All of those things cut them off from the day-to-day flow of connecting with colleagues. One of the challenges for leaders is to know which traditions to keep and which to discard. That's especially true for idiosyncratic markers that help define corporate values and priorities. Like the pledge from Costco Wholesale’s CEO that the company will never raise the price for a hot dog lunch at its stores above $1.50. That re-enforces a message that Costco is cost-conscious. At most companies, the size of one’s desk and office convey status. At Bloomberg, desk size does matter, but for a different reason. It’s a way to remind everyone that the company is in the information and communications business. (Part of a series of lessons I learned from three decades at Bloomberg LP.)

Interesting data on Fortune 500 HQ trends from 2018-2023. A couple points that stuck out to me: -Between 2018 and 2023, 30% of Fortune 500 firms took major action on their physical HQ -28 Fortune 500 companies opted to move their headquarters out of state. Notably, Sunbelt states had the largest net gains of Fortune 500 firms, led by Texas with +10 and followed by Florida (+4) and Georgia (+3). California experienced a net loss of eight F500 firms I agree with the sentiment in the article that as firms continue to evaluate the purpose of physical office space, understand the best location in relation to skilled talent and leverage the role of the workplace to promote company culture and values you will continue to see movement among large employers. #commercialrealestate #tenantrep

"Over the past six years, significant real estate changes have occurred among Fortune 500 HQs. Continued movements among these large employers will play out in the coming years as firms continue to evaluate the purpose of physical office space, understand the best location in relation to skilled talent and leverage the role of the workplace to promote company culture and values." #officeleasing #fortune500 #cre #tenantrep #headquarters #cbre

New Post: The Neiman Marcus office ‘is a magnet, not a mandate’ - After filing for bankruptcy shortly into the pandemic—and emerging guns blazing three months later—leaders at Neiman Marcus Group (NMG) realized that in order to keep up with an entirely new way of work, drastic changes needed to be made.  The first major change: a vast, permanent downsize of its corporate office space in the Dallas–Fort Worth area, from half a million square feet to about 100,000, with no plans to grow it back.  The bankruptcy “allowed us to make some tough choices about what we wanted to do with our corporate real estate,” Eric Severson, NMG’s chief people and belonging officer, tells Fortune. Ditto for tough choices about its work model: The company officially became remote-first, allowing employees to work from anywhere, with no in-office requirement.  The NMG office, which has been so carefully designed to appeal to workers who can drop in at their leisure, is “a magnet, not a mandate,” Severson says.   Some may wonder why NMG even invested in an office at all if they can’t guarantee—by brute force—that it will be filled with people. But Severson takes a different perspective: The hubs are the inverse of a typical pre-pandemic office, which was mostly individual work stations, with small pockets of collaborative space. The Dallas hub has been retrofitted for 70% collaborative space and 30% individual space, a key balance. It can fit about 800 people at any given time, the Dallas Morning News reported, and while it has a wealth of offices and meeting rooms, no one—not even executive brass—has a permanent desk. With shared-use spaces and connection spaces in ample supply, the idea is that “people will come together” at the Dallas hub because they want to, and it serves their needs, not because they’re required to.  Productivity and choice are at the heart of the matter Despite NMG’s salient approach, most companies nonetheless stick with mandates. Severson says it’s not so much because they’re doubtful it works, but rather that “inertia is a really powerful force,” and it’s easier to stay the same than to risk a major change.  “Many companies have not necessarily done a great job of measuring outcomes related to initiatives,” he goes on. “I see CEO after CEO saying that they’re forcing you back into the office to improve collaboration and innovation. Not one I’ve seen has cited any statistical research or other proof that that’s true.”  To be sure, the jury is still out on the real link between productivity and work location. While many workers insist they’re more productive at home, others admit they accomplish more at the office. And while some amount of worker-led flexibility is roundly considered the best approach, each team is different, and most U.S. companies are still struggling to land somewhere everyone is happy with.  The unfortunate state of affa

The U.S. office market is seeing an unprecedented slowdown in new supply, compounded by the fact that most projects that broke ground in the past year will not add meaningful availability to the market because they are fully pre-committed. Q4 had 1.2 million s.f. of groundbreakings, the lowest quarterly total in more than 20 years, and 800k of this was Goldman Sachs new Uptown Dallas campus which they will fully occupy upon completion. With current rates of inventory removals, the US needs to see about 5-6 million s.f. of quarterly groundbreakings to balance supply loss, a volume that may take an extended period to reach with core capital reducing allocations to the office sector. As newer spaces fill up, many markets may find that even though headline vacancy is at or near record levels, supply of the "right" office space that today's tenants are seeking is rapidly thinning. #USofficechartoftheweek #JLLresearch https://lnkd.in/ght3QQ4s

Loved reading this article put out by ICSC about how retail and office are working together... "Leasing space near retail outlets has become a bigger priority for office tenants that want to attract and retain talent or lure back remote workers." Retailers benefit from the return to office push, especially in mixed-use developments. Higher traffic usually equals higher sales. When at the CREi Summit last week, I found the perfect example of this at Ponce City Market in Atlanta, GA. Was amazed at the execution and synergy that the developers were able to create. I'm excited to see how some of these new large Utah mixed-use developments flesh out to create a similar atmosphere. If anything, this concept proves that the asset classes need each other! Office tenants are relying on retail concepts to add as an amenity to their employees, and retailers are reliant on increased traffic counts consistently spending time near their storefronts. Give it a read, I've linked it below! #ICSC #ICSCCreator #Partnership