Real state design: Short shelf life for a “permanent” structure - by Daniel Calano

March 13, 2020 - Appraisal & Consulting
Daniel Calano
Prospectus, LLC

Recently, I have been doing some market analysis consulting for a developer in Naples, Florida regarding “What buyers want” in housing. The bottom line was that buyers want something different than they wanted five years ago, which was different than five years before that, which was different than when people were happy with the same thing for twenty years. In other words, the shelf life of “current design” is getting shorter by the moment. 

Using Naples as an example, a couple of decades ago the “must have” housing was heavy Tuscan, clay tile barrel roofing, ionic columns, mustard colored paint over stucco, enormous cavernous spaces, demanding equally huge furniture. Along with these mausoleum type structures came huge footprints, and therefore dark interiors, with great difficulty in enlarging small windows stuck in stone facades. In other words, they are relatively new, multi-million dollar tear downs. 

Not to go into great detail, but the next new thing, five to ten years ago, was a reaction to Tuscan, and back to Caribbean, Bahamian cottage style. But the demand for large space was still big, usually 5,000-6,000 s/f and more, and thus the “transitional style” was developed: Caribbean façade with more modern, open interiors. It was the house du jour. The landscape is now dotted with these houses, such that buyers on open house tours cannot remember one from the other. 

What does this tell me? It tells me that we are in trouble. Large, costly, “permanent” house design is changing only a little more slowly than tastes in food and clothing. While land may still be appreciating, houses are depreciating, not in a traditional sense of 30 year deterioration, but because they are out of style at a very rapid pace. It tells me that owners can get stuck with a highly unappreciated “dog house” in a short amount of time. 

Fast forward to office design. In a prescient Wall Street Journal article on the “Future of Everything”, the main story was titled “What will replace the open office?” It featured a progressive architect named David Dewane with his vision for the new workplace. Worth reading in full, I can summarize the article that suggests office workers will move through half a dozen distinct zones during the day, with each space having a purpose, ranging from socialization, to research, to meditation. The passage culminates in individual “deep work chambers” totally intended for solitary focus. Dewane states, the concept is a repudiation of open office design, as well as departure from the look of modern offices. 

As you recall or well know, office design of the 70’s and long before, had windowed offices for the managers, corner offices for “the boss”, and interior office for all the rest. That morphed during the 90’s plus into more open floor plans, presumably reducing company inequality and facilitating open communication. That lasted for the next decade or so, but presented its own problems of noise contamination, boring and drone-like similarity of space, overly public and totally unprivate. 

All office owners and managers know that new tenants regularly require new tenant improvements. Typically, it used to be at least a modest rearrangement of walls, paint and carpet, maybe a new lounge/kitchen. But the Dewane article goes much further, calling for a radically different space, fully integrated with recent human behavior, and geared toward worker happiness as opposed to efficiency. 

Is it the design of the future? What will be the future? More importantly, what will be the time frame of the future? Things are changing very fast, clearly based on technology, but also individual and cultural needs. Just as younger workers had previously demanded redos of college dormitories and amenities, they are clear and persistent about what they want in workspaces. In our current economy of extremely low unemployment, where companies need workers to grow, workers are thus empowered to require design changes that meet their daily needs. And, by the way, those daily needs can also change on a dime. 

What is the takeaway? Development and design will have to be increasingly flexible. Technology will accelerate what is appropriate for workspace. Space must be easily adaptable to new worker needs and company requirements. 

Greater tenant improvement needs on a quicker basis means higher cost built into development pro formas. While all of this seems obvious, the pace at which it will continue to occur will continue to surprise. Read up on “The Future of Everything.” It is not just leisure summer time optional reading; it is required reading.

Daniel Calano, CRE, is the managing partner and principal of Prospectus, LLC, Cambridge, Mass. 



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