Office Size Doesn't Equate With Success

IRVINE, CA-“You used to progress from the little office to a bigger office to the corner office to an office with more window panes,” Guy Johnson, CEO and chairman of Johnson Capital, tells GlobeSt.com. “Today, the most successful people are in an open-space environment or with smaller work spaces. Trendsetters don't equate office space with status or stature.”

Johnson, who will be moderating a lightning-round panel focusing on the investment-sales, leasing and capital-markets transaction worlds during RealShare Orange County here next Thursday, says there has been a real shift in the way office users see and value office space from all levels of the organization. “Much like people buying online, as people get older, each generation is more tech savvy, and they like the trend—they're pushing the trend—of less office space per worker. Older generations identify a large office with success; younger generations—even wealthy people—want nothing to do with it. They don't measure success by the size of their office, and the square footage per worker is coming down to 150 or even 125 square feet.”

Naturally, business owners and those focused on the operating expenses of a business enjoy the trend toward creative office and consolidation of space, since users are charged on a per-square-foot basis. “Not a lot of people believe that large offices are more efficient than smaller offices,” says Johnson. “There is, however, a debate between traditional and creative office in terms of the distractions of noise and confidential conversations. That's a big debate point, particularly for businesses with trading desks—of which there aren't many in Orange County.”

Still, others maintain that open environments assist in the mentoring process of less-experienced employees who overhear more-experienced employees' conversations and learn from them. “People like the energy,” says Johnson. “The younger they are, the more they adapt to that.”

The next trend in office space, Johnson says, will be “hotelling,” a method of supporting unassigned seating in an office environment, which is a more efficient use than office space that's unused—and yet paid for—most of the day. “Someone figured out that office space is only used about 20% of the time at any given time. Considering that users pay to use the space seven days a week, 24 hours a day and it's only used five days a week for five to eight hours at a time, why pay for space that's rarely used?”

Johnson says he feels the creative-office trend has legs, and he is quick to point out that the current move to creative space differs greatly from the '90s transition from closed offices to “an assembly line of ugly gray cubicles that was cheesy. Back then, people did not feel appreciated. But today, a lot of companies will argue that the office-space expense is second to the personnel expense. What do you need to do to keep people happy? You can greatly reduce the expense per worker, but increase efficiency and improve the experience.”

What also differs today from the “cube farm” era is the addition of inviting common areas with modern design, Johnson says. This is a trend that echoes that of the newer multifamily complexes that feature smaller individual units with more common-area amenities, on which GlobeS.com has previously reported.

In addition to this topic, Johnson's panel will cover other trends within office space and whether it makes sense to develop right now. Other panels being offered during RealShare Orange County include a town hall power panel on investment, leasing and development activity in Orange County; “Econ vs. the Street: Where Do We Go From Here?”; and “Corenet SoCal Presents: Corporate America's Presence in Orange County.”