Office Buzz: More Alley Vacations

SEATTLE-Office tenants' needs are changing as technology advances and the desire for urban office environments grows. In advance of next week's NAIOP Development '13 conference in San Diego, GlobeSt.com spoke with A-P Hurd, VP at Touchstone Corp., a Seattle-based developer of sustainable urban infill commercial real estate, to discuss some of the areas she'll be addressing during the conference and what the upcoming issues will be for office tenants, owners and operators.

GlobeSt.com: What new technology needs do office tenants have that building owners and operators should know about?

A-P Hurd: For many years, technology needs were driven by the increase in how computers were used in the workplace. We saw a continuous rise in the need for cooling capacity in office buildings, particularly for tech tenants. Cooling was needed to offset the plug-load of desktop computers and large server rooms, and the requirements were highest among tech tenants.

Over the past decade, however, as the demand for mobile computing has increased, computer manufacturers have strived to increase battery life. Improvements in battery technology were incremental, so computer manufacturers also worked to reduce the power requirements for computing. Whereas a desktop computer in the late 1990s used 165 watts of power, an iPad today uses closer to 1.5 watts. That's nearly a 100-fold decrease in power requirement and has a huge impact on the heat emitted by computers in the workplace and a huge impact on cooling requirements. Add to this the fact that more and more companies are managing their data on the cloud, reducing the need for server rooms in their office, and you have a rapidly changing profile of what energy needs office tenants have for their space. These changes have yet to be fully integrated into tenant-standard specifications, and spec buildings still need to accommodate a wide range of loads, but I expect we will see a real reversal in the power consumption of buildings from plug-loads and cooling in the coming years.

GlobeSt.com: Let's talk about other office-tenant requirements. How are these changing?

Hurd: For the past few years, many office tenants have been more focused on urban environments that have better vehicular access and transit service and are more amenity-rich than many traditional suburban office environments. As these office users become more urban, they still don't want to lose many of the things that made their former suburban locations so attractive. Large floor plates remain very desirable, but can be more challenging to accommodate within a single city block. In Seattle, we are definitely seeing the number of “alley vacation” applications going up. Even more interesting is the question of how to accommodate growth in the more congested urban environment. We at Touchstone—as well as other developers—are increasingly teeing up multi-phase projects (even across multiple city blocks) that can provide opportunities for tenants to expand three, five or seven years into their initial lease.

GlobeSt.com: Clearly, the workplace is evolving, but where does it go next from creative office?

Hurd: If you map workplace layouts over the 20^th Century and the early 21^st Century, you see nearly all office uses migrate through all the different trends. With each change, some industries lead the trend, and others lag. Personally, I wonder if over the next decade, we don't begin to see employers buck the latest “trend,” focus more on the types of work their employees spend time on, and offer configurations of space that meet those needs. This would result in multiple space configurations within one company, depending on the needs of each work group. I started my career on a column-free trading floor with 400 people—and in an externally driven environment like that, being tuned in to the noise level of each part of the room is incredibly valuable—but that's also the very opposite of the space you need to have a difficult HR conversation or to finalize a negotiation.

Stay tuned to the West page for more NAIOP conference coverage.