The design of a contemporary office building is about much more than aesthetics; it’s about leveraging architecture to support a client’s business objectives while creating enduring long-term value. That is according to principal Jon Pickard of architecture firm Pickard Chilton. In the Q&A below, we talk with Pickard about the elements of design that most contribute to value-creation and that can lead to the premium pricing of an office building. Signature buildings that Pickard Chilton designed have, on average, surpassed price-per-square-foot records in their respective markets by 23% when sold, he says.
GlobeSt.com: It seems unusual for an architecture firm to track and measure real estate metrics. What was the impetus for the analysis of these data points you mentioned above?
Jon Pickard: That is quite true. As architects, it is not our mission to establish nor break real estate records. However, if these data points come to somehow substantiate and quantify the value we create for our clients with our architecture, we are happy to share these metrics. While there are many factors that determine a sales price, such as location, efficiency, amenities, tenancy, developer reputation and quality, architecture plays a very important role. When The Pinnacle sold in Atlanta in 2004, we were pleased to read the headlines of it breaking the price-per-square-foot sales record. However, we assumed it was an anomaly until Hines sold 1180 Peachtree in Atlanta in 2006, breaking and establishing yet another record in that market.
This prompted us to look at other projects we had designed and that had subsequently been sold. We learned that 4600 South Syracuse in Denver and 24th at Camelback in Phoenix both set sales records in their respective markets. When in 2010, 300 North LaSalle established a new sales record for the city of Chicago, we knew that these were not mere coincidences. These were then followed by The Pinnacle at Symphony Place breaking the record in Nashville in 2013, followed by 300 North LaSalle again breaking its own previous record in 2014.
When Hines sold BG Group in 2013, while it garnered an impressive sales price, it did not break the price-per-square-foot sales record. It was reported, however, that at the time of sale, it was the highest price ever paid for an office building in downtown Houston, and among the highest prices on a per-square-foot basis.
GlobeSt.com: When developing architectural concepts, aside from creating a beautiful building, what are some key considerations/project attributes for creating enduring long-term value?
Pickard: In an effort to strengthen and maintain their competitive advantage within their respective fields, our clients are continually seeking innovative approaches to attract new employees, understanding that approximately 92% of a company’s budget is directly attributed to their personnel and the challenge of recruiting, engaging and retaining their workforces.
Our clients, which include many Fortune 500 companies, have specifically engaged Pickard Chilton to support them in the creation of new buildings and work environments that have come to create a true strategic advantage while improving the quality of their cities. In many of the most successful projects, there is compelling vision by an organization’s leader that is shared by public sector leaders to affect change that ripples throughout a city. We have experienced this effect firsthand in locations like Oklahoma City, Milwaukee, Richmond and Seattle. It is profound and, in many cases, results in dramatic increases in economic activity by the attraction of new businesses and investment by the city in public infrastructure and the public realm.
Proportionally modest in comparison to the necessary investments in their workforce, these investments in new consolidated workplaces have shown to yield exponential return as a result of improved employee satisfaction, efficiencies and increased productivity, reduced attrition and reduced absences.
The next-generation workspaces we are designing today offer more free-flowing environments that blur the line between work inside and outside the office. Professionals are increasingly working remotely, and the office has become a place for collaboration, face-to-face encounters, knowledge-sharing and team-building.
The contemporary workforce, while becoming increasingly diverse at many levels, nonetheless shares greater expectations from their employers and more so from their work environments. While the average work station is dramatically reducing in size, the new workplace provides a range of innovative lifestyle amenities, such as fitness centers, restaurant-quality dining, ease of access to public transit, conferencing and huddle rooms, and an embracing of the public realm.
However, design elements that most contribute to the health and well-being of building occupants, and thereby increasing their productivity, are those that are perhaps the least tangible. Enhanced access to daylight and natural ventilation; views of nature; access to green space; water elements; and natural materials and finishes enhance and meaningfully contribute to an employee’s sense of well-being while encouraging collaboration, innovation and productivity.
GlobeSt.com: How can a building’s architectural design increase the efficiency of a company and, in turn, add to the asset value?
Pickard: There are a variety of efficiencies to consider that would support and yield a given building’s greater asset value. Such efficiencies can include: allotting less space on an individual basis but more for communal space, diverse conferencing space, technology integration, and efficiencies in the building materials and systems themselves as one considers cost over the life of the project. In working with our clients to understand their vision, we balance all these strategies to deliver a building that best meets their long-term business objectives.
In addition to sales performance, we track other metrics that lend further credibility to our value-added story. On average, lease rates for projects we have designed are 41% higher than the typical Class A offices in their respective markets. Occupancy rates for these projects average 96%.
GlobeSt.com: To what degree does the design of sustainability measures influence value these days?
Pickard: Sustainability has always been an integral design component to each of our projects. This approach not only creates buildings that are livable and workplaces that are healthy, but also results in innovative and elegant architecture of long-term value. As strategies such as LEED and WELL have evolved and become ever more rigorous over the past decade, we have deliberately adopted and advanced our approach to high-performance and sustainable design.
Among today’s workforce, there is the inherent expectation that their new work environment will actually improve both their mental and physical well-being. Wisely investing in these high-performance facilities to further support the attraction and retention of talent, visionary clients recognize that the interrelationship of building design elements including materials and interior and exterior spaces is ultimately experienced by people and, as such, every facet should foster and support their long-term well-being.
While originally perceived to add a premium to the cost of a building, sustainability in fact offers near-immediate payback in terms of the thoughtful use of energy and natural resources but also in its ability to support recruiting efforts and a healthful work environment.
GlobeSt.com: What type of architectural features would you recommend companies consider exploring to create greater value?
Pickard: A number of features in office design are impacting the design of new work spaces worldwide, directly impacting an organization’s bottom line. Real estate metrics demonstrate appreciable increase in efficiency and further maximize the value of critical real estate decisions. Features include:
- Enhanced employee satisfaction though the embrace of diverse ways of working collaboratively and alone
- Creating a greater sense of community in the workplace
- Engagement of the public realm
- A healthy work environment that promotes physical, psychological, and spiritual well-being
- Open floorplates that maximize real estate utilization, create cost savings, and increase the ease to adapt the workplace to an organization’s changing needs
- Personalized comfort controls at workstations that enhance office environment comfort and improve productivity
- Designing buildings that promote planning flexibility and easily adapt to alternate uses over time