Today is not the best time to be a commercial landlord. Or a tenant, actually.
Smaller footprints, shorter terms, mismatched tenant improvement costs, and workforce mobiity demands are breaking traditional leasing models. How did this happen, and what will change?

How did this happen?
Employees need less physical space to do their work. Support functions have shrunk even more. Acceptance of a “sharing economy” means turf ownership does not signify value the way it used to do. And a technical ability to work from anywhere allows high productivity with fewer seats on-site.
Add volatility, uncertainty, and rapid social change. The risk of too much space dwarfs the potential benefits of stability. So lease terms are shorter.
With a smaller footprint and shorter terms, tenant improvement (TI) funding goes way down, well below tenant’s actual capital costs. For landlords, shorter lease terms translate to lower property asset value, which increases borrowing costs to fund even reduced TI’s.
It gets worse. Theoretically, the TI allowance for a ten-year term on a smaller footprint should cover design and construction of the reduced area. In fact, it does not. High-finish areas like reception, conference, and café represent a greater proportion of total lease area, resulting in a higher net cost per square foot, and higher out-of-pocket capital expense obligation for the tenant.
We conclude that traditional office leasing is unsustainably expensive and risky, for both landlords and tenants.

What will change?

An organic solution is evolving out of necessity. . . . . Unbundle the office lease into three separate transactions:

  1. Long-term lease for core square footage only; conference, operations infrastructure, executive leadership. Building systems improvements covered by landlord under terms of lease.

  2. Capital improvements financing by Tenant to optimize terms.

  3. Landlord and Tenant manage volatility with office sharing solutions; (a) co-working space in building managed by landlord, (b) sublease-ready co-working modules within tenant envelope, (c) off-site co-working space

Implicit in these trends is a transformation that affects the entire industry;  landlords, tenants, brokers, base-building architects, interior designers, bankers, lawyers, and employees.

  • Shared office space will become a new service/profit center with a battle to see who ends up in control

  • Base building core design will support higher density and greater multi-tenant flexibility

  • Shared office floor(s) will be incorporated in most office buildings

  • Menu-based broker fees will cover a wider range of services delivered through more and smaller transactions

  • Interior design will become even more generic, "portable", furniture-driven

  • BOMA load factors will lose their historic meaning as an efficiency metric (rentable:usable ratio)

  • Lease documents will address a moving target of flex options, amenity access rights, and pass-through expense formulae

  • Commercial loan structures will support new tenant capital expense obligations 

If you’re like many of our clients, you’ve already seen these trends emerging. We’d welcome your stories and questions.


Blog Index

AuthorMarcia Hart

You may have seen the provocative article published in Fast Company, “Here’s the Final Nail in the Coffin of Open Plan Offices” by Libby Sander, assistant professor of organizational behavior at Bond University. The Washington Post picked up the story too.

Studies cited seem to justify hatred of the open plan. Notably, "…an innovative new study has found that employees in open plan offices spend 73% less time in face-to-face interactions. Email and messaging use shot up by over 67%, ...productivity declined due to a substitution of email for F2F." The implication that sacrificing privacy improves neither collaboration nor productivity is the final nail.

Should we concede failure and bury the open plan once and for all? Not so fast. Close reading of source material reveals the real problem with open plan, and it's not the lack of private offices.

First, the main study examined controlled transitions from bounded workstations to boundaryless bench-style seating. Enclosed office environments were not examined. Data suggest that heightened exposure upon removal of physical boundaries drove people to retreat and avoid further stimulation.  A low-grade fear of people sneaking up behind you or the extra-annoying distraction of partially intelligible conversation really does make it hard to think. Ironically, when you're in flow, such distractions and vulnerabilities recede but you can't get to flow if you're distracted and vulnerable.

It seems obvious that design solutions must allow humans to feel protected and secure so they can concentrate;  visual privacy while seated, smaller neighborhoods with boundaries, no circulation behind exposed chairs, opportunities to be alone.

Productivity questions are more elusive, as usual. Study data were collected “just over two months after the move, enough for people to have settled into their new environment but not so much that the work they did could have changed much.” For productivity to improve, collective intelligence would have to accrue and positive new behaviors would have to evolve. Furthermore, we don’t know what conditions were included in productivity measures. [Workplace1080 suggests (a) revenue per employee, (b) annual hiring costs including enrollment administration and training, and (c) sick days.]

In any case, the benefits of collaboration, if any, require a variety of activities and spaces to develop. Enclosed solo carrels, huddle rooms for 2-4, distributed team rooms, central conference rooms, collaborative café, and some quiet soft seating are essential. Sander’s article comes to the same conclusion:

… Organizations should focus on providing workplaces that support the requirements for privacy and focus, as well as interaction and collaboration.

The good news is there is ample research to support hating the open office. The other good news is we understand better than ever why they fail due to excess exposure and over-stimulation, and how we can get the benefits of collaboration without undermining the individual.


Libby Sander, “Here’s the final nail in the coffin of open plan offices,” Fast Company, 2018-07-19  Original publication in The Conversation

Ethan S. Bernstein and Stephen Turban, “The Impact of the ‘open’ workspace on human collaboration,” Harvard Business School, pub. The Royal Society Publishing accepted: 3 May 2018

Jungsoo Kim and Richard de Dear, “Workplace Satisfaction” The privacy-communication trade-off in open plan offices,” University of California, publication date: 2013-01-01

Richard M. Ryan and Edward L. Deci,  “Self-Determination Theory and the Facilitation of Intrinsic Motivation, Social Development, and Well-Being,” University of Rochester,

Kimberly D. Elsbach, Francis J. Flynn, “Creative Collaboration and the Self‐Concept: A Study of Toy Designers,” Wiley Online Library, Journal of Management Studies, First published: 27 February 2013

Rob Cross, Reb Rebele, Adam Grant, “Collaborative Overload,” Harvard Business Review, Jan-Feb 2016 issue,

Clayton P. Alderfer and Ken K. Smith, "Studying Intergroup Relations Embedded in Organizations,"Administrative Science Quarterly, Vol. 27, No. 1 (Mar., 1982), pp. 35-65, Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management, Cornell University

AuthorMarcia Hart

I recently posted a blog entitled Expect 143% From Remote Workers. The premise is that people working interactively contribute a lot more than just deliverables; they provide social motivation, knowledge transfer, and shared experience that builds trust. So, if someone is working remotely they ought to compensate for NOT contributing these qualities by producing more deliverables. How much more? 143% more to be exact. See for yourself here.

Furthermore, as appealing as remote work may be for some, it is rarely the cornerstone of a successful career. On the contrary, remote work can quickly undermine development of rich relationships, meaningful impact, and personal growth that define professional success today. (ref. Aaron Hurst, The Purpose Economy.)

But Workplace1080 is not about dictating individual preferences and priorities. It’s about managing organizational implications of workplace change. The impact on organizations of non-strategic remote work is the issue today.

One of my valued readers pointed out that no amount of additional output from remote employees can replace the loss of interaction in the office. It's hard to grow in a vacuum. Friction and connection are catalysts for innovation.

Instead of looking at all those quick gotta-minute-questions and whad’ya-thinks and meandering-coffee-chats and overheard-one-sided-phone-calls as distractions from our “real work,” we might recognize them as building blocks in the foundation of corporate capability.

The sample table below shows generic advantages and disadvantages of remote work for both individuals and organizations. To capture the benefits and avoid pitfalls in all quadrants, get strategic about remote work policy. Put social motivation, knowledge transfer, and trust on the same page with freedom, privacy, and access to talent.

remote work assessment table

Get started with a strategic assessment. Complete a table like the one above for your specific group or situation. Ask questions:

What jobs are best suited for remote work?
Is remote work a privilege or a requirement?
If it's a privilege, what criteria apply?
Can a flexible schedule include regular face-time to build relationships and trust?
What is the minimum expectation for on-site presence, if any?

Pay attention to physical and virtual workplace design too. There’s no point in bringing your whole workforce into the office if they don’t interact while they’re there. Poorly integrated technology tools and procedures in the virtual workplace will exacerbate isolation and reduce teamwork regardless of geographic location. 

Interaction is not merely a distraction from so-called real work. It IS the real work.

(Wherever you are in your workplace evolution, Workplace1080 can help frame the issues, explore options and model likely outcomes. Like any interaction, another perspective may be just the spark you need to stimulate and clarify your thinking.)

AuthorMarcia Hart

Let’s say there are only two basic modes of workindividual or interactive. Working individually in an open environment with intermittent interaction still qualifies as interactive. Each mode offers different benefits.

In the first mode, working by oneself in a private setting there are no barriers to cranking it out. You’re entirely focused on the task -- except for daydreaming or, if at home, the distraction of laundry. (Assuming of course that your goal is clear and you know what you’re doing.)

In the second mode, working in a group setting involves unavoidable encounters and ambient awareness of others that distract from such a direct march toward a goal. At the same time, you’re motivating one another, discovering and learning together; getting to know strengths and weaknesses,  failing safely but publicly in small ways that build capability over time. You’re building trust with eye contact and mutual reliance.

Personal development and corporate vitality depend on such shared experiences. Without social motivation, knowledge sharing and trust there is no growth or innovation. These are not merely ancillary by-products of other work; they are essential corporate assets created through interaction.

Let’s say we expect each person to deliver 100 units of value each hour, regardless of where they’re working. Even with the “cost” of distraction lowering interactive output of deliverables to a guesstimated 70, total value creation matches the baseline 100 when we properly count intangible benefits as well.

Meanwhile, the solo/remote worker provides 100% of their value in deliverable output alone. Therefore to maintain parity the solo worker must produce 100 units of deliverables for every 70 units produced in the office. Looking at it another way, the solo worker must deliver 1.43% more than an interactive worker. (100 = 70 x 1.43)


No matter how you weight each component of value, the fact that individual work only contributes in one category makes it clear that we can and should expect more from people working alone, whether remotely or in a private office or focus room.

How much more? 143% more

AuthorMarcia Hart
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"... Baby boomers includes people who are between 52 and 70 years old in 2016 …. It is projected that by 2020, the proportion of the U.S. labor force that is composed of older adults (55+) will be 25.2%. This continues a trend in increasing rates of older adults remaining in the workforce, as the rates were 13.1% in 2000 and 19.5% in 2010." [1]

This simple fact of workforce demographics can ruin a business in two ways:

#1 Boomers are still here.

In 2008, they lost 40% of their retirement savings and haven’t gotten a real raise since then. Short on cash and eager to stay active, they're blocking the career advancement ladder and hoarding good jobs. Seniority allows them to work from private offices and vacation homes, depriving the next generation of both opportunity and information.  [2]

#2 They’re going to retire eventually.

Even with delayed retirement, Boomers won’t be around forever. When they go they will be taking thousands of years of experience and knowledge that has not been transferred to the next generation.

What to do NOW

We need to encourage immediately more fluid transfer of knowledge – in both directions. Subject matter expertise flows from old to young; work process improvement flows from young to old.

Here are three ideas that can work for any company:
A. Design the workplace around face-to-face interaction – F2F is the main benefit (maybe the only) of coming into the office, considering that most people can “get work done” anywhere with wi-fi and a laptop. So we need to really push that work mode: face to face. Perhaps more even more importantly, looking someone in the eye builds trust, the core of positive workplace culture and essential foundation for innovation.

B. Recognize that 68 year olds might not thrive in an airline hangar with bean bag chairs. A demographically diverse workforce needs a variety of interactive workplace options. Let’s not design valuable older workers out of the picture prematurely.  

C. Incorporate virtual workplace improvements: network drive organization, file management protocols, chat and screenshare applications. Tools for online collaboration are exploding right now – they’re affordable and readily accessible.


Contact to find out what a knowledge-transfer initiative could look like for your organization. Explore strategies for supporting a demographically diverse workforce.

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AuthorMarcia Hart

They would rather have brunch with their friends than mow the lawn. They don't want your status-symbol car either. What makes you think they’re going to want your old office?

Until recently it didn’t much matter what Millennials wanted. But now you need them. Look at this – it’s the demographic dumbbell, and it's a huge looming problem.

demographic dumbbell

What it means in the workplace

Boomer retirements eviscerate management ranks.
Generation X population lacks bandwidth to take over.
Competition for qualified leaders gets ugly.
Productivity goes down. Resources are scarce for reactive change.

The fix

Get active about knowledge-transfer.
Cultivate millennials for leadership.
Prepare to compete for talent.
Apply known principles (natural light, social interaction, physical movement, personal choice) for a more productive workplace now.

What it's worth

Changes that improve knowledge transfer, innovation, quality, and well-being, can improve productivity by 10%, measured as gross revenue per employee. For just 50 employees, that's worth $600,000 every year, assuming a modest $120K gross revenue per employee. For gross revenue per employee of $200K, the gains are worth $1.0 mil. per year. Serious numbers.


Who is responsible in your office for thinking about this stuff? If your workplace feels old or you have a lease transition coming up, consider calling us for an expert assessment. We’ll identify your opportunities and create a realistic roadmap. Whether or not you implement the plan, learn what you’re missing out on.

While you're toiling away in your private office, Millennials are eating your brunch.

AuthorMarcia Hart

To be successful, lawyers learn to privilege precedent over logic. As a result, common sense and legal prowess don't always go together. Nonetheless we can use logical reasoning to show how freedom from the past can make the workplace more productive for today's attorneys and staff.

A. The traditional law office is socially isolating, sedentary, dark, limited by perimeter conditions, and inefficient with excess interior square footage. 

B. Known factors that contribute most to workplace productivity --

  • Natural light
  • Social interaction 
  • Physical movement
  • Personal control

The traditional office floor plate can be transformed within the same footprint for greater productivity. 

Figure 1 - Traditional Layout

Figure 1 - Traditional Layout


1. Break continuous perimeter
2. Add attorney offices inside
3. Group staff together
4. Centralize support functions
5. Create alternative work areas

Figure 2 - Logical Transformation

Figure 2 - Logical Transformation

1. Critical for natural light
2. Use excess space
3. Foster teamwork, reduce isolation
4. Encourage physical movement
5. Enhance social connections, add variety and choice

No one needs a reason to do things the “way we’ve always done it.” But to achieve greater productivity in today’s workplace, logic demands a break in precedent. That goes for every company, not just law firms. To find out more contact

AuthorMarcia Hart

A lot of things we do by habit are flawed, mostly out of ignorance. Peeling a banana. Folding a fitted sheet. Making a BLT sandwich. Just look at LifeHacks: You're Doing It Wrong.

Along these lines, the latest fail is that handy rule of thumb that real estate professionals use for estimating rentable square feet (RSF) for corporate offices -- RSF/Person. It doesn't work anymore. One Person = One Seat is over. 

To estimate square footage now you need to know how many days per week each person will be on-site. Occupancy profile is more important than office size for determining actual space needs.

Let’s say there are three kinds of people: Resident, Mobile, and Drop-in. The table below shows a range of occupancy scenarios – 0% mobile, 20% mobile, and 40% mobile. For simplicity, Drop-in count is set to zero. Total headcount is set at 150. The resulting seat requirement and RSF requirement for each scenario shows how a mobile workforce affects real estate.

To calculate the RSF requirement start with the days per week that each member needs a seat. For residents the number is five (days in the work week). For mobile members it's some number less than five. The model uses 2.5 (half-time on-site.) Vacancy rate also affects the seat requirement and is set at 10%. Vacant seats are essential for staffing flexibility and are available for mobile members.
This algorithm generates the new metric: RSF/Day. Note that RSF/Day is 50 across the board, regardless of the mobility mix. For corporate space in the United States the typical range is about 45 – 55 RSF/Day, depending on office sizes and the amount of shared space. If you're a commercial real estate broker or in-house professional, imagine the value you'd bring with a quick and easy method for estimating  true real estate requirements for the new workplace. 
Start doing it right. Get to know the new rule of thumb. It’s 50 RSF/Day.

AuthorMarcia Hart

People at parties love to tell me about workplace disasters . . . the cool new collaboration space as storage dump, . . . the low-panel exposure to a neighbor who coughs and farts all day, . . . the working at home on deadline because laundry is less distracting than other peoples’ speakerphone calls. What went wrong?
Clients rarely mention the possibility of failure. They’d rather float down a river in Egypt. But denial won’t solve this problem and may even be the cause.

Let’s start by acknowledging that big change carries big risk. It’s easy to crunch numbers and modify a space, a lot harder to modify attitudes and behaviors. William Bridges, Ph.D. author of Managing Transitions: Making the Most of Change says, “It isn’t the changes that do you in, it’s the transitions. . .Change is situational,… Transition is psychological.”  

Successful workplace change involves an emotional shift – and not just resignation but also embracing new benefits. (If there are no benefits, don’t do it.) Bridges identifies three overlapping phases for making a transition:

  • Ending, Loss, Letting Go
  • Neutral Zone
  • New Beginning
Transitions Diagram_Wm. Bridges

Tactics for supporting people through it all may include focus on the reason for the change, defining what’s changing and what’s staying the same, recognizing “losses” to support the process of letting go. You can read more at
The Heart of Change Field Guide by Dan S. Cohen (protégé of change guru John Kotter) provides a good structure too. Like Bridges, he emphasizes the personal.
Of course there’s more to change management than a few quick steps. Remember that transitions are psychological, not situational. Change means loss, as well as gain. That does not mean workplace change is a bad idea. The real risk is in thinking you can re-arrange the furniture and call it done. 

AuthorMarcia Hart

Would you pay $1000 per month for office space? Your employer does. With annual costs of $52.30 per SF and average 230 SF per seat one assigned seat costs $12,029 (based on 80% workstations, 40% of total leased area allocated for workstations and private office seats, with 15% vacancy). See for yourself by editing shaded cells in the table below, or just send me a note if you want to customize the calculator for your specific situation.

Is It Worth It?

Value is always more difficult to measure than cost, but if you had a monthly allowance of $1000 to spend at your discretion for office space, what would you do? Here are four options:

  • A. Keep the money and work from home
  • B. Give the money back and keep your assigned office space as is
  • C. Give the money back plus another $1000 of your own money for a private office
  • D. Keep half the money and work in a shared space 2-3 days per week

There are two issues here-- what do YOU get from showing up at the office and what does your EMPLOYER get. What's that worth? 

AuthorMarcia Hart

Book Review: Cubed - A Secret History of the Workplace 

image credit:

image credit:

I read Cubed so you don’t have to. But you might want to learn for yourself how the author Nikil Saval connects the insecurities of 19th century clerks to today’s workplace.

The big takeaway: It all began with clerks in the 19th century angling for status to compensate for the unmanliness of their tedious and sedentary work. Here’s what Vanity Fair had to say about clerks in 1860:

 “vain, mean, selfish, greedy, sensual and sly, talkative and cowardly” and spent all their minimal strength attempting to dress better than “real men who did real work.” p.14

Unlike laborers in fields and factories, clerks worked side-by-side with the men who would promote them. Clerks were relatively few in number and had the opportunity to learn all aspects of the business at the right hand of their boss.

The possibility of advancement offered a powerful incentive to maintain non-adversarial relationships with owners. It also fueled fierce internal competition among peers in the office.

In keeping with a genteel image that signaled membership in the middle-class clerks resisted calls to join the growing labor movement during the Industrial Revolution and Gilded Age. They formed associations, rather than unions. Instead of collective bargaining they relied on trust and individual relationships to promote their interests. Saval sums up the legacy of this approach:

“With reformers promising a utopia of one kind, the office promised another, which would prove more enduring: an endless, placid shaking of hands.” p. 32

Fundamental Beliefs of Office Workers

  • Value of proximity to boss·       
  • Possibility of advancement
  • Norms of internal competition
  • Reliance on individual achievement over collective bargaining

Meanwhile, telecommunications and railways were changing the structure of commerce from local to regional, resulting in massive growth in service sector employment. The US Census shows 750k clerks in 1860, growing to 2.2 mil. in 1890, and 4.4 mil by 1910. During this period, proprietorships were superseded by a new form of the corporation that separated ownership and management for the first time. Workers were further isolated in narrow functional departments.

Still, office workers remained loyal to the idea that proximity to leadership and individual achievement might lead to advancement into the owner class. And they were eager to beat out their colleagues to do it. (Entrepreneurship is today's manifestation of the same drive.)

These fundamental beliefs have persisted through every management trend, technology boom and demographic shift ever since. Even with ever-increasing demands and erosion of real wages, the roots of office politics remain firmly planted. Mess with them at your peril.

Part II “The Perversion of the Cubicle” will take a quick look at physical workplace design and the (mostly failed) attempts to prioritize efficiency over deeply held beliefs. Coming next month. 

AuthorMarcia Hart

Let’s start with the stipulation that if you’re a timekeeper and you’re not charging your time then you are a burden. 

When you're getting a coffee, you’re a burden. Any timekeeper you see in the corridor is a burden too.  Both of you really want to get away from each other and go back to the solitary act of billing. 


In an insidious way, hourly billing effectively drives lawyers out of common areas. So law firms don't build much common area. 

Now, add the condition that your office is likely the only place on the floor that has natural light. Most normal humans will naturally want to spend the whole day there.

Next, add the condition that “internal conference” -- a familiar activity known in other fields as collaboration -- is anathema to clients. An invoice line item referencing multiple lawyers at once is an open invitation to challenge the bill.

To summarize, because of hourly billing:

  • A lawyer in a common area is a burden
  • Socializing has negative value
  • Collaboration is a problem

Furthermore, an attorney’s private office is more appealing than any other working space on the floor, and attractive common space is rare.  

How this affects productivity:

Four factors that contribute most to productivity are (1) natural light, (2) social interaction, (3) physical movement, and (4) personal control/choice

Due to hourly billing, the traditional law firm scores close to zero on (2) social interaction and (3) physical movement, which cancels out high scores for natural light and control for lawyers. (Staff space & productivity factors is a subject for a separate post.)

So hourly billing results in environmental and social conditions that actually undermine productivity for lawyers.

What can be done?

It’s simple. Restore the space where lawyers can legitimately work together but not necessarily collaboratively. Not a food lounge, not a place where the whole firm comes together but a shared place just for lawyers to practice law. This used to be called the library. 

AuthorMarcia Hart


In December 2014 WeWork raised a fourth funding round to the tune of $355 million, giving the office-rental company a valuation of almost $5 billion. more

image credit: Betamore, The Verve Partnership

image credit: Betamore, The Verve Partnership

WeWork develops and manages “co-working office space” for the creative class. They provide flexible offices space, meeting rooms, and amenities plus food and classes, for a monthly membership fee. It’s like a gym, but for work. Or it’s the love-child of a private club and a coffee shop. 

WeWork currently has 19 locations and leases 1.5 million SF. With annual revenue approaching $150 million my guess they have around 30,000 members @$5k per year per member. And it’s growing. By the time this blog is posted the numbers will be out of date.

While corporate America gradually wraps its head around the radical idea of collaborative space, “co-working” is all grown up.

Fundamentally, co-working is people-oriented, not space-oriented. Because it’s billed by the person instead of the square foot, office accommodation is now an HR issue. Facilities still manages the physical infrastructure and leasing but WeWork proves a modular mix of private and collaborative space can support all kinds of people and functions. With proof that generic build-outs  really work, human-centered issues can take precedence. 

While the shift is subtle, the implications are profound. Productivity (for people) rather than efficiency (for space) is the new office design driver. This makes sense, since payroll is 10x the cost of real estate. See The Efficiency Myth: How to Calculate the Real ROI for Workplace Change.

Real estate initiatives need to start with the people question – what do our people need to be most effective?” rather than the space question – how much square footage do we need?” 

1.    Generic office space really works
2.   Office accommodation is an HR issue
3.   Productivity trumps space efficiency 

Now you know what 30,000 happy office workers know. Generic space is here. It’s time to focus on the people.

AuthorMarcia Hart