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 FRIDAY MARCH 19, 2021

The Upfront

Google announced that it will invest $7B in offices and data centers in the U.S.

Good news about future projects for office furniture makers continues to mount. This week we Google announced that it will invest $7B in offices and data centers in the U.S. this year. The company expects to create 10,000 new jobs and create offices in Minnesota, Texas, and North Carolina.

More:

• The investment comes as the company looks to grow its cloud services unit. Google accounted for less than 10% of global cloud revenue in the last quarter, while Microsoft accounted for 20%, and Amazon led with 33%.

• The company reported an operating loss of $1.2B for its cloud services unit in Q4, lagging behind Amazon’s $3.6B operating profit. Overall, Google's cloud division reported a revenue of $13.1B at a loss of $5.2B in 2020.

• Alphabet CFO Ruth Porat said the company is investing ahead of its revenue in the quarterly earnings call.

• Though Big Tech was early in implementing extended work from home policies for its employees when the pandemic began, they have also invested in new working spaces. Last August, Amazon spent $1.4B on a 905,000 square foot office space. Facebook, Amazon, and Google leased enough office space in New York last year to accommodate 15,000 more.

• Google announced in December that its employees can work from home until September 2021. Last month, Google CEO Sundar Pichai said that from September, many workers are likely to work three days from the office.

It’s not only Google planning to expand. Zillow, an online real-estate marketplace in the US, plans to hire 2000 new employees (40% increase in its workforce) and most of them will be remote or hybrid! Check out the details here.

Interestingly, Zillow's leadership wasn't so keen about remote prior to Covid-19. They had predominantly seen people grow in the workplace and were almost wedded to this way of working. Zillow's chief people officer says that this had caused tension between the leadership & employees.

It's quite laudable that Zillow has made such a drastic shift in 2020 by announcing permanent remote. Maybe something other companies (particularly tech) should learn from?

Again, here's the full narrative - Zillow to expand its remote workforce.

In other news, you will be surprised to know that remote working has proven to be a lifeline for Kenya's beach resorts amid the pandemic. Read this thread to know how.

Herman Miller North American Contract Sales Drop 35% in the Third Quarter

Herman Miller Inc., reported Wednesday consolidated net sales for the third quarter of $590.5 million, down by 11% compared to last year and down 13% organically, which excludes the impact of foreign currency translation. Miller’s Retail and International segments delivered a better performance, which helped offset continued pressures on the North America Contract segment as a result of COVID-19. Orders in the quarter of $566.1 million were down 13% compared to the prior year on a reported basis and down 14% organically.

Herman Miller’s North America Contract business continued to be impacted by the pandemic with sales and orders down 35% and 38% compared to last year, respectively. The company believes, however, that there are positive signs emerging – vaccination efforts are progressing, infection and hospitalization rates have dropped dramatically in recent weeks, customers are actively preparing to return to their offices, CEO sentiment measures are improving, and new project inquiries at architecture and design firms reflect a positive trend over the last six months. In fact, Miller says it had an improved pace of new projects being added to their sales funnel with 28% sequential improvement from the second quarter and their pipeline data indicates that the back half of calendar 2021 is when many customers are anticipating these new projects will translate into orders associated with returning to their offices.

Their International business delivered growth in what remains a challenging demand environment in several key geographies around the world. Net sales were 6% above last year on a reported basis and up 1% on an organic basis. Orders were flat on a reported basis, while down 5% on an organic basis. Regional order growth in mainland Europe was led by the continued strength of the HAY brand, while China and Japan also contributed to quarterly growth. Order demand levels in Mexico and the Middle East were lower than last year.

Momentum continued to accelerate in their Retail businesses, with sales and order growth rates of 63% and 81% over last year respectively. Both sales and orders exceeded the year-over-year growth rates in the prior quarter. Growth was broad-based across their Design Within Reach, HAY, and Herman Miller retail brands. While the company has certainly benefited from the surge in demand for home offices generated by the pandemic, with order growth in the category exceeding 326%, the growth they’re experiencing in this segment extended across all of the retail categories. In fact, excluding the home office category and DWR Contract, Retail orders grew by 59% over last year.

Operating margin for the quarter was 9.3% compared to 7.6% last year. On an adjusted basis, consolidated operating margin of 9.4% was 40 basis points higher than last year. These results were driven by a combination of gross margin expansion and “our continued focus on managing operating expenses.”

Gross margin of 39.1% was 260 basis points higher than last year, reflecting strong channel and product mix. The Retail segment delivered another quarter of strong profitability with an operating margin of 20.1%. Operating expenses at the consolidated level, excluding restructuring expenses, were down $13.9 million from last year due to the combination of structural and temporary cost reductions the company put in place to weather demand pressures from COVID-19.

Miller delivered earnings per share of $0.70 on a reported basis and $0.65 on an adjusted basis for the quarter, a year- over-year increase of 9.4% on a reported basis and a 12.2% decrease on an adjusted basis.

Outlook

“While we are encouraged by positive signs in each of our businesses, the overall global demand environment and potential pace of recovery remains uncertain. From a demand perspective, our contract sales funnel is pointing to increased demand in the back half of calendar 2021. From a cost perspective, like other industries, we are experiencing commodity pressures, especially associated with steel prices. We are also reinstating our employer retirement contributions, which we temporarily suspended for the first three quarters of fiscal 2021. Our ongoing cost reduction initiatives and a planned price increase will help offset these pressures over time.

“We are ready to capitalize on the increased demand expected as the global contract market begins to recover. We believe that recovery, along with our expectation for sustained momentum in our Retail business and our global, multi- channel distribution model, puts us in a strong position to drive growth in our business as we reach the other side of the global pandemic.”

Facility Interiors - Certified by the Women’s Business Enterprise National Council

Facility Interiors announces that they are now nationally certified as a Women’s Business Enterprise by the Women’s Business Council Southwest (WBCS), a regional certifying partner of the Women’s Business Enterprise National Council (WBENC). “Facility Interiors is a Texas-based Haworth dealer partner but it doesn’t stop there; aside from furniture procurement, we specialize in providing state-of-the-art walls, floors, power solutions, and crisp installation.”

WBENC’s national standard of certification implemented by the WBCS is a meticulous process including an in-depth review of the business and site inspection. The certification process is designed to confirm the business is at least 51% owned, operated and controlled by a woman or women.

By including women-owned businesses among their suppliers, corporations and government agencies demonstrate their commitment to fostering diversity and the continued development of their supplier diversity programs.

Are digital nomads the future of work?

Emma May Morley, the founder of workspace design consultancy Trifle, reflects on homeworking, the new office and our work-from-anywhere future

I have spent the last 12 years of my life dedicated to making work life better for my clients by creating inspiring workspaces for businesses. In recent years (pre-pandemic), we noticed a distinct move towards office design becoming a ‘numbers game’, the challenge of fitting more people into less space had become a regular feature of the brief.

Despite our determination to stay true to our mission of focusing on the human requirements of these spaces, more often than not we were tasked with cramming in more people/rooms/requirements than we felt comfortable with.

The Hybrid Work Model: Ready or Not, Here it Comes

American workers with a need for greater flexibility in how they work increasingly edged toward the idea of a hybrid work model, combining remote and in-office work, even before the COVID-19 pandemic gave the workforce the opportunity to experience remote work on a grand scale.

Now that that remote work is on the table after practicing it for a year, companies are realizing that it must be part of their workforce strategy going forward in order to remain competitive in retention and recruitment. Hybrid work is no longer just a buzzword popping up on blogs and news feeds in the COVID-19 era. Most employees today expect that they’ll be offered some kind of flexibility when offices reopen on a large scale, and 92 percent of employees surveyed by Smartway2, a workplace scheduling company, say that they would prefer a hybrid arrangement of some kind.

The World Has Changed, So Should Our Approach To Work

While it is not yet known to what degree COVID policies will remain in place once the pandemic subsides, we do know that flexibility and holistic workplace design centered on promoting health and wellbeing will play large roles in recruiting, retaining and operating businesses of all types in the future.

Returning to the Office: Where to Begin

As society prepares to enter this new era of work, companies must assess a range of space- and policy-related adjustments and determine what changes will or will not align with their firm’s unique mission, vision, brand, culture and values.

Shifting Paradigms & Impact on Real Estate

Certainly, there is much to consider within this new world of work. For many organizations, understanding how physical offices and post-pandemic space needs fit into the picture are becoming mounting priorities. Remote work has ignited an honest and in-depth exploration into the role of physical office spaces, the level of flexibility that employees expect from their employers, and what companies are willing to embrace moving forward. And this is just the beginning of a widespread paradigm shift in work styles and modalities across industries, including architecture and design.

Workplace Design Innovations Helping Smooth Return To Office

As workers trickle back into offices across the land, they are certain to see changes in the settings they departed last March. From flexible adaptation to biophilic designs to niche co-working and more, architecture and design firms have responded to the hurdles of the late- and post-pandemic workplace environment. They are unveiling new systems and concepts to help smooth transitions for both worker and employer.

Workers have grown accustomed to having more control over their work environment since heading home to work. Look for employers to give their staffs greater flexibility, choice and control in the office than they had before. Some experts envision firms stressing personalization as a means of recruiting and retaining top talent. Flexible configurations and adaptable furniture will let spaces pivot to meet evolving needs.

Choices in color depth, brightness and subtlety can exert strong influences on the work setting. Some workplace experts envision color theory being used in 2021 and beyond to raise the mood of employees and ease the experience of returning to the workplace.

The real legacy of the work-from-home era? Robotic furniture

There has long been a trade-off associated with dense urban areas. In exchange for the action and vitality of city living, people often compromise on space. If you’re spending most of your time working and enjoying the city, the shoebox apartment isn’t a major problem. But now, when most people are working in that same shoebox and practically forbidden from enjoying the city outside, the compromise on square footage feels more like a punishment.

“What we’re seeing is that people are starting to demand much more from their space,” says Hasier Larrea, founder and CEO of Ori. The company makes motorized furniture systems that dramatically transform rooms and spaces by hiding or revealing different pieces of furniture for different needs. One product is a bed that slides up a track to hide in a compartment on the ceiling, revealing a couch below. Another product is a two-part shelf that splits in half to create a faux walk-in closet.

Here’s Why Gen Z Workers May Be Inclined To Ditch WFH

Gen Z workers are itching to get back to the office, according to a new survey from CommercialCafe.

A year after global lockdowns drove companies to adopt widespread WFH policies almost half of employed Americans are still working at home, the firm’s most recent survey shows. And while most of those surveyed reported that their work-life balance was equal to or better than it was before, Gen Z respondents were generally less-satisfied compared to older generations.

Spotify to make its offices feel more like home as it introduces "work from anywhere" policy

Swedish music streaming brand Spotify is to improve the cosiness and acoustics of its offices to appeal to employees used to working from home during the coronavirus pandemic.

It will also introduce a "work from anywhere" policy from this summer. Announced last month, this will allow employees to work from home, from the office or from a combination of the two.

"We've got a new policy, which is basically [that you can] work from anywhere, which is inclusive to everyone being able to choose wherever they work," said Sonya Simmonds, head of workplace design and build at Spotify.

Simmonds discussed the company's approach to reopening its offices during a live Dezeen talk about the impact of the coronavirus pandemic on workplace design.

"I think that we see two camps really," she said, explaining how Spotify employees feel. "People who want to work from home and people who want to go into the office."

"But we still see a massive need for the office."

Why work drama may increase as we return to the office

After months of being isolated in remote working arrangements, a return to the office could be a welcome change. But the honeymoon might be over quickly as employees adjust to the traditional nine-to-five workweek and loss of flexibility. In fact, managers should expect arguments, conflict, and irrational behavior, says Matt Casey, cofounder of the management software company DoThings and author of The Management Delusion: What if we’re doing it all wrong?

“When we were working remotely, most of us may say we worked until 5 p.m.—but probably not,” he says. “Getting back into a morning routine and then having to stay all day will be a big adjustment after working in a flexible way. If you have to go back and do a full day, you’re going to be tired by end of it.”

Fatigue is one factor, but so is dealing with a variety of personalities. “People have spent a year not having to talk to coworkers all day,” adds Casey. “All of sudden, they’ll be forced back into situations dealing with others with whom they may have previously clashed.”

The Role Of The Future Office: Innovation, Mentorship and Culture

If COVID-19 and its aftermath have taught us anything, it’s that present employees don’t necessarily equal productive employees. Gone are the days when staff are required to be face-to-face in corporate headquarters from 9 to 5, Monday through Friday. In fact, many organizations have discovered that employee productivity actually increased in a remote working environment.

So, how do we enter the modern age of work with a traditional workplace setting? The role of the future office must set its sights on the value and concept of teamwork.

In a recent study, McKinsey and Company found that businesses must design workspaces to support interactions that are not possible to achieve remotely. For instance, if team collaboration is essentially lost in a remote environment, how can you foster this type of collaboration with in-person spaces? What modifications to a traditional cubicle and office setup will be required to create open areas for engagement and interaction?

Newly Remote Workers Face Reckoning As Back-To-Office Push Accelerates

In a year of so much discomfort, many workers have settled into the notion that remote work, perhaps an afterthought in years past, may actually work for them. Owners of office space are understandably nervous that the future for many people may include fewer commutes and, for companies, a corresponding need for less commercial office space.

But as increasingly positive vaccine news, especially in the United States, accelerates plans to return to offices, some workplace experts caution that expectations of more permanent remote work arrangements will come head-to-head with the notion, however unsupported, that workers are more productive within the office. David Lewis, CEO of OperationsInc, an HR consulting firm in Connecticut, told NPR a “day of reckoning” is coming for newly remote workers who left town or even moved to a different state during the pandemic.

Remote work, in other words, isn’t a foregone conclusion. The rest of 2020 will mark the beginning of a new normal for office workers and staffing policies, and analysts say many companies are just beginning to grapple with how they may institutionalize new remote work arrangements. As companies reintroduce staff to workplaces, true decisions about the future of more flexible, remote work will be made and codified, resulting in shifts in corporate real estate portfolios.

How Enterprise Clients are Changing the Definition of Flex Office

When most people think of a flexible workspace, they think of co-working. The high-profile rise and fall of WeWork has imprinted the idea of techies sitting shoulder to shoulder at bench style desks surrounded by beer kegs and foosball tables. Co-working was only ever a small subsection of the larger category of flexible office but it was the one that stuck in people’s minds.

Now the pandemic has closed offices and co-working locations were some of the hardest hit. Small organizations and independent contractors have learned that much of their work can be done from home, so why waste money on desk space? But at the same time it has taught larger companies, which account for the vast majority of the office market, the value of the agility that a flexible office can provide. With the economic future uncertain and the role of the office in the new paradigm of work unclear, demand for flexible office solutions is all but inevitable.

As larger enterprises examine how flex can fit into their real estate strategy they are doing so through a very different lens than the average co-working tenant. Most large organizations define flexibility when it comes to offices as short lease terms and the ability to easily expand, contract or change their office footprint. In CBRE’s recent Global Occupier Survey, companies were found to be deferring leasing decisions and to reduce their space usage in accordance with lower economic growth expectations. When asked what role flexible office space will play in their long-term real estate strategy, 50 percent of respondents said it will play a role with 23 percent expressing it will play a significant role. The growing interest in flexible space by large companies has caused a broadening of the very idea of flexibility when it comes to office.

15 Reasons Why Office Demand Will Remain Robust Post Covid

Before Covid and since the early 1990s, many companies already had flexible work schedules that allowed for office workers to telecommute, hoteling programs for desks and offices and work at home Fridays. But since the pandemic, flex work has become the bane of the office asset class, with many believing it will prove to be disastrous for office landlords and lead to a downward spiral in demand.

This is not true and will not happen. Ninety-five plus percent of employees want to return to the office.

Bruce Mau's SXSW documentary offers a career retrospective

Over a career spanning decades, Bruce Mau has developed a radical vision of what design can do. A documentary premiering at SXSW today, Mau, shows us how his vision manifests: with design that breaks boundaries on a massive scale.

The documentary, filmed over about three years and directed by Benji and Jono Bergmann, offers a retrospective of Mau’s life and career so far. It uses some of the designer’s biggest projects to showcase his wide-reaching, fundamentally optimistic view of design as a global change agent.

But his beginning was rather small by comparison. Mau, 61, grew up in the remote mining town of Sudbury, Canada. Surrounded by forests, design was remote, until he went to Ontario College of Art & Design for post-secondary school (his studio would later design its logo). After a brief time in Pentagram’s London office, Mau left to pursue projects of his own: S, M, L ,XL, an architectural tome developed with renowned architect Rem Koolhaas; Coca Cola’s “Live positively” sustainability platform; a commission to redesign the holy city of Mecca; a commission to rebrand Guatemala; his 20,000 square foot exhibition Massive Change about the future of design. Last summer, Mau released his latest book, MC24, which offers 24 principles to inspire massive change.

Studio by Dekko introduces Ashley Freestand, a sleek new mounting style that transforms stationary power into a portable charging solution

Power and data supply leader Studio by Dekko announces the launch of Ashley Freestand, a dynamic mounting solution that allows the power unit to be portable.

An addition to Studio by Dekko’s Ashley 210 Series™, Ashley Freestand is a personal charging device that sits on a surface and provides flexibility for the user to relocate where power is needed. This sleek power unit is available with a standard cord or a braided cord for added style, two AC outlets and two USB-A ports providing 2.4 amps each.

“We respond to the ever-evolving needs of our customers with user-friendly products that are nimble, flexible and aesthetically pleasing. By adding the freestand mount, users can move the product without restriction. This new mounting is especially great for flexible power that easily can be integrated into office designs which incorporate screens or partitions,” Dekko Director of Marketing Meghan Meier said.

The Ashley 210 Series™ is available in a variety of mounting options, including bezel, undermount, freestand and clamp-on. The product can complement, blend in or stand out with a variety of neutral and bold colors.

Big Talk Seating Is Big Eye Candy

Adam Goodrum’s Big Talk seating first came to light during 3 Days of Design in Copenhagen in 2020 as part of the Febrik and Kvadrat exhibition, Knit!, before it landed in Blå Station’s hands and became Big Talk. Upon first sight, Big Talk brought to mind the happiest thoughts of Eric Carle’s The Very Hungry Caterpillar. The correlation between the new addition to Blå Station’s family and the children’s book makes perfect sense, as both rely on geometry and a rainbow of colors that are sure to make you smile. The front of Big Talk’s backrest and the seat are the same color, whereas the rear of the backrest combines textile swatches using a color book format. This armchair looks just as good on its own as it does when placed back and forth to create a snakelike shape. Both the seat and backrest are shaped of molded foam, then covered in shades of velvet made by Febrik.

Sustainability, Materiality and Environmentalism: A Discussion About What Could Be…

Coalesse recently hosted a panel of visionaries to address the question: “What Could Be?” on the topic of sustainability, materiality and environmentalism.

Ecologically Minded Landscape Design: Pier 26 in Hudson River Park , New York City, NY

The mission of Hudson River Park Trust in the redevelopment of New York City’s Pier 26 in Hudson River Park was to focus on the pre-settlement ecology of the Hudson River estuary. The redesigned park, which opened in September 2020, is now connecting people to the diverse ecology of the riverina multitude of ways.

OLIN’s Philadelphia studio made it their mission to make those connections to the river deliberate and apparent. “The Trust looked at Hudson River Park’s Pier 26 as a platform for education; our design literally points to ecological features throughout the park, but the most important feature is always the river,” says OLIN project manager Demetrios Staurinos.

The 2.6-acre park with its 12-foot grade change takes visitors through five unique ecological zones from the bulkhead to the river’s edge, a “curated journey through the landscape,” says OLIN CEO and partner in charge Lucinda Sanders.

Startup That Turns Restaurants, Hotels Into Flexible Workspaces Raises $2.5M

A D.C.-based startup that turns underutilized restaurant and hotel space into flexible workspaces has raised its seed funding round. 

WorkChew announced Wednesday it raised $2.5M in a funding round to help it expand across the country. 

The seed round was led by Harlem Capital and also included participation from Wilshire Lane Partners, Invictus Advisory Group, Techstars Ventures and RW Capital Investments Inc. It also had individual investors including Kabbage co-founder Kathryn Petralia and Etsy co-founder Chris Maguire. 

The company had raised $225K from accelerators in 2019 and 2020 prior to the seed funding round, WorkChew founder and CEO Maisha Burt told Bisnow.

Founded in late 2018, WorkChew has locations in D.C., Philadelphia and Chicago. It has plans to expand this year to New York, Atlanta, Miami, San Francisco, Seattle, Los Angeles and Denver.

The company partners with restaurants and hotels to give them an extra source of revenue by turning underused spaces into on-demand workspaces for remote workers. The days and hours when the workspaces are open vary by location. For restaurants, it is typically during the workday when they are less busy, and they offer deals such as 10% off or bottomless coffee. 

WorkChew co-founder and Chief Operating Officer Allyson McDougal told Bisnow that the company had strong activity before 2020, but she said the coronavirus pandemic made restaurants and hotels even more interested in the concept as they searched for new ways to generate revenue. 

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