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THE TENANTS & LANDLORDS GUIDE TO HAPPINESS

BEST PRACTICE AND GREEN LEASING

CHAPTER 6 DESIGN AND FITOUT:

NOT JUST ABOUT LOOKS

PRINCIPAL AUTHOR LYNNE BLUNDELL

6CHAPTER SIX: Design and fitout… it’s not just about looks By Lynne Blundell

Cover image: Marcus Clinton

Aurecon Melbourne office by Geyer. Image by Shannon McGrath

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It’s crunch time. You’ve chosen your new office space and now you just want to get in there with minimum fuss. But first there’s the design and fitout to do. So just get it done as quickly as possible to save on time and money. Right?

Ahh… wrong! Never underestimate the importance of your office design and fitout. Getting it right and aligning it with your company profile is integral to the future success of your business.

The evidence is mounting on just how important good office design and fitout is to a company’s performance.

There are myriad benefits of installing more energy efficient fittings, letting in more natural light, recycling materials and furniture, and creating a more open, flexible space.

First there are the environmental benefits of reducing carbon emissions and sending less waste to landfill by re-using fittings. Then there is the cost benefit of reducing energy bills and recycling existing materials.

But most importantly, and too often the last factor considered, is the human factor – happier, healthier and more productive employees who feel good about working for your company.

We have already seen CitySwitch’s ground-breaking “Why Choose High-Performing Buildings” fact sheet, bringing together over two dozen Australian and international studies on the topic of productivity, retention and absenteeism, but more research and data is being released every day.

According to a new survey released by Amicus Interiors, which specialises in office fitouts and refurbishments, office fitouts have a huge impact on staff morale and retention.

When asked how important they thought office fitout was for staff morale and retention, 88 per cent of business managers across a range of industries in Sydney, Melbourne and Brisbane said office fitouts affected how their staff perform.

SOCIAL SPACES MAkE US HAPPY

The survey aimed to identify trends in office size, design and configuration. A key finding was that while areas of play, entertainment and relaxation are important to employees (with almost 90 per cent of those who had them as part of their offices using the areas), only 50 per cent of respondents from Sydney and Brisbane had included such areas in their fitouts.

Meryl Pearse, account manager at Amicus Interiors, says one of the likely reasons for the low uptake of social spaces is cost. Also, the people who feel leisure spaces are important are not usually the ones who make the budget decisions.

“I’m guessing that those in charge of the budget are saying ‘we’ve only got this much money and the rent is this amount, so why would we spend a lot of money renting space that essentially is only used as social space?’

“Part of our job is looking at how to change that mindset.”

Interaction is highly valued by employees and even small changes in office layout can impact on this.

DON'T MOvE THE wATER COOLER

“A study in the US showed that the fitout trend where the water cooler has been moved out of the office space and into the kitchen sink has actually reduced the amount of interaction between people,” Pearse says.

With the shift towards more flexible workspaces, or activity based workplaces, where people are not restricted to working at a single desk or location, there is a lot more opportunity for collaboration and engagement between people, even when the space is not specifically classified as social, Pearse says.

“Even if people are identifying casual meeting areas as non-social spaces, I would classify it as a social space.”

Image by Marcus Clinton

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THE YEARNING fOR SOCIAL SPACES

But when a workplace is changing, people often don’t recognise how much they seek out social spaces, even in a traditionally designed workplace.

In a workshop conducted with an organisation about to move from a traditional to more flexible workplace, Amicus asked employees what sort of spaces they wanted in the new workplace.

“All of them gravitated towards social spaces – gym, the outdoors

– when asked what they wanted in the future workplace. And talking about it took away the fear of moving to a different, less traditional type of workplace,” Pearse says.

The Amicus survey revealed that open-plan configurations, or a combination of office and open-plan configurations, are the most sought-after office designs.

TIME TO GET fLEXIBLE

Amanda Steele, head of sustainability, Pacific with CBRE, says the trend for more flexible workplace design is now well established, particularly at the top end of the market.

“We’re definitely seeing more requests for more flexibility in tenant fitouts. Organisations are recognising that they’re growing and changing in ways they hadn’t anticipated. That flexibility of space is not just how it is designed and the open-plan aspect but also the technological implications of that to allow people to either work in the office, as a contractor, at home, wherever they choose,” Steele says.

Image by Marcus Clinton

This trend is coming through in the diversity of materials tenants want, including a big push for lounges, bench seats and pods. This demand is coming not just from “designer and arty types” but also from financial institutions and investment banks.

“I’m delighted to see this diversity of approach and design. It absolutely encourages higher engagement of employees,” Steele says.

CBRE has also moved to an activity based workplace design, which Steele says is challenging but overwhelmingly positive in allowing more freedom for employees, and ultimately more engagement and productivity.

THERE’S DOwNSIDES TOO

However, she stresses that it is important to look at the downside to activity based working, not just the positives.

“It is absolutely critical to get change management in place before introducing activity based working. The important thing is to talk to people and not just thrust it upon them and hope it works.

“You need to continually have that conversation and ask ‘Is this working?’ and ‘How can we do it better?’.”

Amanda Steele, CBRE

YOU NEED A GRADE TECHNOLOGY

For ABW to work the technology must be A grade, Steele says. People need to be able to find their colleagues quickly and easily. And there needs to be recognition that some people like to work in the same location every day and certain spots will be seen as more desirable and there is competition for them.

"There’s been feedback from some people that they never get to sit in the desk that they want. So we’re looking at having a ‘reserve till 10am’ to accommodate this.”

“CBRE has committed to doing activity based working globally now because it’s so successful. But we’re tinkering around the edges. One thing we’re looking at is introducing a parking bay approach for individuals who come in late after maybe going to sport in the morning or dropping children at school.

“We recognise there’s been feedback from some people that they never get to sit in the desk that they want. So we’re looking at having a

‘reserve till 10am’ to accommodate this.”

Another very strong push is putting in creative spaces to drive innovation and creativity. This is apparent in every industry, Steele says.

“I love that companies are looking at what colours will inspire their people and realising that air quality is important to productivity. And that real push for materials that are both sustainable and that feel good to use – that reinforce positive behaviour.

THE CHAIR HAS TO wORk TOO

“It’s no good having a chair made from recycled plastic if it breaks your back when you use it. That’s the important sustainable piece that people forget. It’s not about having an environmental hair shirt

– you’re looking for a sustainable outcome where people feel socially connected, engaged and involved as well as part of a green, environmentally friendly space.”

Using low-VOC materials is important but the textural quality of fittings is also vital. Soft fittings must be “tactile and wearable and durable, and reflect the culture of the organisation or tenant”.

GIMME GREEN… ANYTHING

Tenants want green space, Steele says, but they may not insist on Green Star or NABERS.

“Tenants often talk about quality when they specify what they want but when you delve into that, it equates to green space. We get requests related to air flow, whether there is PVC on site, how much natural daylight there is and what the energy costs are. These are all rated in Green Star.”

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In Sydney requests for end-of-trip facilities for people who want to cycle to work have increased markedly. Interestingly, tenants don’t necessarily equate this with sustainability despite the obvious connection both environmentally through emission reduction and from the social/community perspective because of the health benefits and increased transport choice.

“It’s fascinating to me because it’s classic sustainability,” Steele says.

“There’s always the opportunity for tenants to be better informed.”

GREEN STAR REwARDS COLLABORATION

The Green Building Council of Australia is putting more emphasis on social sustainability and the tenant–landlord relationship in its latest Green Star Interiors tool, launched in 2012 and still in pilot phase.

The existing Green Star Office Interiors v1.1 tool is still in operation until the new Interiors tool is officially launched later this year as a universal tool across property sectors.

There will also be more alignment between the Interiors tool and the Design and As Built rating tools, which will be relaunched in October 2014.

In addition to environmental assessment categories, such as water and energy use, land use and ecology, emissions and use of sustainable materials, the Interiors

rating tool gives points for factors that affect employees such as indoor environment quality. It also rewards better collaboration between landlords and tenants.

Jorge Chapa, executive director Green Star Technical Development and Operations, says the emphasis of the new tool is to reward best practice in fitout and design rather than the previous focus on discouraging bad fitout practices.

“In developing the Interiors tool there has been a big focus on sustainability for the individual,” Chapa says.

“Rather than saying it’s about minimising the impact on the environment it is about maximising comfort or working conditions. It’s about creating a good environment.

“We also wanted to give people the tools to manage their fitout better. There are a number of credits that focus on managing metering systems.

“Don’t just have your designer put meters everywhere in your fitout but define the purpose and strategy to monitor the outputs.”

The “Commitment to Performance” credit, which looks at the management of the lifecycle of the fitout, also focuses on outcomes. Leasing agreements, quality of the building and management of the end of life of the fitout are all assessed from the tenant perspective.

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“Rather than saying [a best practice fitout] is about minimising the impact on the environment, it is about maximising comfort or working conditions. It’s about

creating a good environment.”

— Jorge Chapa

Image by Marcus Clinton

“At the moment building owners might say it’s great to do all these things around energy and waste but if the tenant doesn’t want to do it they don’t see the value. So it’s not happening,” Chapa says.

“We want to encourage the fitout element to create conditions where the tenants is rewarded and recognised for working with the building owner to achieve those joint goals.”

A LANDLORD CATEGORY SOUNDS GOOD

In the new version of the Design and As Built tool there will be a landlord category of this credit, which rewards landlords for working collaboratively with tenants.

The Better Buildings Partnership’s model and best practice leasing work, with centrepiece Model Lease Clauses, is a pivotal tool in creating this collaboration, according to the Better Buildings Partnership. A lease that enables information sharing, conversations on building upgrades, and collaboration on energy and resource management can be the first step to happier, healthier occupants and lower operating costs. The Model Lease Clauses were purpose built to work with existing tools in the industry like Green Star, NABERS and varying building grade expectations.

“We’re trying to create the idea of partnerships and collaboration at the building scale which seems to be a big problem. At our end we’re offering a double incentive for each side to work with the other.”

Some points, such as using more sustainable concrete, are expensive to achieve. Collaboration with the tenant, on the other hand, is not an expensive way of getting points but results in huge rewards

Image by Marcus Clinton

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for long-term operation of the building. Chapa expects the new weighting to encourage a big push in collaboration.

The indoor environment quality points are also being revamped so that there is more emphasis on landlords and tenants working together to create a better environment.

Landlords will get points under this tool and the Performance tool for having tenants with a Green Star Interiors rating. On the flip side tenants will get points for choosing a Green Star rated building.

“It’s a way of recognising there is a dual effort involved in achieving a single outcome. There are two parties at the table and both should be recognised and both should be encouraged to talk to each other,” Chapa says.

THE HOLY GRAIL: MEASURING PRODUCTIvITY

A key factor in changing attitudes to workplace design is providing evidence that good design and fitout leads to better business results through increased staff productivity.

While difficult to quantify, significant research is being done in this area.

Professor Alan Hedge of Cornell University has been researching the link between office fitout and design trends and productivity for decades. Speaking at a series of

“Design for Productivity” workshops hosted around the country by design company Schiavello late last year, Hedge discussed the latest research findings.

In the US, Hedge says, companies realise that achieving high business productivity is all about fostering innovation.

Creating innovative, productive and healthy workplaces is vital for recruitment and talent, particularly important as competition for talented people is on the rise.

And as younger generations move into the workforce this will become an even bigger factor.

“The generation of people going into these companies is not thinking they will stay for life. They want work that challenges, that’s exciting, where they feel they’ll be rewarded,” Hedge says.

AvOID THE SITTING DISEASE

Then there’s the health aspect of workplace.

Recent studies have shown the benefits of constantly moving, or more accurately, the major health issues arising from not moving enough, a syndrome referred to as

“sitting disease”.

In recognition of this syndrome, at their 2013 annual meeting the American Medical Association adopted an official policy that recognises the potential risk of prolonged sitting. The policy encourages employers and employees to take up alternatives to sitting, such as sit-stand workstations.

This follows numerous studies on the effects of prolonged sitting and inactivity.

For example, a 2010 American Cancer Society study of 120,000 adults suggests that the more people sit, the shorter their average life span. Even more alarming, the findings were independent of how much exercise people did outside of work.

So it doesn’t help if you jog eight kilometres in the morning before work if you then sit for eight hours at a desk without moving much.

Professor Hedge’s own research reveals that people who varied posture were more productive than those who stayed in one position.

Arup headquarters, Brisbane, combine an interactive space with environmental focus

A 2010 American Cancer Society study of 120,000 adults suggests that the more people sit, the shorter their average life span.

Rio Tinto Brisbane office by Geyer

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In addition to sit-stand workstations he says companies need to create a culture that encourages people to move. This could include strategies such as:

• encouraging staff to stand for short meetings

• encouraging staff to periodically move around to do other types of work

• moving filing systems / printers to end of office

• moving shared equipment

• moving water fountains far from desks

Michael Tyerman, NSW manager for design and ergonomics firm Humanscale, says there is growing understanding of the importance of moving regularly and workplaces are reflecting this.

“What we’ve seen for the last 20, 30, 40 years is that people have been sitting down too much. We’ve always known this hasn’t been good for us but now it has been proven,” says Tyerman.

A key advantage of more collaborative, flexible workplaces is that people not only physically move around more, they also tend to be more inspired when they work alongside different types of people and collaborate more, says Tyerman.

Humanscale focuses on technology that encourages people to work more ergonomically and to move more often. For example, chairs that automatically adjust lumbar and back support according to the occupier’s weight and body resistance.

“A workplace is selling you an idea about an organisation – that you as an employee or as a client of that organisation will be buying or selecting.”

“What’s really exciting now is that people are understanding if you have an ergonomic program or your staff understand about posture or the importance of standing up, everyone is happier, everyone is more comfortable, people take fewer sick days, their time in the office is more productive and the work they are working on is more accurate, and (I like to put this last because I like to think health is more important than profit) at the end of the day the company employing them makes more money,” Tyerman says.

“This is really coming into mainstream now.”

A LIGHTING DIvIDEND

On the environmental side a trend towards dual source lighting and task lighting in workplace fitout and design is having a huge impact on air conditioning and electricity use, Tyerman says. There is less heat generated from over-lighting, people have control over the amount of lighting they need and the space is only lit when it is being used.

BLURRING THE BOUNDARIES

Laurie Aznavoorian, global workplace sector leader with interior design firm Geyer, says there is now a blurring of boundaries between different types of workplaces with different industries borrowing from each other.

“Just like people’s lives have become blurred between home and work, workplaces are learning places as much as retail places. A workplace is selling you an idea about an organisation – that you as an employee or as a client of that organisation will be buying or selecting,” Aznavoorian says.

Some of the principles of retail design – using space to influence behaviour and to attract people on certain paths – will be used in offices. In universities, environments are reflecting the types of workplaces future employees will be attracted to – ones that allow interaction and that incorporate technology into the everyday workspace.

“If you have an ergonomic program or your staff understand about posture, or the importance of standing up, everyone is

happier, everyone is more comfortable, people take fewer sick days and their time in the office is more productive.”

— Michael Tyerman

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Aurecon Melbourne office by Geyer. Image by Shannon McGrath

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A DRAMATIC CHANGE IN ATTITUDES

Working with clients such as Westpac for its new headquarters at Barangaroo, and American Express, Aurecon, BHP Billiton and Rio Tinto, Geyer has seen dramatic change in attitudes to workplace design and fitout over the past decade, Aznavoorian says.

“Sustainability in the workplace goes way beyond environmental concerns to ensuring an organisation thrives and survives,” Aznavoorian says.

A great example of this, she says, is Rio Tinto’s offices in Brisbane where the company has dedicated an entire floor to health and wellbeing, including healthy food zen type areas where people can sit and stare out the window or take a nap.

There is no doubt activity based workplaces have become a big trend but Aznavoorian would like to see them presented differently so they sound less like something that is being done to employees.

“ABW can feel like something that is being rammed down your throat but if it is intelligently presented to people they are less likely to resist or fear the change,” Aznavoorian says.

It is about tapping into people’s need to be inspired. Collaboration is different for different organisations and sometimes people need to

work on their own – introverts need to be catered to and there are also important “introverted” processes in organisations.

“The concept of ABW is appropriate for most workplaces but you have to dial certain parts up and down.

“ABw can feel like something that is being rammed down your throat but if it is intelligently presented to people they are less likely to resist or fear the change.”

“It’s important not to leave out the people aspect – it’s not just about saving money on furniture,” Aznavoorian says.

“We can no longer consider space on its own. The physical environment is part of a workplace ecology and that is comprised of the spaces that we work in, technology to support those spaces and the people that occupy the spaces. In particular their attitudes, ideas and emotions.

“So when we make a change in a workplace it has to be considered in that context. If you make a change to any one of those three parts it affects the other parts.”

CASE STUDY: NEw fAIRfAX wORkPLACE EMBRACES OLD AND NEw

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When Fairfax Media’s lease renewal came up the company did some serious assessment of its office space to see if it matched the business’s current and future needs. The answer was a definite no. It was time for a completely new design and fitout, combining state-of-the-art technology with some of the existing fittings – revamped of course.

Fairfax workplace innovation manager Gina Creegan says when it came to deciding what type of design and fitout was suitable, it was a matter of letting the business lead.

“The media business has shifted significantly over the last couple of years and we needed to change our work environment to mirror the new requirements of the business.

“Our project wasn’t just about the physical space,” Creegan says. “It was about technology and behaviours as well. It was about creating an environment that was much more flexible and taking away the infrastructure barriers that existed, whether these related to the physical space or the technology staff were working with.”

The old style of working where occupation determined where people were physically located in the building was also no longer relevant. Working at a single desk all day is also a thing of the past.

Teams now include people from a range of occupations, including journalists, events management and marketing, all working together.

A smaller workforce meant less office space was needed. In Sydney and Melbourne, office space was cut by 40 per cent and the excess space sub-let, creating big cost savings.

The company made the decision to change to an activity based workplace where employees have considerable physical mobility, supported by wireless technology and software systems such as the Google Apps Suite, which enable this style of mobile working. Consolidating space also enabled better staff interaction as they had previously been spread across several floors.

Fairfax then hired sustainable fitout specialist Office Spectrum to design and create a new fitout, re-using as much of the existing furniture as possible.

“The work we did with Office Spectrum allowed us to be quite clever about what we spent,” Creegan says. “Both our buildings were fairly new and there was furniture that was only four or five years old so we could do a lot with it. That allowed us to spend more on technology.”

Joyce Seeho, director of Office Spectrum, says the key driver for refurbishment is still cost rather than sustainability. While many companies want to be greener there is still a perception that it will cost more and that re-using furniture will look unprofessional.

“I think we proved at Fairfax that this isn’t the case, that re-using and recycling furniture doesn’t need to look ugly. It looked good and it saved money.”

Another key issue for companies to consider is the cost of taking fittings to landfill – nearly $300 a tonne.

“The other day I gave someone a quote to dump 170 workstations in landfill – $15,000, which includes the labour to pull the fittings out, transport and landfill costs,” Seeho says.

New tenants don’t see this cost because they just see the empty space restored to its base building

requirements when they move in. It is the old tenant who has had to pay for this. There is enormous potential, Seeho says, for landlords and tenants to work together to encourage recycling of fittings and furniture through their leasing arrangements.

In the case of Fairfax, the company was renegotiating its lease with Mirvac at the time of the refit. While Mirvac did not offer specific incentives that specifically focused on sustainability as part of the new lease, Creegan says Fairfax is working jointly with the landlord on projects to improve sustainability, including LED lighting in the base building and tenancy.

Following the refit, Fairfax did a staff survey before and after the change to measure staff satisfaction with the new workplace.

“What we can clearly see is that levels of satisfaction around comfort and set-out of the workplace, satisfaction of ease of use of personal and shared IT has significantly increased,” Creegan says. “People feel our workplace now reflects our culture and values more than it did in the past.

“Re-using and recycling furniture doesn’t need to look ugly.”

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“We’re happy with the results to the extent that as our leases expire we will consider activity based working for our other sites.”

The key to success with ABW is to ensure that managers are trained to work in the new environment where they have to manage by outcomes rather than by line of site.

“We’re already making changes from

what we’ve learnt. We have invested a lot in manager training and I’d definitely do that again. There’s a lot of change for managers and they need to be supported properly,” Creegan says.

“The technology needs a lot of follow-up – you can’t just drop it and run. We now have people whose job description includes being continually responsible for worrying about how technology and people work together.”

Click to see an overview of Fairfax’s transition to an activity-based workplace as told from the perspective of workplace innovation manager Gina Creegan, project director Brent Harman and consultant Joyce Seeho from Office Spectrum.

THE TENANTS & LANDLORDS GUIDE TO HAPPINESS

ISSUE 06. MARCH 2014

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