With people working from home and social distancing becoming the new normal, office and co-working spaces are drastically adapting and changing to meet the new reality. We assembled a panel of local workspace experts to offer their insights into the expected changes, including Jackie Bezek, Vice President at JLL; Samara Wheaton, Associate Interior Designer at IKM Architecture; and Rabih Helou, COO at the Beauty Shoppe. Gain insight on how spaces will be reconfigured and redesigned to ensure health and safety for everyone in a post COVID-19 world.
Transcript:
Good afternoon, everyone. This is Audrey Russo. I'm president and CEO, the Pittsburgh Technology Council and I'm joined by john cursings, Vice President of all things, media and marketing and we're going to have some fun today like we do each and every day. Thanks for joining business as usual want to give a shout out to our sponsors? That includes Huntington bank, they've been with us right from the onset. This week, we are approaching our hundredth conversation that we've had we've met some amazing people and we reunited with even more so it's been fantastic And today, we also want to give shout out to Deloitte as well as sheetz both have been sponsors and just by the way, we have some speakers that are coming up this week, which is Wednesday. So hard for me to remember.
what day it is. But Wednesday, which is tomorrow, we actually have the CEOs of Inception and of the Jewish Association on Aging. And why are they on our show, because we have been talking a lot about the COVID-19, the effect of long term care, and what that's really actually done and impacted each and every one of us whether we're directly affiliated with someone in skilled nursing, but what it's done to our entire ecosystem. So we're really excited to have them and stay tuned for that because all of our voices matter, there. And then Thursday, we have Mayor Bill peduto. He is joining us on our hundredth show. So we're going to have some fun with him. And he's going to give us some updates on all that he's up to. And then we have on Friday, the chief operating officer of sheetz, and they're going to talk about what they're up to including their innovation center that they have here in the region. So just a couple of housekeeping notes. One is we've muted everyone that's just totally out of being considerate to her
Guess. And secondly, we have a chat. But all that we ask is just don't sell your wares to the chat. We're here to have a conversation with our guests. And that's the intention that today, it's all about them and what we can learn from them as well. So on that note, we have three people who are here with us today, and I'm going to give each of them a spotlight. One is the first is and in no particular order. It's Jackie Bezek. She's Vice President at JLL. We're going to talk about commercial real estate. The second is Samara Wheaton. she's the associate interior designer and IKM architecture. So we're going to talk about design. And then we have Rabih Helou. He is the chief operating officer of the beauty shoppe and he's going to talk about everything that's happening in co-working and and the land that he's actually been living in and advocating for quite a while. So thank you all for being here and thank you for our guests as well. So I am going to immediately jump to Jackie..
And Jackie's with JLL and we've known them for a while, but what I'd really love is for you to just give us a quick background and details just about JLL like, you know, are they local? Are they national talk about, you know what's happening in commercial real estate. So let's just lay it up that way and welcome Jackie, thanks for joining. Thank you and thank you Pittsburgh Technology Council for for having me. So, I am Jackie Bezek. I've been at JLL for about
coming up on five years. JLL is a global commercial real estate firm and we pretty much run the gamut in terms of services from tenant representation, and landlord representation on the brokerage side. We also have project management.
And we are an international fortune 500 company headquartered out of Chicago, here in Pittsburgh locally, we have about 300
50 plus employees in our offices downtown and Market Square. I, personally am a broker on the landlord rep side. So I represent the owners of buildings, I help them market their buildings and help them find tenants to lease up the space. So very exciting time. I mean, right before COVID we were at the peak of sort of happiness and terms of prosperity.
And then we actually it sort of changed. So talk about how the impact of you know the, what's happened with COVID-19. And the impact on commercial, whether that's local as well as global. Yeah, so
it's kind of a loaded question. First of all, I want to start out by saying, when you when we look at the market, the commercial real estate market where we kind of have to put it into buckets, right. So commercial real estate is a very cyclical
Industry meaning that, you know, it's it's a landlord's market or low vacancy rates every, you know, five to 10 years, but it's always going to come back around and it kind of always switches from low to high to low to high, you know, supply and demand that really dictate dictates that Pittsburgh has been fortunate enough to have very healthy vacancy rates. You know, back in 2014, I think
in the end of the fourth quarter vacancy rates were
were extraordinarily low. And what we saw is over the years, there's companies that have been what we like to call right sizing, which is a nice way of saying downsizing, not because they're doing poorly, but because a lot of companies are rebranding themselves and changing their layout and orientation. So we were seeing
Companies that, for example, had 300,000 square feet, it's time for the lease to expire, they want to rebrand themselves and give them themselves the new workplace environment and they're getting a more dense occupancy. And so they're downsizing because of that, so that in addition to more products coming on the market, we saw vacancy rates somewhat rise from what was formerly very low and it wasn't an unhealthy rising, it wasn't because, you know, companies weren't doing well.
And then so that's one thing. So downtown in particular, you know, started having higher vacancy rates because of that. And then people now are looking at current vacancy rates and what's going on with COVID and kind of attributing that to our low vacancy rates when that's really not the case entirely. I think it's too early to tell the effects of what COVID is going to be having on you know, the market the office market.
In particular,
you know, right now we're seeing a lot of sublease space come on the market. Some of that, again, was pre COVID. Some of that's due to COVID. And everyone's what we're really seeing is everyone just kind of in a waiting game companies wanting to just wait and see what the Joneses are doing, afraid to kind of make the wrong decision. So we're seeing a lot of we're seeing some companies like letting their lease expire. So they could just wait it out before they make any bigger long term decisions. We're also seeing a lot of companies
renew short term for one year, which typically, landlords historically don't like to do, but understanding the environment have been flexible to allow them to do that so they can see where their business is and what they need to be doing one year from now. So it's, as far as the market goes, I still obviously, my job is in office leasing. So I am bullish on
The office environment in general.
Of course, you know, it was actually just announced in the news, that Facebook sign another 730,000 square feet in Manhattan. That is after they had already taken down last year, 1.5 million square feet. So, you know, we are seeing companies still making big office moves, which is a good sign and even tech companies that understand and have the ability to work from home. Sure. Yeah, it's definitely shifting. Facebook at the same time has also said that they anticipate 50% of their employees not working in offices. So it could be that there's a shift to the east coast based on their business. So thank you. Thank you for laying that up. Really appreciate that. I'm going to jump right now to sumaira Wheaton, and sumaira is with ik. And let me see let's bring her to the forefront. Hi Samira. How are you? Thank you for being there. Can you give us your background and
Talk about I am sore. So I'm Samir Wheaton. I am an associate interior designer at ICANN. I've been there for about six years in the industry for about 14. I am is local, we're, we're downtown. In the key bank building, we have a great view from the 22nd floor. We've actually recently
moved to that space within the last four years. rebranding ourselves, as Jackie had mentioned, we're one of those companies that we right sized for our culture that I will talk about a little bit. But um, we do workplace design, which is one of my focuses, and we also do healthcare. We do higher ed and we do some K through 12 and nonprofit.
So that's great. So you cover like almost everything which is pretty, which is really diverse. So
How will workplaces be designed differently? What are you seeing? And what do you predict? So we're seeing a little bit I am actually has re entered the office safely.
We're seeing companies reaching out to us asking a lot of questions. You know, what does the workplace look like? Should we be right sizing it? What should furniture look like? Should we buy new furniture? should we think about rearranging our spaces? So we're working closely with our clients, you know, there's a temporary change that's happening right now. But you know, this is this change is going to be
permanent. This is going to be one of those, you know, times in our lives where we're going to have to rethink everything and it's and adapt and be resilient moving forward. So like I said, we're going to look at some temporary changes right now for our clients, but it's really is going to look
At a permanent change on flexibility of furniture systems and reevaluating the spaces, you know, a lot of people are working from home right now. They're comfortable with that. They need to come into the office for certain things. So really, really looking at what does the desk mean? What does your office space mean? How are you going to bring in people to your space? And what are you going to have them do there because people crave social interactions. So that's what's going to be happening in the workplace now in six months in a year, but you know, all that head down work and production can happen at home. So right sizing the space is important, but how, how we're interacting in the office, what we're using the office for, how that office can be used as a tool. So you know, the socialization factor collaboration cannot happen in your home office. So bringing your staff bringing your
Your your employees into the office and creating spaces to engage them, to reinvigorate them to activate them back into that culture. And you know, what your company is mission, vision and values are, are really going to be strengthened by how you're looking at engaging those employees. So we're working with our clients right now, and really investigating on, you know, what does that mean to them? What activities do you need to do into the office and how can we create and design spaces that really enhanced that whole process? Have you seen any new materials that have come out? There's not anything in terms of technology that has been rapidly deployed through the short time? Sure, absolutely. Um, finished materials. There's all kinds of finished materials that have been released furniture systems that have been released that talk about you know, social distance
anti microbial, I think we have a little bit of an edge in the industry for workplace because of our expertise in health care design, where we're used to, you know, specifying a lot of these materials in that kind of setting already. So just kind of transitioning, and using some of those materials in the workplace to help, you know, prevent the spread of infection, using materials that can be easily cleaned, you know, with anything that you're looking at alcohol based, that kills viruses. But, you know, like I said, these are all temporary fixes, so we still want them to all be aesthetically pleasing as well. So that's one of our jobs. Okay. Excellent. And what are their standards? Now? What about achieving EPS? The last question I want to throw at you right now, these well, standards, w e? ll? Sure. Yes, we're looking at all kinds of standards right now. You know, the wealth standards talk a lot about that in office. That the health
and wellness of your staff of your employees. But also, you know, how your mechanical your, how those mechanical systems are looking, you know, the ventilation is a big factor right now I know, at our offices, the building systems have been changed over to 100% outside air. So that's recirculating in our building, that was a change that had happened. Post covid, which is great. So, you know, our building took its existing mechanical system and switched it over. So there's more pressure that's being pumped through that, because obviously, we can open our windows. But, you know, looking at those well standards, we're really going to have to incorporate them into new new interior design.
Excellent, thanks. So I'm gonna now pass the baton over to Robbie Hulu. And if you don't know him, you and you've been in startup worlds you should because he's been around
I'm trying to make sure that the ecosystem is strong and inclusive, as well as accommodating. So I'm very thrilled to have him here with us today. He is actually has a role at the beauty shop and I'll let him pass the baton and talk about who he is and about the beauty shop. So thank you, Robbie.
Thank you, Audrey. Thanks for having me. So for those of you who don't know, the beauty shop is the name of the our business to businesses, what's understood as a co working operation, which is shared office space, if you're thinking that that's a small niche thing that's only for tech startups or or people in their 20s, then then I would say that it's not it's much more than that. I think it started that way. coworking started very much as a movement about 10 years ago, when the digital nomad was exploding when the gig economy was exploding when people realize that
That they could they could they don't need a job. They don't need to go work for a large company, they could do it on their own. And so there's this burgeoning of the startup scene, but they were all disputed and kind of housed in different areas in the city and coworking brought them together. But I'd say since then co working for me the way I would I would explain coworking is just, it's a new way to consume real estate. It's it's, it's wedged in between the value chain of the consumers of real estate that Jackie was referencing, the office users real estate, and, and, and real estate. So this question of, what is the office space of the future? What is our relationship with with office space? What is our relationship with landlords? What is our relationship with real estate is really central to everything that we're thinking about right now.
So where are you? Where's Where are the beauty shop operations? Yeah, so we we've got a number here in Pittsburgh, we actually grew to about eight
in Pittsburgh, but we've since retracted and that isn't just the COVID thing we've been working on that called the right sizing since last October, but but we're not necessarily shutting down spaces. What we're doing was we're transitioning spaces over to the to the landlord or like in our partnership with the center really transitioned that space over to a center so that they could take it on and focusing our operation on some spaces that we really want to invest in. Part of that was a lesson in you know, in the we work extravaganza and the idea that co working can somehow grow like tech, invest in an operating platform, lose money for a bunch of months, and then hockey stick grow, I think, misunderstood how real estate works right and misunderstood how physical space works, and I think we got to some degree caught up And that, but I think we were always we always had a very different perspective on it. We always had a very different business model, which I'm happy to talk about, but I'll just follow your lead in terms of the questions. And and we decided that Wait a minute, this is not this this fast paced scale, you know, tech style startup growth is not right for what we're doing. Let's focus on the principles. So we said we want to, we want to go back and focus on hospitality, we want to go back and focus on service. And we want to go back and focus on the thing that really kicked off the CO working movement was this concept of community. So so we're doubling down on our new location here on the corner of 37th and Butler, five second plug, we've got an open house in a music event happening this Friday, from three to seven.
The band is going to be inside but everybody else is going to be outside open air. It'll be lovely. There'll be food and drinks and you can come toward the space which I would say is, is really it's a beautiful space.
It's so we want to focus on the locations that we have. So right now we've got three in Pittsburgh. There are other ones that are open with ones at Penn State University or the one with the center. Those are still open, but we're not under the control there. We've got one in Cleveland and another one opening at the end of the year. We've got one in Detroit opening here in a couple of months. And, you know, four months ago, when we if you had asked me the same question, I would have listed off a dozen other spaces that we have in the pipeline. And right now, you know, that that's, that's no longer necessarily the case. But that's okay. I think focusing on what we have and doubling down on on the assets we have and focusing on the fundamentals. What made this organization what made this movement meaningful is where our heads are. So are you have you have people in that space right now that have actually taken out space in Lawrenceville? Yeah, yeah, actually, it's been our strongest opening we're opening with 30% of the seats occupied
Yeah, it's pretty, it's pretty impressive. People are eager, eager people are eager to get out. But to this point, they're getting out for a particular reason. They could go heads down at home, but they're still coming out to engage to meet.
The, the part of the 30% here is the salon group, which I also want to highlight. It's the women's forward social group that
that Kathy Lewis long and Sue Kula are starting off, they've got a corner studio here in the space right in the first floor, right in the second floor, basically the first floor of the office space. And it's just really excited to have them and excited to honor have this building in this location, honor women in the work that they provide to the community. No, I think it's great. And so what about any kind of the accommodations that we've just heard from somar and jL, any of that resonate with the space that you've created and that you're building? Yeah, absolutely. And
Oh, yeah, on the safety matters. Let me hit that really quickly. I think that those things are resolvable problems. I really do. I think that you know, there are quick there there are there are emerging h back air cleaning solutions, whether it be ozone machines and ionisers, or the UV lights.
Those those I think are going to, you know, some combination of those two is, is the technology we have today that from my understanding resolves the issue. Everybody's wearing a face mask when they you know, you know, I got mine when you walk out into the hallway, everybody's very respectful there. There's hand sanitizers everywhere, there's gloves everywhere, we've also reduced the things that would normally people would share, you know, collective, you know, sort of grad school type like snacks in the kitchen where everybody put their hands and fingers in, we've eliminated those. We've eliminated some of the shared utensils and whatnot. So, you know, plus, you know, it's a really big open space and when you walk in here, if
feels more like you're kind of, you know, in a big open space, it doesn't feel very, very enclosed. So those those were doing. But the other point I wanted to just highlight that semara mentioned, which I think is spot on is.
And I think this, this building kind of does that is, you know, what is the office space if you could. Now, I just want to put a caveat for those pair of pair of parents with young kids like myself, if your kids aren't in school, this is all out the window, right? But if the kids go to school, and you could focus at home and do your work, that's fine, but and some people will choose to do that all the time, but most people will not. They're going to want to get out. They may not want to go out to the same office space they had in the past. It may be that office users and we're seeing this maybe jacket could validate this or contest it.
Somebody some companies are saying okay, well, you guys can go work wherever you want, which means
The office space may be decentralized. So people do need to come out, they need to leave their home, they need to go somewhere else. What does that look like? Does it look like a cube farm? It doesn't look like close office, but it looks like a community community gathering space. It looks like a private indoor public space. And I think that's what we have here. It's always been our vision. It's always been the direction we want to go. Are you doing any hotelling there's someone who taught, john asked about, you know, hotelling is a new trend. I don't think it's a new trend. But are you doing? Are you offering that in terms of hotelling? Or do I have to, I have to commit to X amount of space hotelling meaning that you just sort of come in and stay wherever you are? No, you we still offer that. And still, we still offer that.
We offer less of it so that it's less dense and people feel like they've got more space to move around. Density on that like
Is there a ratio that you're trying to get for number of people per square foot or something? Yeah, great question. I think this is fundamental to the CO working model, the business model, number one. Number two, I think it's the thing that's going to be most threatened by the business model in a possible reality. So the industry standard with wework was somewhere more dense than 65 square feet per square feet per person. Some may argue that they're even 55 square feet per person. We're closer to 85 square feet per person. That's a significantly different constitution, right? It's a makeup Right, well, composition rather, of the space. In contrast, for those of you don't know, I like the traditional office space. Jackie, maybe correct me was, you know, in the last decade, hovering just south of 200 square feet per person. So we're a more dense community of abusers. And so can What about guests? What are you doing like
guests come. So we got to represent my people there. And you know, I've taken out co working space, how do you handle guests, guests are always welcome. And they they check in when they have to as long as they abide by the practices. I don't want to say the rules, the conventions, the norms, the culture of being careful for your neighbor, then they're most certainly welcome.
That's awesome. Okay, so we in a nutshell, if I just sort of sum sum this up, and I'm definitely not trying to be simplistic. I mean, we've heard that yes, there's some impact in the commercial real estate space, but it's too soon to know and people are just watching and looking and so our vacancy rates seem to be somewhat stable. Samarra Talk to us a little bit about you know, the design of the workspace and people really are paying attention to that and using new materials as well as trying to make
sure that the design is safe. And then we have the example of a co working space. That is actually saying we're we're thriving were here, we planted a flag and that it's a clean, safe environment. And we're welcoming people and we're using the right protocols. So there's another question that Frederick watts has just asked about the space use estimate of other such workspaces in the area, how many entities? I'm not exactly sure what what he means by that question, but maybe you do Robbie. Or I could use repeat that app, just what space use so what's the space use estimate of other such workspaces in the area? How many entities I'm not exactly sure what Frederick is, catheter? Do any of you have an answer to that one, or maybe can answer it?
Okay, so I think we answered some of the questions in terms of square footage and space.
So in terms of the the beauty shop, I just want to tell everyone that they have an open house that's coming up. And that open house is going to be filled with music from the inside and party on the outside. Is that sort of like a mullet?
party? That's right, Robbie's that's what's happening. So again, Samira, and jack, is there anything else that you want to add that you want to be sure that people know about in in terms of your world?
Jackie Thank you. Jackie's unmuted. Okay, I'm muted, so we need to unmute her. Um, anything you wanted to add.
I just want to say, I think it's important.
You know, we really need to get back to the office and see, companies have spent so much time and money and effort figuring out
How to make their work workplace safe. I know there are a lot of companies that were planning on sending their employees back or at least at some percentage back into the office, and then our second wind of COVID spike hit and that was kind of it was called off for a lot of companies. So no one really got to test out the new protocols set in place. I recently the past couple weeks started coming into my office, I feel incredibly safe here.
You know, companies, like I said, has spent a lot of time and money like Robbie's mentioning, making sure that the spaces are safe people are socially distanced wearing masks. And, and I would love to see companies get back into the office to prove that this works. You know that I think the spikes and I know health expert but, you know, obviously there were a lot of spikes attributed to the social events and bars and whatnot. And I just, I don't want that to scare people off I think
You know, I've recently come back into my office the past couple of weeks, we're very spread out everything safe. You know, at least I feel and I feel like we, in order to move forward, we really need to see what it's like back in the office environment. And I think for a lot of our sanity as well.
That's awesome. So I want to thank Jael L. I can and the beauty shop for having an opportunity to talk about what's happening in the in this ecosystem. These are important pieces to the work that all of us do, trying to make sure that Pittsburgh's an amazing place for tech companies and innovative companies to do business and to grow. So we've shared with you their websites, we've shared with you a little bit of a peek into this, and we realize there's lots of opportunities for even more conversation. But on that note, I just want to tell you all join us tomorrow at the same time and we're going to talk about the COVID-19 and how that's affected.
communities in particular, in skilled nursing facilities and ways that we perhaps have left some of our aging people in situations that aren't, haven't been had good outcomes. And then we're going to have Mayor peduto come in and talk on on Wednesday, as well as the CEO of sheetz. So I'm hoping I'm getting my days right. I think today's Tuesday, so thank you all for being here. The days are definitely blurring appreciate all of you, all of you for you know, being a part of this community and helping to build tomorrow, under sometimes these surreal times. So thank you, and I'll see you all tomorrow, same time. Thank you. Hi, everybody. Thanks. Bye. Bye.
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