Creative Office, Soaring Stock Price, Works for Biogen
Before Biogen moved into its new open plan office its stock wallowed at $48/share for years. Since it occupied 500k SF of new, open plan offices in Kendall Square, its stock has skyrocketed to $400/share, says Biogen director of facilities Ed Dondero. That's why we're excited to hear from Ed and other expert panelists at Bisnow’s Boston Office of the Future event on May 28 starting at 7:30am at the Boston Sheraton.
Of course, this success can’t all be attributed to the life science company’s new space on Binney Street, but it’s clear that the space's contemporary interiors paradigm has changed how Biogen works, Ed tells us. In the old space, the facilities group determined how people worked, and awarded space according to rank in the company hierarchy. When someone needed a conference room, it had to be reserved in advance and may have entailed a wait. Now, conference rooms are used 75% less. Meetings still happen but they’re impromptu—no reservations, no waiting.
Biogen’s new offices, at 300 Binney St and 225 Binney St, were designed by Nelson to be entirely open space with no enclosed, private offices but with heads-down work areas sprinkled throughout. There’s a series of huddle rooms, shared spaces and cafes on every floor. When people want to confer with a colleague, they just walk over and say, "Hey." When the timing is right, they grab a huddle room or settle into some other open space. Most people have at least two places they can work most of the time. Decisions are more spontaneous, collaborative and faster, and people work in smaller groups that are more effective, Ed says. The new buildings also feature an on-site daycare, fitness center and other amenities.
Biogen surveyed its staff before and after the moves of July and November ’13, says Ed (a blues guitarist in his spare time). People worried about noise, lack of privacy and the smaller number of conference rooms. But surveys conducted after the move indicate that all three concerns have been alleviated. In the last two years, the company has launched four new products, compared to three products in the prior 15 years. This success isn’t all do to the new space but actions speak louder than words, and Biogen is seeking more space to lease in Kendall Square.
Not all tenants can reproduce Biogen’s results, but most are thinking differently about their offices than in they did five years ago, says The Davis Cos CEO Jon Davis (also a panelist, above left with development director Enrico Bellido). His portfolio includes 12M SF of offices and multifamily along the East Coast. Tenants want office space that creates energy, collaboration and efficiency. Drywall is out in favor of brick, beam and high ceilings. Exposed mechanicals are in demand, even preferred. The biggest tenants are under the most pressure from their C-suite bosses to decrease their footprint.
This can be a struggle for facilities execs as well as landlords but it’s essential to listen to tenant preferences. In fact, the changes in office layouts can be an incredible opportunity to achieve a competitive advantage, Jon says. Many market forces are driving up asset values, rents and TI allowances from about $25/SF five years ago to as much as $50/SF now. But it isn’t a tremendous sacrifice for landlords to swap the old paint and carpet TI regimen for ripping out ceilings and installing cement flooring. For commercial space that responds to the needs of tenants—especially those competing for top talent—users will pay a premium in rent.
But not every company can invest in renovating its office space, says CBT Architects principal Haril Pandya (an event panelist). Tenants are pushing for flexibility in their space. To achieve that in an economical way, one option is to use parts of a building outside of the offices to create places for employees to meet; a WiFi lounge, outdoor roof deck or lobby. These places become an extension of the office so a tenant’s space extends beyond the four walls they lease. Tenants also like amenities that reflect their brand and even the newest, smallest tech tenant may need access to a fully wired video conferencing facility where they can hold face-to-face meetings for 100 people. Next month, Haril expects The Flatley Co to start renovating its lobby space at the Schraffts’ building, 529 Main St in Charlestown, slated for a late fall completion. The anchor tenant in the 600k SF former candy manufacturing plant, Partners Healthcare, will do a relo to Assembly Square in Somerville in ’17. The newly imagined lobby will help the landlord to keep the building competitive to attract young, hip companies, Haril says.
Join us for Bisnow’s Boston Office of the Future event on May 28 starting at 7:30am at the Boston Sheraton. Register here.