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Experts Say Open Office Is Getting Pushback

While modern offices mean open office floor plans, the concept has not won over all employees. Noise and added distractions have had some companies regretting their new offices. Even some tech firms are seeking alternatives to open offices. Developers and builders discussed the open office trend and the movement toward more flexible buildings during Bisnow's recent Silicon Valley Workplace of the Future event held in San Jose.

Experts Say Open Office Is Getting Pushback
Steelwave CEO Barry DiRaimondo

“When you create these open environments for people who haven’t been in these environments, you’re starting to see pushback,” SteelWave CEO Barry DiRaimondo said.

While it is not creating issues across the board, in about 30% of instances people regret their decisions. The open office plan often creates distractions that make it difficult for some companies to conduct their business.

Experts Say Open Office Is Getting Pushback
Iron Construction President and CEO Dave Edgar and Iron Construction/Titanium Chief Operating Officer and co-founder Claudia Folzman

Iron Construction/Titanium Chief Operating Officer and co-founder Claudia Folzman said noise issues became a problem at the company’s last office, which was a converted warehouse. Iron Construction’s new office will separate people into different neighborhoods to better control sound so everyone is not all in one place. The middle of the office will have public amenities with natural lighting from a 24-foot square skylight.

Large floor plates and higher ceilings are becoming the norm regardless of whether the tenant has an open floor plan or not, Insight Realty Co. Managing Partner Dennis Randall Jr. said. Companies prefer large floor plates since they allow for large work groups to come together on a project basis. These groups work together for a few months and then seamlessly move to the next work group with the next project, according to Randall.

“As a developer and investor, what we are trying to do is facilitate that creativity so that we have a real estate asset that provides value for [tenants] and our investors for the long term,” Randall said.

Experts Say Open Office Is Getting Pushback
Insight Realty Co. Managing Partner Dennis Randall Jr.

Insight Realty’s Museum Place project in downtown San Jose will offer large floor plates of 50K SF to 60K SF with 15-foot clear heights and large usable terraces. The project will include more than 200K SF of office and a luxury hotel from Kimpton with 300 condos above the hotel. The total project will span 1.2M gross SF. Museum Place in downtown San Jose will create a central urban mixed-use location, according to Randall.

“When we look at an investment, there has to be a purpose and there has to be a need and we go and try and solve it,” Randall said. “That is why we see creative office and collaborative and mixed-use development as a solution for all of our own needs in our lives.”

Experts Say Open Office Is Getting Pushback
City of Fremont Economic Development Director and Chief Innovation Officer Kelly Kline

One way Fremont is providing more creative spaces is through the creation of a mixed-use area that could accommodate different needs of different companies. The city plans to turn 850 acres surrounding BART in Warm Springs into an innovation district with engineers next to manufacturers next to distributors, according to City of Fremont Economic Development Director and Chief Innovation Officer Kelly Kline.

“In the past, cities have wanted to bifurcate those [industries] into different silos,” Kline said. “But it’s created a big traffic problem.”

Experts Say Open Office Is Getting Pushback
Steinberg Senior Design Manager Raquel Bito, Insight Realty Co. Managing Partner Dennis Randall Jr., Iron Construction/Titanium Chief Operating Officer and co-founder Claudia Folzman, Steelwave CEO Barry DiRaimondo, Clark Pacific Director of Corporate Development Roy Griffith and City of Fremont Economic Development Director and Chief Innovation Officer Kelly Kline

Fremont is pushing to accommodate more hardware companies that may not have as many incubation and midsize spaces as software companies. She said cities need to offer a lot of different products to accommodate the differing needs of small to midsize companies so they have places to scale up as they grow.

“What we see a lot in Fremont is the blurring of different product types,” Kline said.