Author: Barbara Hicks

By Dan Perruzzi, AIA, LEED AP, principal and senior partner at Margulies Perruzzi Architects. Originally published in Commercial Property Executive.

May 7, 2018 – Sustainability and green design have been trending real estate topics in the last two decades, especially when it comes to corporate office assets. Still, the benefits of energy efficient spaces come up more and more often in connection to employee wellbeing. The tenant-landlord conversation now covers how providing a healthier working habitat increases productivity.

But what makes a good working environment? Is the distribution of individual/common spaces in offices a difficult task? How does sustainability impact the value of an asset? We touched on all these issues and more in a discussion with Dan Perruzzi, principal & senior partner of Boston-based Margulies Perruzzi Architects (MPA). The studio is a member of the U.S. Green Building Council and the majority of its architects are LEED accredited.

What are the latest trends when it comes to workplace design?

Perruzzi: Companies are wrestling with the best balance between quiet and/or private space and collaboration space. Employees need private space, but they also need easy access to their colleagues for beneficial interactions. Individual, focused work has to be supported while simultaneously supporting group work.

Everyone is trying to do more with less. Companies are actively reviewing space standards to see where they compare with the competition. Metrics of area per seat and seats per assigned staff are critical areas of focus today. Given that in many areas basic sustainability has been incorporated into building codes, there is a greater focus on wellness and health in workplace design.

When you think of your recent workplace design projects, does a particular one come to mind?

Perruzzi: The Cimpress/Vistaprint workspace at 275 Wyman St. in Waltham, Mass., stands out. MPA designed the 315,000-square-foot, Class A office base building for the owner/developer—Hobbs Brook Management. Our knowledge of workspace design actually informs our building design process. As a result, the building is very efficient and offers great overall flexibility to the owner and their tenants, while at the same time offering great amenities.

The Cimpress workspace is designed around a high degree of openness with a real commitment to providing the right spaces for collaboration and social interaction. The overall flexibility of the building design has allowed Cimpress to sublet excess space to other tenants without drastic modifications to their own premises. The success of the Cimpress workspace is evident through their overall satisfaction and the positive impacts to productivity and wellness.

How does sustainable office design benefit the people working inside?

Perruzzi: Sustainably designed spaces have better air quality, low levels of harmful chemicals embedded in materials, better lighting and better access to daylight. All of these contribute to overall wellness and productivity.

In what real estate asset class do you see a growing interest for sustainability and why do you think that is?

Perruzzi: We see growth in existing building rehabs and technology spaces. In existing building rehabs, growth in sustainability is driven by competition. Sustainability is sometimes a “box to check” for tenants looking for space. If two buildings match up on most attributes (for example, on cost, available square footage, building class etc.) but one has sustainable design features, it can tip the balance in favor of that building. High-tech companies frequently have a younger, more diverse workforce, who often demonstrates a greater interest in sustainable design.

Would you say that passive design strategies are at the basis of sustainable design or are technology-related, active approaches more relevant?

Perruzzi: Passive design strategies were the initial basis of sustainable design. For instance, MPA used to spend a lot of time making sure materials didn’t contain harmful chemicals that could off-gas into the space, but the market has evolved. It is more difficult to buy the bad stuff now.

Technology is really driving the continued growth of sustainable design since passive strategies alone cannot meet the enhanced standards. The fine-tuning of HVAC, plumbing and lighting systems through the use of embedded technology will continue to drive the growth of sustainable design.

Tell us about one of the most recent and innovative green technologies you have implemented.

Perruzzi: MPA recently completed a new 694,000-square-foot global customer fulfillment center in Quincy, Mass., for Boston Scientific Corp., a worldwide developer, manufacturer and marketer of medical devices. Sustainability is incredibly important to this client and the modern, state-of-the-art facility is expected to achieve LEED Gold certification for existing buildings.

The new facility expands and modernizes the company’s logistics and distribution functions and aligns with the Boston Scientific Global Facilities Master Plan. Given the size and scope of the facility, the design needed to creatively mesh 64,000 square feet of office space with 630,000 square feet of warehouse and distribution space. This was critical to ensure optimal logistics, flows, efficiencies and quality system compliance in an FDA-regulated facility while also improving the office and work environment for end users.

The customer fulfillment center includes 2.5 miles of high-efficiency, “smart technology” motorized drive roller conveyor with a high-speed sortation system and the first installation of an enterprise warehouse management system for Boston Scientific Global Distribution. MPA worked closely with the conveyor and robotics systems designers and manufacturers on this green automated technology, which will result in significant cost savings in facility operating expense and energy reduction for Boston Scientific.

In your experience, how is sustainability/green certification impacting the value of a real estate asset and how do you see this going forward?

Perruzzi: We don’t believe that sustainable design changes the price of real estate. Owners would be happy to charge for a sustainably designed space or building, but they cannot do that and still remain competitive. Instead, sustainable design adds value as a “separator,” a feature that tips the balance as tenants evaluate their real estate strategy.

Going forward, there is still much work to be done. It is misleading to think that sustainable design is a given across a wide spectrum of the real estate market. Legacy buildings in many downtown markets cannot be easily rehabilitated into buildings capable of supporting sustainably designed space. The pressures of the marketplace will dictate how quickly those legacy buildings will be adapted.

About the author
Dan Perruzzi, AIA, LEED AP, is a principal and senior partner at Margulies Perruzzi Architects. Consistently ranked as one of Boston’s top architectural and interior design firms, Margulies Perruzzi Architects services the corporate, professional services, research and development, real estate, and healthcare communities. For more information, please visit www.mp-architects.com.

Originally published in NAIOP’s Commercial Real Estate Development Magazine

BOSTON – April 2, 2018 – Supply chain advances and new technologies are affecting how, where and what types of industrial facilities are being built. Much of the media coverage of industrial real estate today is overwhelmed by e-commerce oriented topics. Retailers continue to build out their delivery, fulfillment and return capabilities, in ways that are having significant impacts on the industrial supply chain and, consequently, on the location and design of buildings. E-commerce is undoubtedly driving significant change within the industrial property sector, but real estate developers and investors should also consider a variety of other disruptions and structural shifts.

These include key changes being made along the supply chain and how those changes are affecting where and how new industrial facilities are being developed today, as well as where and how they will be developed in the future.

SUPPLY CHAIN ADVANCES

Key changes unfolding in the supply chain include the following:

Multimodal Options. Wholesalers and retailers alike recognize that they need to create more nimble supply chains to accommodate evolving first- and last-mile activity. “First-mile” multimodal transportation options are becoming increasingly important. End-to-end supply chains are becoming ever more complex, and industrial real estate site selection will continue to be tied closely to cost efficiencies in transportation.Supply chains must become more nimble. Bringing multimodal transport options, including trains, electric vehicles and trucks, to the first mile helps streamline the process of distribution from the source to the end user, while also speeding up delivery.

A Fusion of Technologies. The Fourth Industrial Revolution and the digitization of the supply chain are both well underway. According to Klaus Schwab, founder and executive chairman of the World Economic Forum, “The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres.”Tomorrow’s warehouses will be increasingly driven by technology. They will be much more connected to logistics operations, powered by information systems and even more embedded in processes related to the broader supply chain.

Automation. According to a recent “MHI Annual Industry Report – Next-Generation Supply Chains: Digital, On-Demand and Always-On,” supply chain professionals view sensors and automatic identification, as well as inventory and network optimization tools, as the innovations with the greatest potential to create competitive advantages.

Emergence of the “Cold Chain.” While the online grocery segment is only in the beginning stages of its development, it is leading to need for new grocery-oriented logistics and state-of-the-art cold storage facilities that help companies get “closer to the customer.”

Yard Management. Improvements in yard management systems (software designed to oversee the movement of trucks and trailers at industrial facilities), dock scheduling software and warehouse management systems will create more integrated information flows to facilitate supply chain management, building more continuity, safety and accuracy into the process.

LOCATION CONSIDERATIONS

Mitigating Risks. As more companies look to employ predictive analytics and artificial intelligence to power their logistics operations, these processes could also affect their site selection decisions. Understanding how to mitigate supply chain risks is becoming ever more critical. Focusing on more accurate demand planning, management around natural disasters and optimal location and functionality of facilities is becoming paramount.

First-mile Efficiencies. While many of the innovations that could transform industrial real estate are technology related, some are more traditional. For example, multimodal logistics efficiencies can be realized from the “first mile” of transloading containers from a seaport to the “last mile” of delivery to the customer. Simply relocating or expanding near different transportation hubs can help reduce delivery time and costs while improving the level of service. Additionally, importers have to become more efficient in the first mile to offset growing congestion on highways near seaports and worsening truck driver shortages.

Throughout the current economic expansion, modernization and growth of the cold chain have continued to garner investor and developer interest. From seaport operations to airport hubs to inland intermodal destinations, innovative new real estate development around transportation hubs is occurring, both from an import and an export perspective. Here are two examples:

Port Logistics Refrigerated Services (PLRS) now operates a 130,000-square-foot intermodal cold storage and freezer facility at Berth 219 at Port Tampa Bay, which serves central Florida as well as the Southeast and Midwest U.S. with direct transfer via truck or CSX rail. The state-of-the-art building facilitates the import and export of food and other cold storage items throughout the region. It can handle break bulk palletized products as well as 40-foot temperature-controlled containers. The facility consists of four cold storage areas and two freezer storage areas as well as a truck staging area, a fumigation building and an office building with a U.S. Department of Agriculture (USDA) laboratory.

The Harbor Performance Enhancement Center (HPEC), a public-private partnership between the Port of Los Angeles (POLA) and a private consortium, plans to operate a 110-acre “peel-off yard” or staging facility intended to reduce congestion at the Port of Los Angeles. It is designed to accommodate approximately 3,150 containers from adjacent container terminals at any one time and to significantly increase efficiencies and throughput at the port.

The site, inside the jurisdiction of the Port of Los Angeles, has been idle since 2006. Meanwhile, container volumes flowing through the Port of Los Angeles, as well as the Port of Long Beach on the other side of the harbor, have recently regained and now significantly exceed their pre-Great Recession peak levels. Growth in container volumes, the advent of ships carrying two to three times as many containers as did ships prior to the recession, and new trucking regulations have combined to create serious congestion in Southern California. This has made the retrieval process for containers lengthier and, at times, unpredictable.

HPEC will lease the 110-acre facility and provide a valet-and-park service for importers. It will retrieve containers from the terminals and park them on chassis in the HPEC yard, so that importers can retrieve them at their convenience on a 24/7 basis. The resulting increase in the predictability of the dray from POLA to the importers’ facilities and the likely shorter time it will take to do this will reduce truck drivers’ idle time at distribution and transload centers.

Manufacturing. Finally, manufacturing is poised for more disruption and transformation in design than any other industrial sector. Employing more adaptive manufacturing methods like 3-D printing could create leaner supply chains and lead to the proliferation of smaller manufacturing facilities closer to major population centers.

Innovative new light production or light manufacturing incubators like the nonprofit The Hatchery Chicago or the L.A. Prep kitchen, both of which provide production space for food and beverage providers, are just two examples of how industrial spaces are accommodating a wider variety of uses. These types of facilities often incorporate coworking kitchen space, dry and cold warehousing, and loading docks, as well as meeting and/or office spaces.

IMPACTS ON BUILDINGS AND SITES

Industrial users are becoming ever more sophisticated, insisting on buildings that are highly functional. According to Jimmy Love, managing partner of Distribution Realty Group, building attributes that were previously considered premium improvements found mostly in build-to-suit structures are becoming more common for new speculative construction. These include 36- to 40-foot clear height ceilings, dedicated on-site trailer storage, 60-foot speed bays, LED lighting and oversized employee parking lots.

New Amenities. Demand for new amenities in industrial parks is growing. In recent years, as e-commerce and associated sectors like delivery and third-party logistics have expanded aggressively, the number of workers picking and packing orders in megasized fulfillment centers has increased. So have the number of workers at traditional warehouse and distribution operations. Attracting and retaining skilled labor has become even more challenging. To keep employees motivated and increase productivity, companies are bringing in more amenities such as expanded eating, lounge and fitness facilities to warehouses and industrial neighborhoods.

Human-centric Design. Some of the newest industrial facilities in Asia contain even more amenities, with people-oriented features such as cafeterias, day care centers, locker rooms, gyms and yes, even rock climbing walls. Developers like ESR-REIT (formerly Cambridge Industrial Trust REIT), which develops and operates industrial facilities throughout Asia, have included these above-standard amenities in some of their new logistics developments, as well as relaxation lounges, retail shops and more sustainable design.

This trend also extends into innovations in personnel safety, especially around loading dock areas and equipment. Using more cameras and red or green lighting systems on dock walls and floors at dock levelers to signal safe loading and unloading execution helps prevent accidents.

Robotics. Goods-to-person picking and collaborative robotics are redefining movement within the distribution center. The goods-to-person concept involves incoming goods being automatically retrieved from storage and brought to a human “picker” rather than the traditional person-to-goods picking model, in which a picker travels around a fulfillment center gathering goods
to fill orders.

Collaborative robots are programmed to work safely alongside humans; many can be easily programmed to perform a variety of tasks as needed. Automated guided vehicles (AGVs) are portable robots that follow wires or tape in or on the warehouse floor or use vision, magnets or lasers to navigate through a warehouse. They offer many cost-saving benefits such as improved safety and accuracy as well as reduced damages.

In addition, drone technology is becoming a reality in some warehouses. A new system developed by researchers from MIT uses drones to track inventory in warehouses by scanning existing radio-frequency identification (RFID) tags.

Wearables. Worker productivity and accuracy can be improved through the use of wearable technology with features like augmented reality, which superimposes a computer-generated image on a worker’s view of the real world, or voice picking. Headsets, wristbands and other wearables can route workers throughout a warehouse more effectively.

Sustainability. Many companies have incorporated sustainability and energy efficiency initiatives into their supply chains. While initially this could primarily impact transportation via the use of more energy efficient vehicles, the real estate implications are also significant. Incorporating LED or natural lighting, cool roofing materials and even sustainable packaging can affect building efficiencies. Smart building innovations are allowing large, sophisticated developers to create efficiencies and operational savings for their customers, according to Jeannie Renne-Malone, vice president of sustainability at Prologis. Harvesting data from these facilities will enable the design and development of even more sustainable industrial facilities in the future.

Incorporating solar power into warehousing space offers various upsides. The overall corporate and social impact is not being lost on many major companies. Larger developers like Prologis have the scale to meet growing customer requirements with a rooftop solar program. Developers are also incorporating water-saving technology, irrigation and landscaping into new warehouse design to meet customer demands.

Accommodating Autonomous and Electric Trucks. With electric and semiautonomous trucks becoming a reality in the near future, site and yard designs will need to adapt. Building owners may need to install dedicated electric charging stations for trucks on-site, embed sensor technology into loading areas and yard spaces, and/or create new safety protocols for trucks within overall warehouse operations.

WHAT WILL THE FUTURE BRING?

The disruptions and structural shifts described above are already having a significant impact on where and how industrial facilities are being developed, and will continue to do so for the foreseeable future. It’s impossible to predict what types of changes the next set of significant advances will bring, but real estate professionals who keep an eye on the future will be well positioned to recognize and make the most of them.

Originally published in IFMA’s FMJ Magazine. By Alvaro J. Ribeiro, AIA, senior architect at Margulies Perruzzi Architects

BOSTON – February 1, 2018 – A building’s curb appeal, image and energy can make or break first impressions. Creating places for people to experience a property – whether it’s first walking through a wonderful entry courtyard or just stopping to sit and talk – can cement a building’s identity in a visitor or prospective tenant’s mind. This process of placemaking starts with thoughtful exterior design. Elements such as landscaping, canopies and outdoor amenities are a valuable part of a building’s identity. Creating outdoor amenities as an extension of the workplace is emerging as a national trend in major cities across the country, with real estate developers and facility managers playing a significant role in their management and operation.

Just as interior amenities such as corporate cafés, fitness centers and game rooms are becoming common features, companies are beginning to tap into the value of outdoor amenities to make properties stand out, create inspiring and motivating exterior work environments, and support a sense of well-being and community.

Property owners increasingly understand the important impact on attracting new tenants by integrating highly desirable amenities in new and redeveloped office buildings. Building owners and tenants are keen to bring the outside in, often with features that stream natural light into the office and support plant-covered “living green walls” for example. They are also enticing people to work, exercise and socialize more outside as well.

In urban areas, outdoor amenities, like roof decks and gardens, Wi-Fi-enabled outdoor seating areas, and access to bike-sharing, are cropping up. In the suburbs, outdoor amenities like putting greens, recreational trails, and central courtyards draw workers outside at various times during the day.

Outdoor amenities are helping building owners, tenants, and facility managers address the values and habits of an evolving workforce, promote increased employee wellness, and turn real estate assets into a competitive advantage. All of it requires a coordinated effort and a shared vision between real estate owners, corporate human resources, and operations.

Successful Strategies

Competition for the best talent is fierce, and facility managers have a role to play in attracting and retaining employees. Forward-thinking organizations are re-evaluating their workplace strategy and appealing to talent by offering rich amenities that support well-being, provide a sense of community, help reduce stress and employee turnover, increase teamwork, and strengthen the company’s vision and values.

Millennials in particular desire amenities like roof decks, landscaped patios, casual seating areas with fire pits, and recreational spaces because of the social interaction and work-life balance these environments help create. Offering small communal settings where people can work, eat, learn and play is essential for increasing social interaction and employee engagement, both inside and outside the office.

In fact, when it comes to the top five ways to improve employee engagement, creating
a sense of community ranks number one on the list. The physical workspace is an important aspect of promoting employee engagement, and companies understand that creative and innovative employees need flexibility in the work environment to do their jobs. The Steelcase 360 Report on engagement and the global workplace found that 67 percent of companies have outdoor seating areas, a trend that shows a successful workplace strategy includes offering a variety of interior and exterior communal settings that help drive individual productivity and wellbeing, as well as an organization’s success.

The Human Factor

Most employees spend 80 percent of their day inside, and sedentary lifestyles are known to negatively impact health. A 2017 study from Columbia University Medical Center found that being in the same position with little or no movement for 60- to 90-minutes over several hours each day increased the risk of early death – even in those who exercised.

However, even small changes in scenery and business practices can counter the negative effects of sedentary behavior. A 2015 study from the University of Miami Miller School of Medicine found that changing just one seated meeting into a walking meeting per week, increased work-related physical activity levels by 10 minutes. Office workers participating in the study conducted weekly meetings in groups of two or three, and were asked to wear accelerometers to measure activity levels over three weeks. The study suggests that modifying traditional seated meetings to walking ones is easy to implement and conduct during regular working hours.

Given that 80 percent of every business’ operating costs are spent on people, many companies have turned their focus on how the workplace, and the ways we work in and out of it, can promote wellness for employees. Studies show that healthy employees perform better, take less sick time, and are far more productive. Companies have been responding to higher health insurance costs and the uncertainty of the health care industry for several years by investing in programs and strategies that help employees stay healthy. This next level of wellness will require reimagining the modern office.

As wellness in the workplace evolves, so does the overall thinking about how facility amenities can keep employees healthy and help them perform at peak levels – beyond offering health insurance or access to the company gym. That’s why many landlords and property managers are now looking to make better use of the premium outdoor space surrounding their suburban buildings by creating gardens, outdoor rooms, and walking areas that support wellness and social interaction. Facility managers are weighing in on how companies can incorporate interior and exterior features that encourage employees to get away from their desk, move around more, and experience the physical, mental, and emotional benefits of fresh air and the natural environment.

With this goal in mind, more companies and building owners are beginning to offer outdoor recreational programming and walking trails that provide stress relief and opportunities for fitness. The global headquarters for Boston Scientific Corporation in Marlborough, Massachusetts offers an inviting environment to get fresh air and sunlight during the work day. The campus features a landscaped courtyard, accessible to and linking all four buildings of the campus quadrangle, that provides a series of outdoor rooms and vegetated meeting areas. The landscaped courtyard is regularly used for small meetings or casual outdoor relaxation and company outings. At 101 Station Drive, a 208,000 SF repositioned and renovated office building in Westwood, Massachusetts, the open lawn in front of the building is often used for tai chi classes in good weather.

Outdoor workspace and amenities contribute to social and emotional well-being too. The dynamics of community and collaboration are being challenged with the rise of the mobile workforce. Shared outdoor workspaces are the bridge between traditional office space and independent remote work because they offer opportunities to gather, collaborate and socialize in an open, natural and relaxed setting.

Office buildings in major metropolitan areas are being transformed with the outdoors in mind. For example, Boston Scientific Corporation’s new global customer fulfillment center in Quincy, Massachusetts enhances the employee experience with a variety of high-end amenities, including a waterfront roof terrace with adjoining full-service corporate café. As the jewel of the building, the 2,000 SF waterfront roof terrace, with Wi-Fi connectivity, reconfigurable outdoor casual seating and conference spaces, offers stunning views of downtown Boston and provides a compelling amenity for employees.

The O&M Viewpoint

Facility managers can play a critical role in the selection, use, and upkeep of outdoor amenities, as they are often most attuned to what amenities make the most sense for a building and the people working in it. They can also play a key role in advancing the building owner’s – and tenants’ – vision for the use of these shared outdoor spaces.

Facility managers can bring valuable insight to issues such as understanding the structural requirements and permitting process for a new roof deck or the accessibility and connectivity needs for walking trails and outdoor meeting spaces. When it comes to deciding on what amenities to invest in, facility managers may be asked to think beyond the cost and consider the greater benefits outdoor amenities have on the potential to increase engagement and productivity, lower health costs, and reduce time away from work.

The maintenance and use of outdoor spaces in urban areas can significantly differ from those in suburban locations. Hosting events after-hours on a roof deck may require additional evening facility management staff to override lighting controls and monitor the security system, while accommodating lunchtime food trucks in the courtyard of a suburban office complex may require nothing more than scheduling. The timing of maintenance should also be considered, to make sure that the grass is cut for a fitness class or that sprinklers do not go on when people are congregating outside.

Finally, remember that outdoor amenities can help distinguish office buildings as a marketable property and can be a deciding factor for discerning tenants. With rents on the rise in most cities, appealing amenities – both inside and outside – could make the difference in creating a leasable real estate asset for the building owner.

As more companies and landlords integrate outdoor amenities into office life, this workplace trend will continue to have significant impact on how facility managers operate and maintain exterior areas and grounds in the future.