Sunday, May 18, 1997

Office workers rub elbows as more workplaces shrink

By ANN CARRNS / The Wall Street Journal

If you feel more crowded in your office, it's probably because you are.

Cost-conscious businesses are squeezing more workers into less office space and eliminating private offices for many managers.

Ten years ago, the typical office employee enjoyed an average of 250 square feet of space, including a proportionate share of a building's lobby, corridors and restrooms. While some say that average isn't much changed today, that won't be the case for long: Professional space planners say companies moving into new offices are typically allocating 200 square feet a person - a shrinkage of 20 percent.

Telemarketing firms and customer-service phone centers often shoehorn operators into 100 square feet or less.

"It's about lower occupancy costs for corporate America," says David Tennery, vice president of the Atlanta office of developer Hogan Group.

And it's about learning to make do with less, as is the case with Barry Dluzen, director of purchasing for UDC Homes Inc. in Scottsdale, Ariz.

The home builder had housed 117 employees in 30,000 square feet but moved them all in January to just 20,000 square feet in a brand new building. It accomplished that by shifting workers to space-saving cubicles and banning most private offices - including Dluzen's.

He now sits in an open 8-by-6 cubicle with 3-foot-tall sides - making him visible to his staff at all times. "You can't take a nap any more," Dluzen jokes.

The cheek-by-jowl approach to cost cutting is changing the shape of new offices across the country, resulting in a crop of boxy, nondescript buildings that are throwbacks to designs typical of the 1970s and early 1980s.

"They were sometimes called toilet-paper buildings, because you just pulled them off the roll," recalls Chicago architect Joseph Valerio.

The new approach is especially noticeable in the suburbs of fast-growing Sun Belt cities. Suburban buildings of four floors or fewer cost less to build than towers - they require fewer elevators, and suburban land is cheaper - so developers can pass the savings along to tenants.

In Dallas, for example, companies can rent space in low-rise suburban buildings for about $19 to $21 a square foot, compared with $24 to $26 a square foot in a high-rise urban property, says Robert Edge, executive director for real-estate services firm Cushman & Wakefield, a unit of Rockefeller Group Inc.

The typical footprint, or floor size, in these new buildings is at least 20 percent larger than 10 years ago - no luxury, since the extra space is invariably crammed with extra people. "The idea is to have a nice, big rectangle that can accommodate a company that wants an open floor plan to pack those people in," says Mr. Edge.

The fast-growing equipment-finance division of CIT Group Holdings Inc. in Tempe, Ariz., is gaining no floor space in its move from a six-story building into a new, two-story building across the street. In the new building, as in its former quarters, the division will occupy about 35,000 square feet-but will add 40 new employees, making a total of 240, says Executive Vice President John Burr.

Pacific USA Holdings Corp., a diversified banking and investment concern in Dallas, initially determined that it needed at least 140,000 square feet for its employees. But it will end up fitting them into 122,000 square feet at a new building in north suburban Dallas.

Instead of one four-story building, developer Champion Partners Ltd. designed the project as two, two-story units joined by a central atrium. The design opens up more space in each unit and eliminates time-consuming trips up and down stairs.

"The message, loud and clear, is to go horizontal rather than vertical," says Paul McCrea of Champion Partners.

The impact of changing corporate structures on building design is clear in Atlanta, where a high-rise project called Concourse epitomized the office building of the mid- to late 1980s. The twin towers' star-shaped, multifaceted design created 16 corner offices a floor, to satisfy status-conscious partners and executives.

"Now, we've gone through the 'detitling' of corporate America, and we have fewer layers of management and less need for corner offices," says Tennery, who once worked for Concourse's developer. His new project, which Hogan Group is building in north suburban Atlanta, has a simple, rectangular footprint.

"Most companies are out of the business of creating monuments," says Bob Hedrick, a Phoenix architect. "They want their building to look financially responsible, in case their shareholders drive by."

That means no ostentatious trimmings. Marble is out; concrete is in. In the Southwest, even a synthetic building material called Dryvit is enjoying heightened popularity. Made partly with polystyrene foam - the material used in portable ice chests - Dryvit was once shunned by the better office developers, but that attitude is changing.

"At one time there was a stigma, but users are now less concerned about image and are more cost-conscious," says Tom Roberts of developer Opus Southwest Corp. in Phoenix.

One developer, Alter Group of Chicago, is now marketing the office equivalent of tract housing. The company simply clones the same building in different cities, with a few adjustments here and there, to save time and design costs.

Alter Group touts separate developments in Jacksonville, Fla., and Atlanta with promotional brochures portraying identical office buildings.

"With global competition and earnings pressure, there's no time to dillydally in corporate America anymore," says Nikki Brown, senior vice president with Alter Group. "Just add land and stir."

Of course, some companies still want to convey a more glamorous image. But that can be accomplished simply by adding a few stories and flashier materials to the same basic, rectangular design.

"We still get the same efficiency," Tennery says, "but it's a dressed-up version."