Meet the Millennials

4th Quarter 2016

The New Majority:

Millenials

inside

TRENDS • ENERGY COSTS • URBAN DESIGN

I N SIDE THIS IS S U E 2

the VIEW EDITORIAL STAFF

Six Millenial Trends

3

Managing Editor

Donna Schumacher

Future of Bay Area Housing

5

Associate Editor

Angie Sommer

Millennial Bring Health and Wellness

7

Achieving the Improbable

9

Minnelials Mythbusters

10

InterVIEW: Lisa Bottom

13

Restaurant Report: Eatsa

17

The Decline of the Traditional Mall

19

A Case Study: Retuning Retail

20

Operating Energy Costs

21

Point of VIEW: Urban Design

23

Rising Leaders

26

A Word from Our Sponsor

27

Angel Profile

28

Letter from the Editor

Angel Editorial Review Contributors

Graphic Designer

Kristina Owyoung Vinson Richard Isaac Lisa Bottom Amanda Bates Jen Chan Lori Coleman Kena David Diane Danielson Alicia Deschamps Verushka Doshi Nina Gruen Carol Ann Flint AJ Jacobsen Erica Levine Donna Schumacher Leyla Sfeir Angie Sommer Jack Verdon Kristina Owyoung Vinson Lori Seaberg Mingus

©2016 CREW SF. All submissions are subject to editing for clarity and brevity, unless otherwise noted.

LETTER FROM THE EDITOR | The New Majority: Millennial Momentum Ready, set, go! A new generation has arrived. 2016 is the year when the millennials (ages 18–34) officially became the nation’s largest living generation. Overtaking the long-standing champion, the baby boomers, their momentum continues to build as new members immigrate into the country and boomers age out.

As the ruling majority for a whopping 50 years, boomers have been driving the real estate biz—and the industry has become accustomed to following their trends. But no longer: the demographic baton has been passed, and this new majority will produce changes that, though subtle at first, soon will grow to be seismic. (Yes, generational preferences are inherently vague and perhaps grossly oversimplified, but there is much to be gleaned by an attempt to understand them.)

For this issue of the VIEW, we are exploring the preferences and influences of this new generation of ready-set-go professionals. Spearheaded and inspired by our Rising Leaders Committee, we take the pulse of how this demographic shift may impact our cities, our workplaces, our homes, and indeed how we travel through our daily lives. It is critical to listen to the voices of millennials as they show us their way forward to the future. (A special shout-out to our “angel,” Kristina Owyoung Vinson, board liaison for the Rising Leaders, for her guidance with this issue!)

With the future in mind, I am excited to announce that starting in 2017, the VIEW will become the quarterly publication for three CREW

2

Network chapters: CREW Silicon Valley, East Bay CREW, and CREW San Francisco. By joining efforts, we will expand our visibility, enhance our quality, streamline efficiency, and foster member-to-member relationships across and around the area. Wow! An editorial board of delegates from each chapter has already met to select issue topics for the year, so get your pencils poised and pull your thinking caps on, because we are already off and running. As always, please let us know if you would like to contribute an article for upcoming topics: Q1: Restaurants, Q2: Sports, Q3: Medicinal Marijuana, Q4: Transitions.

It was just this time of year, five years ago, that I met with then-editor Valerie Concello to talk about the VIEW. Her advice was to jump in feet first and see where I landed. And see where we are now! The VIEW has always guided me, as new opportunities for expansion have appeared along the way organically, suddenly both obvious and necessary. I have been both humbled and inspired by the experience. Thank you, readers of the VIEW! But—like the generational shift at the heart of this issue—it is now time for me, too, to pass on the baton of leadership. Please congratulate and welcome Angie Sommer, associate engineer at ZFA Engineers, as she assumes the role of managing editor in 2017. We look forward to finding out what happens next!

Warmly, Donna Schumacher Managing Editor, the VIEW Donna Schumacher Architecture

COVER: WeWork in Washington DC, courtesy of WeWork

SIX MILLENNIAL TRENDS Changing the Face of Our Cities © 2016 Diane K. Danielson, SVN International Corp.

New GE Headquarters in Boston, image courtesy of General Electric © Gensler

In 2015, millennials surpassed Generation Xers and their predecessors, the baby boomers, to become the largest generation in America’s workforce.

Anytime we pass the generational baton, we experience change in our workplaces and in how we use commercial real estate. Baby boomers grew companies under command-and-control leadership and remained loyal to those companies, which built suburban campuses and high-end offices in Class A space with executive floors and corner offices. Generation X ushered in the Internet and casual days, the latter of which seem almost quaint today. Yet they were also the first generation to talk about flexibility, and many built home offices from which they started their own companies.

We now have millennials once again changing the way we “office” and how we live and work in our cities.

1. THE URBAN CAMPUS General Electric in Boston, McDonald’s in Chicago, and Pinterest in San Francisco are just a few of the companies locating or relocating their headquarters in downtown areas. What’s driving this urban immigration? It’s not solely the tax breaks; it’s a war for talent. Millennials want to live and work in areas that are walkable and bikeable and that have recreational facilities and public transit.

Another driver of the urban campus is the proximity to synergistic resources, like research universities and incubators.

Unlike in past years, companies aren’t seeking out space in Class A office towers. Instead they are building anew or renovating space to their liking, which means sustainable and green architecture, more spaces to congregate, room for popup lunch vendors, glass walls (or no walls), and high ceilings.

Class B brick-and-beam is more attractive than traditional floors with executive offices surrounding a sea of cubicles.

2. URBAN STOREFRONTS We are also seeing traditional suburban big-box retailers like Target and Staples following the millennials by creating scaleddown urban storefronts. These stores have smaller footprints, same-day delivery, and curated content. Items are geared to the apartment dweller and come in smaller packaging options so it’s easier for shoppers to carry their purchases home and store them.

3. CO-WORKING SPACES Even non–Fortune 500 companies are chasing the millennials into the urban core. The most cost-effective way to do so is in co-working (continued on page 4)

3

(continued from page 3)

New GE Headquarters in Boston, image courtesy of General Electric © Gensler

spaces. WeWork is the leader in this area, with 90 locations around the globe. Due to demand, its model has moved beyond serving small businesses and individuals to working with larger companies like the aforementioned General Electric and Pinterest.

Finding the right buildings for co-working spaces involves more than a location that has nearby retail and public transit.

Buildings must be retrofitted to accommodate more people per square foot. Co-working spaces have downsized the ratio of square feet per person from 175 to approximately 70. This also means accounting for HVAC issues, air quality, noise (high ceilings are a must), and modernized elevator systems.

4. CO-LIVING SPACES WeWork is also changing the face of city living with their WeLive locations. Whether you consider them micro-apartments or dorms for grownups, they provide an alternative to a traditional lease with roommates. Their flexibility and community feel have made them popular with more than just millennials. However, they are unlikely to solve the issues of affordable workforce housing many are still facing in high-priced urban areas.

5. URBAN MANUFACTURING The General Electric move into Boston also reflects another change that’s happening in urban real estate. Thanks to innovations in 3-D printing, lean manufacturing techniques, and online marketplaces like Etsy, we are seeing a rise of “makers” or smaller manufacturers here in the US. Many of these new companies are run by millennials and are locating downtown and near research universities. General Electric is specifically designing its Boston headquarters to accommodate local creators and makers in an incubator-type setting.

4

WeWork SOMA in San Francisco, image courtesy of WeWork

6. SMART INFRASTRUCTURE As the millennials flock to cities—and companies follow— it spotlights the need we have to not only reinvest in our infrastructure but to reinvent our infrastructure. As more people move into microapartments and cram into co-working spaces, the strain is showing on public transportation systems that in some cases were designed over a century ago. Other infrastructure challenges include urban heat and rising seas due to climate change. Cities around the globe are experimenting with smart technology, self-driving cars, and green infrastructure that can cool cities and control flooding.

These infrastructure challenges require long-term solutions, and the commercial real estate industry will play an important role in ensuring that our cities are sustainable and livable even after all the millennials retire.

•

About the Author Diane K. Danielson is the chief operating officer of SVN International Corp., a commercial real estate franchisor headquartered in Boston. Danielson, a 2015 Real Estate Forum Woman to Watch, was recently appointed to the CREW Boston Legacy Council.

THE FUTURE OF BAY AREA HOUSING MARKETS AND INCOME INEQUALITY:

What the Demographics Tells Us © 2016 Nina Gruen, Gruen Gruen + Associates

An earlier version of this article was published in the JulyAugust 2016 issue of APA California Northern News.

Because US birth and death rates are pretty stable—at least for the not too distant future—predicting demographic change is easier than predicting the future of the economy. The rate of immigration is basically the only unknown.

Generations The 84 million millennials (those born between 1981 and 2000) are currently the country’s largest demographic. By 2030, this generation will be between the ages of 30 and 49, and will account for almost 91 million people (the increase being due to immigration). The latest generation—the recently named iGeneration, those born after 2000—will surpass them, accounting for over 125 million by 2030, or 35% of the total US population. Conversely, the size of older generations will decline. So for example, the boomer generation, formerly the largest, will decrease substantially: its oldest members will be age 84 in 2030 and are projected to account for only 17.6% of the population. Figure 1 shows the pattern of each subsequent generation being larger than the previous one.

Race and ethnicity Hispanic populations, followed by Asians, will experience the largest percentage growth increase in the United States between 2016 and 2030. As shown in Figure 2, the Hispanic population is forecast to increase by 55% and the Asian population by

19%. According to the 2014 National Population Projections of the US Census and the California Department of Finance, Hispanics are now the largest ethnic group in California: they account for 39% of the state’s population, followed by whites (38%), Asians (14%), blacks (6%), and others (3%).

Education The long-term economic and real estate impacts of these dramatic changes in America’s ethnic and racial mix will depend upon whether we are able to provide the younger generations with the type of education that gives them the skills needed to be employed and enhance the productivity of an economy that is undergoing its greatest technological change since the Industrial Revolution. Figure 3 presents the educational attainment of the country’s post-college-age millennials (age 25–34) and Gen Xers (35–54) by racial and ethnic categorization.

While looking at the proportion of college graduates within a demographic segment is certainly not the only measure of progress in employment and productivity, these data suggest that we have not been making sufficient progress in providing our Hispanic and black populations with the skills required to enter the middle class. Unless we begin to do so within the next decade, it may be too late to save the middle class that our democracy depends upon.

While not everyone needs to go to college to earn a livable wage, statistically there is no question that college grads earn more income over their lifetimes.

Figure 1. Generations as a percent of total US population projections, 2016–2030. Sources: US Census Bureau, Population Division, 2014 National Population Projections; Gruen Gruen + Associates.

Figure 2. US population projections by race and Hispanic origin, 2016–2030. Sources: US Census Bureau, Population Division, 2014 National Population Projections; Gruen Gruen + Associates.

Successful workers will have to have the cognitive and perceptual skills needed by technologically innovative industries and services. We are living in a time when many of our manufacturing and logistics support companies cannot find enough workers with the training needed to operate the industries’ new digital tools.

Many workers without the needed training who once held well-paying jobs, particularly those over 40, have given up on obtaining employment that will provide a living wage, while younger unskilled workers are limited to low-paying service jobs for the foreseeable future. To provide these two groups with the appropriate training, we need to adopt apprenticeship programs such as those Germany and other European countries (continued on page 6)

5

(continued from page 5)

Figure 3. Millennial and Gen X educational achievement in 2014 by percent of population group. Sources: US Census Bureau, Current Population Survey, 2014 Annual Social and Economic Supplement, Gruen Gruen + Associates.

have had for many years. Importantly, rather than focusing high school education exclusively on preparation for college, we should be offering technical training beginning when students are freshmen in high school.

In 2014, approximately one-third of black and Hispanic students did not receive a high school diploma. If they had gained the requisite skills training during their high school years, a higher rate would have graduated, and those who did not would still have possibilities for employment at more than the minimum wage.

Renting and owning The shift from the majority of national and regional households residing in owner-occupied units to an even split between owner and rental housing will be America’s new housing pattern. By 2020, it is estimated that half of all US households will be renters. This is because the foreign-born and Hispanics will account for two-thirds of the growth in renter households, with Hispanic households accounting for the largest share.

The rationale behind the switch in preference from ownership to rental differs with age and income, but is often linked to an increased preference for mobility. Younger households with $100,000+ incomes often prefer to rent because it provides them job mobility. The over-60 often elect to rent to avoid maintenance tasks; and as they age, some older households will move to more accessible space, e.g., no stairs. However, because so many millennials are employed in low-paying service jobs, the sharpest drop in home ownership rates has been among those 19–35 years of age.

Many of these households move to foreclosed single-family, detached exurban houses that can accommodate multiple generations. This trend is not limited to high-cost areas like the Bay Area; it also occurs in overbuilt, lower-priced markets like Phoenix and Las Vegas. In many instances, grandparents are able to babysit while both parents have one or more jobs.

6

Due to their high salaries, the impact of the Asian housing market—both condo and rental—should not be underestimated, particularly for those Asian millennials working in STEM fields. All new high- and mid-rise multifamily units built in San Francisco now attract approximately 50% Asian occupants. While the majority are Chinese, there is a wide variety of country origins, including Pakistan, India, Vietnam, and South Korea. Many Asian households appear to have a strong motivation to own rather than rent, and they often have a strong preference for newer rather than older housing stock.

Skills, income inequality, and the housing market While demography and housing demand preferences play important and interacting roles in the vigor and scale of the regional economy, the skills of the local labor base are critical.

Some may disparage “techies,” but the Bay Area’s innovation economy is one of the world’s strongest because a large number of uniquely talented, technically advanced workers combine innovative ideas in local agglomerations. As Enrico Moretti has pointed out in his book The New Geography of Jobs, highly paid tech workers provide the consumer demand that fuels the jobs of less-skilled service workers.

But the high price of housing places a burden on the less well paid and unemployed and contributes to income inequality.

Over time, high housing prices also threaten the health of the regional economy, as they are less able to attract and hold tech workers. As that happens, we are likely to see today’s innovative high-tech economy go the way of finance, shipping, and other industries that once were the mainstay of the local economy.

As we have seen in recent political discussions, narrowing the income gap and reopening the path to the growth of the middle class are shared American goals. This review of current and likely future demographic and housing market conditions in high-cost areas, including the San Francisco Bay Area, suggests the urgency of policy changes to achieve those goals.

The question is, will we have the political will to successfully adopt the needed policies?

1

•

Data in this article are derived from the report “America’s Rental Housing: Expending Options for Diverse and Growing Demand” from the Joint Center for Housing Studies of Harvard University (2015).

About the Author Nina J. Gruen has been the principal sociologist in charge of market research and analysis at Gruen Gruen + Associates since cofounding the firm in 1970. Nina applies the analytical techniques of the social sciences to estimating the demand for real estate and to understanding the culture of the groups who determine the success of development, planning, and public policy decisions. She has led market and community attitude evaluations and programming studies that resulted in the development and redevelopment of many retail, office, industrial, visitor, residential, and mixed-use projects. She can be reached at ngruen@ggassoc.com.

Millennials Bring HEALTH & WELLNESS to the Workplace © 2016 Kena David, BCCI Construction Company

Thornton Tomasetti office lounge, photo by Benjamin Grimes

The millennial generation is the first generation to grow up with mobile phones and ready access to the Internet. They’ve had the luxury of answers to virtually any question at their fingertips. Their lives have always been digital and connected.

Recent changes in the workplace have come in large part from millennials asking questions and challenging the status quo.

Questions like “Why do only private offices have windows?” or “Why is my office building located so far from a train stop?” or “Why am I so tired after sitting at my desk all day?” Moreover, continued advances in technology have made it easier to work faster, more efficiently, and in many different settings.

This generation—now the largest in American history—has proved to be the impetus for many changes in the workplace, including the way buildings and offices are designed, operated, and marketed. The influx of millennials into the workplace and their affinity for technology has also shifted the way in which we think about our work environment. Thus the real estate industry has seen a movement toward open office plans that inspire collaboration and offer flexibility and versatility, as well as workspaces that are in closer proximity to public transportation hubs, and an increase in urbansuburban communities. The classic American suburb with a long commute to the office is less appealing to millennials,

and the 9-to-5 workday has shifted, with flexible schedules and remote working options becoming the norm.

The worlds of architecture, construction, and real estate have grown and adapted to meet these challenges put forth by millennials. Known for being civic-minded and environmentally conscious, millennials often make work and lifestyle choices that align with their values. For example, the well-known LEED certification established by the US Green Building Council (USGBC) is increasingly a factor when millennials choose a place to live or work. (LEED certification is an indication that a company or building owner is highly attuned to how its physical operations affect the environment.)

Questioning and challenging how and why things function a certain way is one of the greatest qualities of millennials. Many millennial-owned businesses are now examining aspects of the built environment related to productivity and wellness in the workplace, and large tech companies—with an average employee age around 27—have begun looking at how different aspects of offices affect health. Previously, employees have not had the opportunity to advocate for elements such as increased access to windows to bring daylight to the space, which boosts happiness, reduces stress, and increases (continued on page 8)

7

(continued from page 7)

BCCI Construction Company Headquarters, photo by Blake Marvin

productivity. Millennials also want comfortable lighting, access to amenities, nutritious food, and healthy air. As a result, many of these features are being incorporated throughout the real estate market—in offices, retail, and residences alike.

Millennial-inspired attention to matters of health in the workplace is reflected in a new certification program dedicated human health and wellness in buildings. The Delos WELL Building Standard has married best practices in the built environment with medical research around what makes people happy, healthy, and productive while spending time

indoors. It is the first certification of its kind to holistically integrate specific conditions into architecture, design, and construction to enhance the health and well-being of building occupants. Delos developed this standard to uphold human sustainability and to transform schools, homes, offices, and other indoor facilities into healthy environments. The WELL Building Standard measures seven categories relevant to occupant health: air, water, nourishment, light, fitness, comfort, and mind. Certification requires a passing score in each of the categories through design and performance verification.

The millennial generation, which has also been called “Generation Me,” may be viewed as self-focused. However, millennials’ expectation of immediate answers to questions and that technology simplify their lives both at home and in the workplace has spurred growth across the real estate, construction, and design industries. Furthermore, curiosity and attitudes about the environmental and social responsibility have created new ways to enhance human health and wellbeing in the built environment.

•

Specialized Bicycle Components, photo by Jasper Sanidad

8

About the Author With expertise in sustainability advising for USGBC’s LEED and Delos’s WELL Building certifications, Kena David provides key sustainability leadership and team expertise for BCCI’s green building projects and a commitment to the USGBC NCC Building Health Initiative. Kena has completed dozens of sustainable projects under LEED for commercial interiors, new construction, and core and shell rating systems, as well as the first LEED v4 for commercial interiors Platinum certifications in the nation.

Additionally she is currently working on one of the first groundup WELL-certified buildings through the Delos program, as well as an interiors project that is targeting WELL certification. Her experience includes sustainable design strategy evaluation and cost analysis and LEED and WELL project management. Kena also provides educational training on the successful implementation of LEED and workshops on various sustainability frameworks.

ACHIEVING THE IMPROBABLE DREAM: Affordable Home Ownership for Millennials © 2016 Jen Chan, White Tiger Condo Conversion

A recent survey of renters in 12 metropolitan areas found that it would take the average millennial in the Bay Area a mindblowing 28 years to save enough money to afford a down payment on a starter home. That’s 17 years longer than in New York or Boston, 15 years longer than in Seattle, and eight years longer than in Los Angeles.

It’s hardly shocking that San Francisco would be a challenging place for millennial homebuyers. Indeed, it is precisely the influx of millennials attracted by the healthy lifestyle, cultural diversity, sense of community, and business opportunities of San Francisco center that exerts the pressure on a housing market that has a limited supply for increasing demand. Housing prices reflect that.

However, the extent of the problem has caught even veteran observers by surprise. “San Francisco is experiencing a major housing crisis,” said Sarah Karlinsky, senior policy adviser at the nonprofit San Francisco Bay Area Planning and Urban Research Association, better known as SPUR. “Most younger people (and older too) are feeling the pinch.”

Difficulties for First-Time Homebuyers One reflection of the difficulty millennials are having in entering the housing market can be found in recent statistics for firsttime homeowners, who are typically in the age bracket that the millennial generation is today. In 2015 the share of first-time buyers nationwide declined for the third consecutive year—to 32%, its lowest point in nearly three decades, according to a survey by the National Association of Realtors (NAR). (The overall strength in home sales last year was driven more by repeat buyers with dual incomes, according to the NAR.) In 2014, home ownership among millennials dipped to 36%, compared with about 65% for all ages, according to US Census data.

Lawrence Yun, NAR’s chief economist, said there are several reasons why millennials are finding it increasingly difficult to enter the housing market, despite persistently low mortgage rates and healthy job prospects for those with college degrees.

“Unfortunately, there are many high hurdles slowing first-time buyers down,” he explained. “Increasing rents and home prices are impeding their ability to save for a down payment, there’s scarce inventory for new and existing homes in their price range, and it’s still too difficult for some to get a mortgage.”

The NAR survey found that another major deterrent for firsttime homebuyers is debt—particularly student loans. The median amount of student loan debt for all buyers was $25,000,

but for millennials that amount is even higher. “It’s likely some younger households with higher levels of debt can’t save for an adequate down payment or have decided to delay buying until their debt is at more comfortable levels,” Yun said.

The Root of the Problem SPUR’s Karlinsky said a number of factors have contributed to the crisis, but the root of the problem is clear: there’s simply not enough housing to go around. Over the past 20 to 30 years, the region has added a substantial number of jobs while “radically under-producing housing.”

This imbalance has only gotten worse in recent years, largely due to the explosive growth of the tech industry in the Bay Area.

Between 2010 and 2014, the region added 446,000 jobs but only 54,000 housing units, according to SPUR. “This imbalance, coupled with a lack of a steady source of funding for affordable housing at the regional scale, has led to our affordable housing crisis,” Karlinsky explained.

Inventory is low across the board, housing experts say, but it’s particularly scarce for entry-level, single-family homes, and competition for those limited number of affordable homes is intense.

Avenues for Solutions In response to the growing crisis, San Francisco, under the leadership of Mayor Ed Lee, has taken a variety of steps to increase the number of below-market-rate housing units and expand opportunities for millennials and other first-time homebuyers.

In 2012, voters approved a $1.2 billion set-aside to create more affordable housing and provide down-payment assistance to moderate-income families (four-person households earning $80,000 to $120,000 per year) and other qualified first-time homebuyers, including teachers, police officers, and firefighters.

In 2015, voters approved a $310 million bond to finance the construction of new affordable housing and the acquisition and rehabilitation of existing units. And yet another measure was on the November 2016 ballot to allow the city to use some unused bonds to purchase existing housing and make it affordable.

San Francisco is also looking into revising its “inclusionary housing law,” which requires builders of market-rate housing to provide units of—or funding for—affordable housing as part of their developments. Currently, the city requires developers to sell or rent 12% of units in new developments at below-marketrate prices that are affordable to lower- or middle-income (continued on page 26)

9

Millennial Mythbusters © 2016 Alicia Deschamps, Rim Architects; AJ Jacobsen, CBRE; Erica Levine, Arup; Kena David, BCCI; Verushka Doshi, Haworth

What’s hotter than maple-bacon cupcakes and crop-tops?

Frequently, it’s hating on the millennials that are into these ridiculous trends. It’s not hard; after all: we are lazy, selfabsorbed, indecisive tech addicts…or are we?

Below, the CREW SF Rising Leaders share our take on some common millennial myths. The answers may surprise you.

MYTH 1: Millennials are digital addicts. (answered by Verushka Doshi and Kena David) Why it’s true: Yes, millennials are digital addicts, but so are all other generations. In fact, according to a study by the IBM Institute for Business Values,1 the differences between the baby boomers, Gen Xers, and millennials have been grossly exaggerated.

Why it’s false: Millennials grew up with technology that has made the world accessible to everyone with Wi-Fi and the instant gratification that comes with a quick Internet search. Despite this world of knowledge at millennials’ fingertips, more and more we are seeing a trend of unplugging during non-working hours, for reasons of personal connection to others and immersing oneself in the natural world. (Of course, we need to plug back in for a few moments just so we can post the amazing things we experience on Instagram.)

MYTH 2: Millennials are terrified of commitment. (answered by AJ Jacobsen) Why it’s true: Due to economic and corporate changes, jobs have become unstable and insecure. Even for long-time employees, layoffs are commonplace. A lack of company loyalty to employees causes prudent employees (and most millennials) to keep their options open. This creates unwillingness in millennials to commit to large purchases such as a house, and it can also make relationships difficult to manage. This and many other factors have changed the shape of the “traditional” life plan. Additionally, “collaborative” workplace ideals may have the side effect of making millennials less confident to make bigger decisions on their own.

Why it’s false: Economic challenges and significant increases in the cost of living relative to income have made it very challenging for millennials to even consider buying a house, making renting more popular than before. An article in the New York Times2 reveals that this is not

10

unique to millennials; they are simply one of the first generations to be starting their lives in this new reality. Additionally, women choosing to work and build careers (as opposed to the “traditional” role of homemaking) gives those coming from a traditional viewpoint the impression that millennials aren’t willing to “commit,” when the reality is that they are just committed to something else.

MYTH 3: Millennials are know-it-alls—yet uninformed. (answered by AJ Jacobsen) Why it’s true: In the fast-paced digital world, news comes in bits and pieces.

Millennials are prone to catching a headline or tweet and basing their view on that brief wording. Friends and articles from a “trusted” source on social media are seen as fact and not researched. Therefore, millennials are prone to building their views on “facts” that they haven’t actually researched and often are not true, or are a twisted version of reality.

Why it’s false: Millennials are thirsty to collaborate with experienced mentors and bosses. They look up to people with experience, but they want their guidance, not to simply be told what to do. Far more millennials are educated with college degrees, and access to information is at their fingertips. This means that the informed millennial may very well have gained far more information and knowledge in a shorter time than was historically possible. This leads them to want to work with someone, rather than assuming the traditional role of simply “putting in the time.”

MYTH 4: Millennials don’t know how to work hard. (answered by Erica Levine) Why it’s true: Career advice from college counselors and seasoned businesspeople always boils down the same things: follow your passion! Do what you love! Make a difference! Shockingly, the passion of most millennials is not making copies. After buying into the promise of mission-driven work, it can be difficult for them to stomach the realization that landing the dream job starts out with some pretty heavy entry-level tedium. So yes, millennials are less willing to accept the grunt work that older generations accepted as part and parcel of the job. This unwillingness can lead them to switch companies, which is often viewed by older generations as a lack of company loyalty.

Why it’s false: Just because millennials don’t want to do grunt work doesn’t mean that they don’t know how to work hard. As mentioned above, more millennials are educated with college degrees.3 Since they grew up with them, they also tend to have more comfort with newer technologies. The passion that leads millennials to switch companies in pursuit of their dreams also drives them to (continued on page 11)

(continued from page 10) work hard once they land a job that fulfills that passion. All in all, millennials have a lot to offer, though this may be overlooked by older generations. That millennials stereotypically prefer different modes of communication (such as texting rather than calling) certainly doesn’t help with the recognition of their value.

MYTH 5: Millennials avoid offices so that they can sit at home and be lazy. (answered by Erica Levine and Kena David) Why it’s true: Many millennial-dominated companies (such as the ever hip start-up) allow employees to work outside of the office and standard working hours, reducing the amount of time that employees spend at their desks. This can give the impression that millennials are lazy slackers who can’t drag themselves out of bed. Millennials are more accustomed to remote collaboration and digital communication, which is only getting easier as telecommuting software improves. Besides, who doesn’t want to sleep until noon and then work in their PJs? Why it’s false: First off, many millennials do not avoid offices. In fact, many prefer to work in an office and during normal hours. They appreciate the in-office technology, collaboration with experienced colleagues, and physical separation between work and life.

Second, just because millennials aren’t working at their desk doesn’t mean that they aren’t putting in equal or longer hours elsewhere. Many of the start-ups that do allow flexible work schedules still demand longer hours overall.

Third, flexible working arrangements may actually increase employee effectiveness, allowing more work to get done in the same amount of time. Research indicates that working in an office is actually quite inefficient. Offices contain a myriad of distractions and interruptions, from Barbara’s phone conversation three feet away to the 18th scheduled meeting of the day. When completing a task that requires intense concentration, each interruption can require up to 23 minutes to get back in the zone.4 People also work most effectively at different times of the day. Allowing Tina to work at 5 a.m. and Mike to work at midnight, free of interruption and during their most productive states of mind, improves the quality of their work and the efficiency with which they do it.

MYTH 6: Millennials want be in the thick of it—and are willing to sacrifice to get there. (answered by Alicia Deschamps and Kena David) Why it’s true: Millennials want to be connected, and that means being physically near others. They prefer walking or biking to work,

Career advice from college counselors and seasoned businesspeople always boils down the same things: follow your passion! Do what you love! Make a difference! instead of long commutes from other cities. They prefer small apartments in the city over large houses in the suburbs, because then they are usually within walking distance to coffee shops, dry cleaners, bars, and restaurants. Why? Because millennials overall understand the immense value of time, and with less commuting time comes more free time. Free time to help achieve that coveted work-life balance everyone is always talking about.

Why it’s false: The millennial generation grew up with the world at their fingertips. With access to world cultures and a global perspective, most millennials catch the travel bug. With the increase of the flexible, remote work schedule and technological advances, more millennials are taking time to travel the world while working on the road. For many, office life is becoming a way of the past, favoring the experiences that the world has to offer as opposed to city life.

CONCLUSION The answers above show that many of these myths exist for a reason but can’t be generalized to every millennial or every situation. In fact, opinions differ even within the Rising Leaders, a relatively homogenous group of new real estate professionals.

All in all, millennials are not homogenous and universally terrible—either that or we are as indecisive as everyone says.

•

1

“Myths, exaggerations and uncomfortable truths: the real story behind millennials in the workplace,” https://www-935.ibm.com/services/ multimedia/GBE03637USEN.pdf

2

“More Americans Are Renting, and Paying More, as Homeownership Falls,” June 24, 2015, http://www.nytimes.com/2015/06/24/business/ economy/more-americans-are-renting-and-paying-more-ashomeownership-falls.html

(continued on page 12)

11

(continued from page 11) 3

Pew Research Center, “Millennials On Track to be the Most Educated Generation to Date,” http://www.pewresearch.org/fact-tank/2015/03/19/ how-millennials-compare-with-their-grandparents/ft_millennialseducation_031715/

4

Tristan Harris, “How better tech could protect us from distraction,” https://www.ted.com/talks/tristan_harris_how_better_tech_could_ protect_us_from_distraction

About the Authors Alicia Deschamps works as a lead designer at RIM Architects to provide quality design for commercial and transportation projects across the Bay Area.

In her free time, Alicia enjoys traveling near or far and as frequently as possible to enjoy new places, cultures, and cuisines.

AJ Jacobsen is currently a senior lease administration analyst with CBRE on the McKesson account, and has been with CBRE for over two years. Outside of work, she road-races motorcycles!

Erica Levine minimizes the environmental impact of the built environment as an energy consultant with Arup. Outside of the office, she spends her time backpacking, hiking, and climbing in California’s amazing outdoors.

Verushka Doshi brings over a decade of design experience and eight years in the contract furniture industry. Her focus is business development for Bay Area companies both small and large.

Kena David is the sustainability manager at BCCI Construction Company, where she advises projects pursuing CALGreen, LEED, and WELL certification.

She also maintains the sustainability commitments at BCCI, including the Building Health Initiative.

In addition, she provides educational training on LEED, WELL, and other various sustainability frameworks.

(continued from page 9) households. However, Karlinsky cautions that it is a delicate balance between attracting developers to create housing and requiring affordable offsets. For the developers, the numbers ultimately must show enough profit to justify the risk.

In addition, the city recently passed legislation to allow more in-law units to be added to existing buildings. “These in-law units are the most sustainable, low-impact way to add housing in our neighborhoods, and they are the most affordable type of nonsubsidized housing available,” said San Francisco Supervisor Scott Wiener, one of the sponsors of the bill.

Living on a Smaller Scale For those millennials who are jumping into the housing market, the old real estate adage “location, location, location” appears to be more important than ever. That’s because a growing number of young people living in San Francisco and other tech hubs are looking for an “on-demand lifestyle” that values location over square footage and traditional amenities.

Millennials are increasingly willing to sacrifice garages, fully equipped kitchens, and even living rooms—amenities that previous generations of first-time homebuyers considered de rigueur—for the convenience of living closer to the city center.

Many young urbanites don’t own a car and prefer to walk, bike, or take public transit to work. They also don’t require large kitchens because they tend to work long hours and take advantage of the plentiful free food provided by many tech companies—or they eat out. And when they do eat at home, they often use food-delivery services rather than cook. Even living rooms are now considered expendable because millennials tend not to

12

entertain at home as much as previous generations, preferring instead to socialize in restaurants, bars, clubs, and online.

“I don’t know people under 30 who entertain,” said Glenn Kelman, chief executive of real estate firm Redfin. “There is so much social capital that is being reinvested elsewhere. I think almost the whole home has become a private space.”

Many developers have responded to this trend by building smaller apartments. Much of this decrease is due to developers building more studios and one-bedroom apartments, which have increased from 40% of total new units in 2002 to 50% today. In San Francisco and other cities where living space is in particularly high demand, compact apartments measuring 350 square feet or less—so-called “microapartments”—are becoming particularly popular.

Let’s keep home ownership alive for millennials in the Bay Area with creative solutions, drive, and education to different paths to home ownership. Let’s all work together to keep the American dream alive for our future generations.

•

About the Author Jen Chan, MBA, has more than 25 years of experience in business, residential, and commercial real estate. She is the founder, president, and creator of White Tiger Condo Conversion, a pioneering San Francisco real estate company specializing in smaller-scale residential condo conversions. White Tiger is committed to making the American dream of home ownership more accessible and building a more vibrant, diverse, and sustainable city through the transformation of multi-family housing and education about paths to home ownership and benefits. For additional information, visit WhiteTiger.us.

InterVIEW: LISA BOTTOM

Š 2016 Donna Schumacher, Donna Schumacher Architecture

Managing editor of the VIEW Donna Schumacher sat down with Lisa Bottom, design director in the Gensler workplace sector, to talk about how the influx of millennial workers is influencing the design of workspaces. How can companies change their spaces to attract more millennial workers?

How do millennial clients differ in their needs and requests for how workspace is configured?

Lisa Bottom

Lisa has 35 years of experience and joined Gensler in 2005; in 2006, she was appointed principal. In 2011, Lisa was named one of the Most Influential Women in Bay Area Business by the SF Business Times. She most recently appeared as the keynote speaker for the Extendance IT/ Workplace conference in Zurich, Switzerland. Lisa has a BS in industrial design from the ArtCenter College of Design.

started when the leadership recognized their need to attract millennials to the company. (With a long-established history as publisher of business-to-business journals, they have transitioned to become more of a digital enterprise and are diversifying in a number of ways.) They were also seeing the high cost of real estate and were interested in looking at square footage strategically.

DS: How do you see the preferences of the millennials influence the work that you do as the design director in the Gensler workplace sector?

UBM started their new workspace approach with the US office. The former office was two floors of a series of highwalled cubicles, 80 square feet each, with almost no shared meeting spaces. Only management had offices with windows, along the perimeter. (continued on page 14)

LB: The United Business Media (UBM) project is a good example project, because their move toward a new workplace

The United Business Media project, courtesy of Gensler

13

(continued from page 13)

Airbnb, courtesy of Gensler

For the new space, they had an opportunity to send a different message to the world. They consolidated the two floors into one where no one individual would have an office.

No one. Not even the guy who runs the division here in the US. They replaced the status symbol of windowed office with ownership of the fastest and best technology.

Small “me” space was combined with much more “we” space. Reducing each personal space to 30 square feet per person, they chose instead to have more density. If there is space by the windows, it is circulation space or a conference room that everyone gets to use. They went from having six spaces to meet to 36 spaces, with all sorts of different settings: big conference rooms, medium conference rooms, chat-boxes where 2-4 people could sit, and two gorgeous café spaces to foster people meeting around food.

It was a highly successful approach. The project became the model for their new UK headquarters that they completed just last year.

DS: How does Airbnb’s space reflect its culture?

LB: The interesting thing about Airbnb was that when we worked with them they were essentially a start-up with

14

Airbnb, courtesy of Gensler

the team in charge being in their thirties, very close to the millennials. To understand that vision, we decided to embed the team at Airbnb during the first stages of design. For the first four months of work on the project the Gensler team actually moved into the Airbnb offices, working on site, so that we could observe their culture. Culture brand and values are very important to the leadership, and they were very clear to say this is who we are, and this is what we care about. It helped that two of the three founders had design backgrounds (two graduated from the Rhode Island School of Design; the other came from Harvard). It was a great experience, for both us and for them.

DS: What are some of the design elements that are unique to a company like Airbnb?

LB: When you join Airbnb, you search through their listings and choose where you would like to go and what sort of place you would like to stay in. The founders came up with idea that every conference room have a theme based on a particular listing. A wonderful firm called Interior Design Fair (IDF) figured out how to take that Paris listing and translate it into a conference room. They were an integral part of the overall design team. (continued on page 15)

(continued from page 14)

Facebook Menlo Park, photo by Jasper Sanidad

We also saw an interesting opportunity for the atrium of 888 Brannan, the location of Airbnb’s headquarters in San Francisco.

We arranged the atrium space in such a way that if you stand on the ground floor and look up at the windows, it’s like seeing postcards. There’s Paris, there’s London, there’s Copenhagen— all designed with the look and feel of the original listing.

Like UBM, everyone [at Airbnb] has access to daylight and views with no private offices. Many employees ride their bikes to work, so bike culture is another big influence. Bike storage, shower facilities—it’s all about health and doing the right thing. The big a-ha was the importance of the food culture. Feeding people and eating together were given top priority with TI dollars, both on the café itself and on healthy, locally sourced food service.

Airbnb now has its own architectural staff in-house. Knowing the leadership, it seemed a logical outgrowth of their work with us. I like to think that we can take credit for allowing them see the value of having the design team right there from the beginning of the project.

DS: How do you generously accommodate different cultural backgrounds and personalities in the workplace?

How is diversity reflected in the design of the space?

LB: You can appeal to a broad range of workforce preferences if you give employees the ability to impact their space. This

impact can be a moveable partition that they can reconfigure on demand, or it can be giving employees the opportunity to influence the design in a visible way. For example, there is a whole range of what I would call street art at Facebook. It could not be more diverse. They wanted space that they could change and move around. Facebook invited their employees to do their own artwork or to bring in people to do their artwork.

We provided the bones and Facebook employees did the rest.

This also happened at UBM, which wanted to reflect the local community. Their own team in San Francisco formed an art committee that commissioned five street artists—graffiti art and street art—to create these spectacular installations in an effort to give the local employees an impact on their space.

DS: What do you see as the priorities for workspace designed to suit millennials?

LB: The biggest learning for me is that with millennials, change is the norm. You design for change.

A great example is the space we recently designed for ourselves, our Oakland office. Just under 50% of Gensler employees in our Northwest region (228 of 488) are millennials, so it was natural to apply the lessons we learned from our clients. A strong focus was to design the space around health and wellness and use food as a unifying cultural element. (continued on page 16)

15

(continued from page 15)

Facebook Mexico City, photo by Rafael Gamo

And like UBM, Airbnb, and Facebook, there are no private offices and everyone has access to daylight and views. The “we” spaces are incredibly flexible. They can be set up as a classroom, a meeting space, or a conference room. This choice is driven by the millennial desire to move things around and impact and interact with the space. Millennials prefer to choose where they want to work rather than being tethered to one particular desk. (My favorite space is the library/meeting space, divided by these cool bulletin boards on wheels, which fold and move in a host of ways.)

The kitchen is also very important. It serves as the social hub, just like your home. You can work around the kitchen table, have impromptu meetings or just gather to socialize. With absolutely gorgeous views of the East Bay hills as a backdrop, it is in constant use.

Another thing that we’re seeing is the influence of the maker movement: the desire to make things, try things out. We have a workshop with 3-D printers for experimentation. It is part of being entrepreneurial, the ability to design something and go directly to the 3-D printer and see what happens.

I love working with millennials, I really do. I love their confidence and how much they really do want to make a difference with their work. They are achievement oriented.

It’s fabulous. It has potential to change so much for the good.

16

I have a son who was born in 1991 so he is right in the middle of the millennials. For him and a lot of the kids he grew up with, the issue of making a difference in their workplace is front and center. They don’t just want a paycheck.

As someone who is working with and mentoring them, one of the biggest challenges is how to channel millennials’ high expectations. It is incumbent on us, the previous generations, to understand how to teach them, because they are ready to go. And if they don’t get there with our help, they will find another way—which would be a lost opportunity for us.

Managers and businesses need to learn how to give them the tools to do what they want to do.

•

About the Author Donna Schumacher is the founder and creative director of Donna Schumacher Architecture (DSA), a boutique architecture practice for small-scale commercial tenant improvements, retail, and residential work in the Bay Area. DSA projects range from one-of-a-kind signature elements for architectural interiors, utilizing Donna’s background in the fine arts, to complex projects requiring multiple permits, tapping into her 30 years of experience with the San Francisco building department. DSA has recently introduced art consulting to its roster of services. Donna has been managing editor for the VIEW since 2012.

RESTAURANT

REPORT

EATSA: Food for the New Generation © 2016 Angie Sommer, ZFA Structural Engineers

Photos provided by Eric Wolfinger

Eatsa storefront, image courtesy of Eatsa

With each new generation comes progress.

A different perspective. CHANGE. The new kids on the block nowadays are the millennials—a term loosely assigned to the slew of people who were born in the 1980s and ’90s who were the first to come of age in the new millennium. Millennials have recently surpassed the baby boomers in population: in 2015 the US Census Bureau tallied millennials at just over 75 million— the largest generation in US history—while boomers slipped to just under that milestone. And, as nature goes, the next decades will be dominated even more strongly by this “Nintendo generation,” whose population is projected to peak at over 81 million people in 2036 (due largely to immigration).1 As we all scramble to adjust to—or initiate—the changes that these young adults bring to our culture, we dutifully note their effects across all facets of our society. Millennials are changing the way we shop, work, live, and, yes, eat.

To generalize, one of the new generation’s often-cited food trends is their preference for local, organic, and healthier foods. Another

is that many of these hip young adults don’t necessarily cook as much as their parents did and tend to eat at restaurants (or order through delivery apps) much more than previous generations.

And as a result, given their seemingly innate familiarity with technology, the market has adapted to provide many options for fast, healthy food that can be ordered quickly and easily online.

Which brings us to Eatsa: a new eatery that successfully combines speed, freshness, and technology to give millennials just what they seem to want. The premise of Eatsa is this: show up at the shop, order and pay via touch screen at a tablet kiosk (or order beforehand on an app from your phone), watch your name pop up on a big screen TV (like the standby list at the airport) with a cubby number next to it, and then proceed to retrieve your warm, freshly made food. No interactions with other humans, no sneeze-guarded assembly line—just the novelty of a delicious meal ushered to you by way of wellgroomed technology.

Having heard of this “robot restaurant” in mid-2015 (a somewhat exaggerated moniker for this seemingly automated eatery), I (continued on page 18)

17

(continued from page 17)

Image courtesy of Eatsa

did a walk-by but was too intimidated by the huge line to go in.

In late September 2016, however, I approached the California Street location with resolve, determined to try it.

I arrived in the back of the line at 12:09 p.m. on a Wednesday afternoon. There were approximately 15 people in front of me in a snaking, stanchion-formed line. Surveying the crowd, I estimated all but a few at under 35 years old.

At 12:13, I had made it through the line and was ordering at one of eight kiosks. At 12:15, I had placed my order by credit card and walked to the main vestibule, where the cubbies were located, to see my name pop up on the bottom of the large TV screen mounted overhead. I watched, mesmerized, as my name climbed up the list until, at 12:16, it glowed green, indicating that my food was ready in cubby #7. I found it in just a moment: the front was a semi-transparent screen that now displayed my name. A small circle in the corner of the cubby flashed the words “double tap to open,” and after doing so, the door opened like an old-fashioned garage door, allowing me access to a perfect little compostable bowl of food.

I was nearly giddy with the experience at the time, and thoroughly enjoyed the Bento Bowl I had ordered. I went back the following two afternoons, this time with my coworkers, who similarly approved. I can see how this ticks all the boxes for millennials—fast, cheap, healthy, and tasty—and so far as I can tell this time around, the new generation has done a good thing.

Image by Angie Sommer

warm lemon-herb toasted quinoa, falafel, kalamata olives, hummus, harissa. Calories: 622; grams of protein: 22.

• Aloha Bowl: sesame seeds, edamame, orange miso sauce, portobello poke, macaroni salad, taro root chips, cucumber, island-style quinoa, lomi lomi tomato, wakame (edible seaweed), pickled ginger, Napa cabbage. Calories: 584; grams of protein: 26.

• Spice Market Bowl: corn curry, roasted yams, saag paneer (spinach and marinated cheese), cucumber raita, tandoori tofu, warm lemon-herb toasted quinoa, pita bread, fried chickpeas. Calories: 717; grams of protein: 27.

Other choices include the Tres Chiles Bowl (“an explosion of Latin American flavors”), Cantina Kale Salad (“a tender kale salad with a fiesta of southwestern flavors”), Burrito Bowl (“a fresh and flavorful Mexican mix”), and Bento Bowl (“a quinoa spin on classic teriyaki”). It also offers smaller breakfast bowls between 7 and 10:30 a.m., such as a southwestern scramble, a Mediterranean scramble, and goat cheese and veggie bowl.

Aside from the interesting, varied menu, each lunch bowl is only $7 (breakfast bowls are under $4). And even if the line is long, your food is ready in minutes, so lines move lightning fast.

So…fast, fresh, healthy, relatively inexpensive, and fully integrated with fun, easy-to-use technology? Sounds like just what the millennials ordered.

All of Eatsa’s food is vegetarian, with quinoa-based bowls making up the majority of the menu. Quinoa, one of San Francisco’s newest favorite superfoods, is a complete protein, with all the amino acids necessary for human nutrition. It’s also cholesterol and gluten-free, and great as a staple food, not just an accompaniment. If you haven’t tried it, think it of it like rice or couscous, except way more nutritious.

But before you turn up a snooty nose, look at a few of Eatsa’s choices and the accompanying nutrition facts: • Hummus and Falafel Bowl: pita chips, tahini dressing, arugula, feta cheese, tomato-cucumber salad, tzatziki,

18

•

Population statistics: http://www.pewresearch.org/fact-tank/2016/ 04/25/millennials-overtake-baby-boomers/

1

About the Author Angie Sommer is an associate at ZFA Structural Engineers, a 60-person engineering firm with five Bay Area offices and a broad range of experience in the commercial, educational, residential, retrofit, and hospitality sectors. In her spare time, she volunteers on a variety of industry committees, including CREW SF and the Structural Engineers Association of Northern California, where she is incoming chair for the SE3 (Structural Engineering Engagement and Equity) committee. She also helps people write wedding vows, ceremonies, and speeches via her business, Vow Muse (vowmuse.com), which was featured in the New York Times in June 2015.

THE DECLINE OF THE TRADITIONAL MALL and the Evolution of Experiential Shopping © 2016 Lori Coleman, Madison Marquette

Major shifts in the demographic and socioeconomic composition of consumers have rapidly transformed the definition of traditional shopping and retail over the last decade. As Michael Glenn, mall manager at Stony Point in Richmond recently told the Richmond-Times Dispatch, “Retail is no longer a brick-and-mortar business; it is a brickand-mobile business.”

With handheld technology that allows a consumer to procure a custom-curated sweater made from the undercoat of an endangered llama or a three-course meal in one swipe, the clicks vs. bricks conversation has generated a lot of debate over how to prepare and restrategize the physical retail landscape.

“Malls Are Dying” Is Not the Whole Story Overbuilding, a mass recession, the rise of e-commerce, and several big-brand retailer bankruptcies have forced landlords and property managers to re-envision a Foot Locker into a health clinic, a Sunglass Hut into mixed-use office space.

Technology and emerging entertainment alternatives have all considerably reduced interest in America’s traditional enclosed-mall model. The International Council of Shopping Centers (ICSC) reported that since 1990, when 16 million square feet of mall space opened, shopping center building has trailed off, and only one large new mall has opened in the US since 2007. According to Greenstreet Advisors, nearly 25 enclosed shopping centers around the country have closed since 2010, and another 75 are in danger of failing.

A combination of socioeconomic forces has revolutionized consumer habits and spending across generations and demographics: The number of individuals living below the poverty line has nearly doubled since the recession in 2008, wiping out a large group of consumers who populated the B and C mall brands. Department stores have experienced rapid consolidation, leaving fewer options for traditional department-style anchor tenants, and discount retailers like T.J. Maxx and Target have replaced J.C. Penney and Macy’s as the popular go-to retailers for home essentials and personal care products. In addition, millennials want products no one else has; they want authenticity and luxury, not just discounts.

The middle has bottomed out. The Wall Street Journal recently reported that “A malls” currently make up only 3.5% of malls yet account for 22% of all value. According to

the 2015 Goldman Sachs list of top 100 malls in the United States, 75% are home to an Apple store, up from 69% in 2014. (“B malls” are traditionally classified by their location in secondary markets and a range of $300–500 per square foot in sales, according to National Real Estate Investor.)

Short Hills Mall in New Jersey, considered one of the most highly trafficked mall properties in the country, with maximum sales per square foot, has anchor tenants Bloomingdale’s and Saks Fifth Avenue peddling luxury leather and skin creams to a demographic with a much higher net worth than those patronizing malls in tertiary markets with marginalized retail concepts that can’t compete in a more sophisticated retail scene.

Since fewer, if any, retail properties are being developed from the ground up, existing ones are looking for innovative ways to remarket their square footage, like Highland Mall in Austin, Texas, which is being converted into a campus for Austin Community College, complete with classrooms and a culinary arts center.

Springfield Town Center in the densely populated suburbs of northern Virginia, closed for renovation in 2012 after suffering double-digit revenue losses during the recession, reopened in October 2015 with a spa, a children’s lending library, and a movie theater with recliner seating, and it is being repositioned to take center stage as a community retail and entertainment destination for surrounding residents and businesses.

Experiential Shopping and the Millennial Market The rise of the millennial spender and the shift in consumer shopping habits is so complex that the Wall Street Journal has dedicated an entire series in its business section to examining the topic. Retailers’ longstanding model of saturating every market with outposts of their brand has been adapted into creating fewer but more upscale stores and shopping destinations with a multipurpose appeal.

Bloomberg News has reported1 that millennials aren’t that into malls, compared to the previous Generation X, who grew up in the “mall-rat culture” of the ’80s and ’90s. Developers, therefore, are not only focusing properties around housing, dining, and entertainment options—as millennials want to live closer to work and play—but also thinking about how to integrate their merchandising into mobile-friendly marketing concepts that draw shoppers into their physical locations, not just the screen. (continued on page 26)

19

RETUNING RETAIL: A CASE STUDY © 2016 Jack Verdon, AIA Verdon Architects, Inc.

Asbury Park. Verdon Architects © 2016

The up-and-coming men’s jeans maker Asbury Park Clothing Company (APCC) has been putting significant time and energy into designing and fabricating its American-made selvedge denim jeans since 2010. The product can be found online and in over 40 boutique locations across the US and Canada. Now APCC is getting ready to venture into its first proprietary outlet.

APCC is a rebellious, rock-and-roll brand geared toward the millennial looking for an authentic, well-crafted, Americanmade jean. Although Asbury Park jeans are worn by guys in rock bands such as Bon Jovi and Guns N’ Roses, APCC is targeting the new generation of musicians, such as Highly Suspect, Red Sun Rising, and Eagles of Death Metal, in order to capture the latest group of fans between the ages of 17 and 25.

When APCC approached Verdon Architects to develop a prototype for the launching of its national chain of brick-andmortar stores, it appeared to be a common request. Naturally, the physical qualities of the new retail prototype would further establish the brand in the marketplace and play a key role in defining its product. But as VA started working with Jimmy Hankins, the CEO and founder, to translate APCC’s gritty, “anything goes” lifestyle brand into its first physical location, it quickly become apparent that the traditional retail store was not the right fit for the Asbury Park brand.

“The denim industry is in a major transition, and the latest generation of consumers is eager for a new brand they can identify with, call their own, and grow along side of,” says Hankins. “Most major brands are product driven by touch-points,

20

with contrived marketing and ad campaigns. In today’s world this business model is no longer as effective on the latest consumer generation… Many brands have lost their ‘creative culture’ to a ‘margin culture’ due to mergers and buyouts, which has compromised their quality in order to meet financial pressure.”

Hankins’s goal is to have Asbury Park Clothing Company’s online presence and its physical locations complement one another, reinforcing the lifestyle brand. A progressive and daring decision was made to create a branded destination social club.

The prototype club has raw concrete floors and a gritty industrial look with well-crafted metal, leather, and woodwork, creating an authentically cool American hangout that feels like your favorite dive bar. The space is designed to be a flexible event space outfitted with a removable stage, comfortable worn leather sofas, and a solid oak bar to check out a pair of Asbury Park jeans or throw back a couple of cold ones.

Hankins describes the club as “a place to hang out, shoot some pool, listen to live music, try on a pair of Asbury’s if you like…but it’s more about hanging out than being in a store to be sold something”.

•

About the Author Jack Verdon, AIA is the owner and principal of Verdon Architects, Inc., an architecture and design firm in San Francisco specializing in ground-floor retail and residential projects. Jack is the cochair of the San Francisco AIA Small Firms Committee, as well as a guest design critic at the Academy of Art. For more information please visit www.verdonarchitects.com.

WHAT MILLENNIALS WANT IN AN OFFICE AND

Their Effect on Operating Energy Costs © 2016 Leyla Sfeir, Energeia Solutions

888 Brannen, courtesy of Gensler

There are several studies that indicate that millennials (loosely defined as people born between 1980 and 2000 and who are approximately 40% of today’s employees in the US) are the largest generational group in today’s workforce.1 Their large numbers grant them the leverage needed to challenge the status quo and set trends that are reshaping corporate culture.

Authors William Strauss and Neil Howe predicted that millennials would become “civic minded,” with a strong sense of community, both local and global.2 This affects the way millennials choose their employers. Companies are taking

notice and are making appropriate changes to address these needs, including reshaping the workspace to promote a greater sense of community with their employees.

A study by Deloitte3 shows that 34% of millennials switch jobs in under two years, and at the same time a survey by the Chicago Tribune4 shows that it costs companies between $15,000 and $25,000 to find suitable replacements. Employers are noticing these trends and are starting to address employee needs in order to remain competitive. (continued on page 22)

21

(continued from page 21) The Deloitte study highlights the criteria (in order of importance, excluding salary) that millennials use to evaluate job opportunities: • good work-life balance • opportunities to progress and be leaders • remote working and flexible hours • deriving a sense of meaning from their work • professional development training programs • the impact their work has on society • the quality of the company’s products and services • a strong sense of purpose • opportunities for international travel • fast growth and dynamism • a leading company that people admire • investing in and using the latest technology • the reputation of the company’s leaders To address some of these needs, designers are starting to rethink and reshape the workspace. In the article “Playing for keeps: creating a workspace that makes millennials want to stay,”5 NewGround identified corporate culture, collaboration, connectivity, sociability, flexibility, and comfort as key design constraints that could help control millennial turnover.

Architectural and design firm Gensler states that, since building stock is limited, old buildings in San Francisco are being renewed and repurposed to turn them into what millennial workers prefer: modern, vibrant workspaces that foster creativity and innovation.6 (An example of this building trend can be seen at 888 Brannan in San Francisco.)

So what does this mean to the office space? Building Design + Construction (BD+C) notes that knowledge workers spend just 40% of their time at their desks and that non-group tasks have decreased by about 20%, resulting in a decrease in the use of personal workspace. In 2001, an average of 300 square feet was allotted per worker; in 2012 the number had decreased to 176 square feet, with predictions that it will go as low as 100 square feet within a few years. Dennis Gaffney, vice president at RTKL, explains that efficient design is “not about decreasing square footage but about increasing utilization.”7 Technology, connectivity, and flexibility in work schedules have allowed new design strategies to emerge, which helps increase worker density and space utilization without making employees feel crowded. Strategies such as desk sharing (also known as “free desking”) and “hoteling” (providing office space to employees on an as-needed basis) allow companies to accommodate more employees with fewer desks. This

22

reduces the amount of physical space that an enterprise needs, lowering overhead cost while (ideally) ensuring that every worker can access office resources when necessary.

Also, in an attempt to help employees strike a good worklife balance, companies are starting to incorporate amenities and common areas that make their employees feel that their personal well-being is important. It is not uncommon to see companies devote office space to wellness rooms, daycare, bike racks, etc.

Addressing the workspace needs of today’s workforce has a direct impact on the energy consumption of buildings, opening up the opportunity to implement more advanced building system control upgrades that can help reduce energy costs. An increase in workspace density (i.e., less square footage assigned per employee) can potentially increase energy costs, since HVAC systems will work harder to maintain zone temperatures during hot days.

On the other hand, employers that offer flexibility in working hours and/or allow employees to work remotely present the opportunity to implement advanced controls for HVAC and lighting systems that can better match building system loading to real-time demand. Building system controls such as advanced equipment scheduling, demand controlled ventilation, and occupancy-controlled lighting can now be cost effective in a wider range of building areas compared to employers that enforce more rigid employee schedules.

•

1

http://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtakebaby-boomers/

2

Neil Howe and William Strauss, Millennials Rising: The Next Great Generation, 2000

3

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/ millennialsurvey.html

4

http://articles.chicagotribune.com/2013-08-05/business/ct-biz-0805work-advice-huppke-20130805_1_millennials-workplace-companies

5

http://www.newground.com/perspective/playing-for-keeps-creating-aworkspace-that-makes-millennials-want-to-stay

6

http://www.gensler.com/design-forecast-2015-the-future-of-workplace

7

http://www.bdcnetwork.com/workplace-design-trends-make-waymillennials

About the Author Leyla Sfeir is the Director of Marketing and Sales for Energeia Solutions, a company driven by a passion for energy efficiency and sustainability.

With over 15 years of experience in the commercial, industrial, and public sectors, Energeia Solutions offers innovative energy management and energy efficiency consulting services.

POINT of VIEW:

URBAN DESIGN

© 2016 Carol Ann Flint

forces that shifted our sensibilities—via Madison Avenue—out of the city and into the suburbs. Sprawl happened.

Millennials grew up listening to all the talk about global warming, and how long it takes plastic to degrade, and how much better it is to exercise instead of being sedentary, and how much healthier it is to have green food and purple food than golden brown food.

This isn’t the weather: millennials are the empowered generation—they are doing something about it.

The first millennials are now 35; the largest subset is currently 23 and 24. This largest generation will continue to enter the workforce until 2022. They are entering their prime years of earning and spending. They will continue to rent, acquire things, and entertain themselves, then buy homes and provide for children during the later end of their spending primes.

So when 90 million people want to spend their money, business listens. And that’s what all the fuss is about.

Muni Train, Shutterstock

“Millennials, millennials, millennials!” (channeling “Marsha, Marsha, Marsha!” from The Brady Bunch). Everyone is talking about millennials, but what are we doing about them (channeling the English saw about the weather)? Well, quite a lot, it turns out, from an urban design perspective.

Millennials’ formative years were the Barney era, in which every child was celebrated for being wonderful. Millennials know they are powerful creators who can do anything better. They are downright disruptive.

Native techies, millennials don’t think about technology as something other; it is more like a part of the atmosphere, like the air we breathe. Its use is an autonomic function, more noticeable when it is absent than when it is present. Hence the millennial nose for identifying where tech isn’t used in quotidian activities—and applying a tech solution.

However, this generation’s preferences that are having profound influence on urban design are probably driven by a longer technology cycle that begins way back. Industrialization drew poorer workers from the farm to factories in the 19th century. Steel allowed more density and more vertical construction. Streetcars and trolleys moved masses around with some efficiency. Enter the automobile, consumer finance, and the political and economic

When it comes to urban design, what are the real impacts? After reading reports by Gallup, NPR, and various wealth advisory firms, real estate advisories, and planning organizations, I found a consensus of values held by millennials that seems consistent: They value health—they want to eat good, healthy food. They are movement and exercise conscious. They are concerned about the environment—and willing to make choices to protect it. They do not value driving and personal automobiles (as much). They are more interested in experiences than owning things. They are willing to share. They like mixed-use communities that are walkable to work, entertainment, dining, recreation, residences, and transit. They are technology adapters.

LET’S LOOK AT EACH OF THESE VALUES IN MORE DETAIL: Personal health: Millennials value exercise, so they emphasize greenspaces, bike lanes, and walkability in the public and private development. Their appreciation of healthy food promotes urban farms and regional food sources.

Environment: Environmental values reinforce the walkable, bikeable urban landscape and promote respect and care for ecosystems in cities and on agrarian land. Urban planning and development that protects rather than degrades ecosystems— particularly as it pertains to water—are prioritized by millennials.

This value also supports sustainable building practices and (continued on page 24)

23

(continued from page 23) communal residential space will change for this generation as they start families.)

Dense communities: More emphasis on green and openspace recreational areas within the urban atmosphere supports mindful design, creating smarter density while protecting light and air. Lively communities with entertainment, culture, useable open space, retail, and dining will grow. Millennials will favor development of mixed office/residential/retail/ public space near currently or formerly underutilized transit stops, which creates “cities within cities” and revitalizes urban neighborhoods. Millennials will vote to capitalize much-needed infrastructure projects that have been ignored by voters of their parents’ generation.

But as millennials mature and build families, will their values remain consistent? Will they choose to raise their kids in homes with smaller land footprints in denser communities rather than urban-sprawl suburbs?

Bicycles, Shutterstock

materials, responsible refuse treatment, and recycling systems.

Millennials appreciate that 120 people on light transit can take 60 cars with two passengers each off the street, reducing pollution and saving energy.

Driving less: Lessened emphasis on car ownership will have a profound impact on urban design because of diminished parking requirements for residential, office, and public amenities. Car sharing and greater use of public transit, biking, and walking will relieve traffic congestion. Less emphasis on driving puts more emphasis on living in dense, amenity-rich, 18- or 24-hour cities with high-functioning public transportation systems.

Experience driven: Millennials place an emphasis on public amenities for entertainment and recreation and on restaurants that innovate and create community. Big-boxes will have a foothold on the streetscape, but the bulk of their housewares and discount shoes will be retailed below grade.

Sharing: As millennials begin their careers and want to live affordably in urban centers, the value of sharing is allowing developers to create residences and work buildings with smaller private spaces and more public spaces. Microapartments are acceptable because they have public or membership amenities with community spaces for cooking, dining, entertainment, recreation, and working. Workspaces that balance privacy and collaborative space continue to spark productivity. Car sharing promotes less private space and more shared space as well, both in the car and as it relates to parking requirements. (The question remains as to how millennials’ appetite for private and

24

Not everyone will live in San Francisco or New York (or Oakland or Brooklyn), so millennials with the same values will densify “suburban-urban” centers to offer a fully mixed-use experience.

With better infrastructure, better transit, better recreation, better retail, better cultural access, and good, efficient interior design, why wouldn’t a townhouse in the Excelsior or Bayview be a better place to raise your kids when you’ve outgrown your sexy rental in the Tenderloin?

Schools are a driver, of course. This is just my prognostication, but I think that as our cities get wealthier and smarter (as education and incomes migrate to cities with the millennials), urban schools will step up to match the demands and pockets of voters.

Tech adapters: A generation of early adapters and acceptors of change will—with the power of their aggregate dollars— foster the transition to such economy changers as autonomous vehicles, which will have a profound impact on employment.

Their smart fridge will send an order to Amazon that they are out of yogurt and that it needs to be delivered to their automated concierge locker.

My guess is that millennial urbanization is a trend that will last beyond their reign, and that our cities will get better for all generations. We can turn the suburbs into farms and wilderness experience parks and wildlife refuges.

•

About the Author Carol Ann Flint is an investment sales broker at Newmark Grubb Knight Frank’s Walnut Creek office. She relocated to the Bay Area from New York City in 2015 and is insatiably curious about planning and design and how they affect life in communities.

RISING LEADERS: Where New CRE Professionals Come to Thrive © 2016 Kristina Owyoung Vinson, Pankow Builders; Amanda Bates, Kilroy Realty Corporation

The CREW SF Rising Leaders Committee is the first such group of its kind in the San Francisco Bay Area: a youngfemale leadership-oriented group specifically dedicated to the advancement of young leaders in commercial real estate.

The committee was created in the spring of 2015 to create a space where dynamic young women feel empowered. Guided by the core values of leadership and innovation, the group is focused on providing leadership training and positions of responsibility in CREW. It also helps to re-engage more seasoned (we like to call them “spicy”) members of CREW through mentorship opportunities and connections to a new, vibrant group of members.

The Rising Leaders Committee was created through great commitment: from the board members who dreamed up the committee and reached out to the CREW national network of 72 chapters and 10,000+ members to learn how to best establish its structure; to 2015 CREW SF President Laurie Gustafson and Board Liaison Kristina Owyoung Vinson, who guided the committee into inception with a core number of younger professionals (Amanda Bates, Kena David, Erica Hurd, Jolene Goldsmith, and Elaine Chan) who helped establish the goals and structure of the group.

Rising Leaders, 2016, image courtesy of CREW SF

The committee has been visible nationwide, as there were seven Rising Leaders who attended the national CREW convention in 2015 in Seattle, many of them having received scholarships to attend. The 2016 CREW Network Convention took place in New York City in October, and five Rising Leaders were in attendance thanks to scholarships.

Locally, Kristina Owyoung Vinson was honored in February 2016 with a nomination for Elevate’s Commercial Real Estate Industry Impact award spearheaded by the Registry, CREW SF, East Bay CREW, and CREW Silicon Valley. Moreover, the group has helped to increase CREW SF’s associate membership (1-5 years of experience in the industry) by 35 members since the committee’s inception.

The Rising Leaders Committee has had three successful morning seminars, called “coffee talks,” helmed by CREW leaders and past presidents, to educate those new to the industry on the many facets of the CRE world.

Now, the current committee co-chairs, Erica Levine (Arup) and Erica Hurd (Equity One), and members are working closely to plan various networking and informational seminars and events, including Wine Savvy 101, The Coffee Talk Education

Rising Leaders, 2015, image courtesy of CREW SF

Series, the Leadership Embodiment Workshop, Golf Savvy 101, High Spirits and Legacy Bars, Rising Leader–led job site tours, and informal happy hours.

By engaging younger members of the Bay Area commercial real estate community early on and developing their leadership skills and industry knowledge, we hope these members can bring their successes back to their respective companies. We recognize the need to actively work towards parity, and when we have more women in commercial real estate leadership positions, entire companies and the industry as a whole will benefit.

We believe that both senior men and women need to focus on training the next generation of leaders in the industry to grow (continued on page 26)

25

(continued from page 19)

Contrast between stand-alone retails stores and the all-enclosed mall models. Photo courtesy of MMRS

Millennials and the next generation of shoppers desire outdoor spaces and garden rooftops, dining options that are near their place of residence, and unique retail they can’t find online or in every chain across America. In losing traditional anchor tenants like Macy’s and J.C. Penney—once the goto purveyors of appliances, lawn care equipment, and towels in every color—developers are reinventing the experiential side of shopping, with on-site programming and events like wine tastings, movie nights, and interactive playgrounds to merge the evolving interests of a population of consumers that’s more connected than ever.

1

•

http://www.bloomberg.com/news/articles/2014-06-25/millennialsshunning-malls-speeds-web-shopping-revolution

About the Author Lori Coleman has been with Madison Marquette for 12 years, and her experience in commercial real estate includes a diverse background in accounting, property management, and project management of hotel, retail, industrial, and office properties. Lori is currently the Vice President of Management Services for Madison Marquette’s California Shopping Center portfolio of over 3.3 million square feet. She oversees the property management and accounting teams and has a direct relationship with each owner, ensuring that their individual needs and reporting requirements are met. Lori has a Master’s of Public Administration from San Francisco State University and a bachelor’s degree from UC Santa Barbara. She also holds a Real Property Administrator (RPA) designation from the Building Owners and Managers Association (BOMA) and a California Real Estate Salesperson License. Lori is an active member of CREW San Francisco and the Union Square Business Improvement District.

(continued from page 25) the future of commercial real estate and that it is incumbent upon our chapter and our Rising Leaders committee to work to achieve parity.

•

About the Authors Kristina Owyoung Vinson is a dedicated communications, marketing, and learning and development professional with a passion for leading and inspiring others to communicate more effectively. As Director of Culture and Communications for Pankow Builders, she is responsible for developing and implementing corporate initiatives to build a strong internal community centered on Pankow’s vision, mission, values, and goals. Kristina ensures that the company has a single, consistent voice and brand by leading its global communications. Kristina actively serves on the Board of Directors of CREW SF and is the Director of the Rising Leaders

26

committee. This year, Kristina received multiple nominations for the Commercial Real Estate Industry Impact Award from ELEVATE: Honoring Diversity & Women Leadership in the Bay Area.Kristina is a fourth-generation Bay Area native and lives on the Peninsula with her husband, Todd. In her spare time she enjoys scuba diving, traveling, dancing, and wine tasting.

Amanda Bates is an investment director at Kilroy Realty Corporation. She is in charge of underwriting acquisition and development projects on the West Coast. Amanda also helps lead the company’s disposition and joint venture diligence processes.

Amanda moved to San Francisco in June of 2014 and previously worked at HFF in Washington, DC, as an office investment sales analyst and at JPMorgan Chase in New York City as a private banking analyst. She graduated from Emory University in 2010 with a degree in finance and international business.

A WORD FROM OUR SPONSOR

AND THAT WORD IS...

Commitment

At BCCI Construction Company, our vision is to expand the role of builder, providing constructive solutions for real estate. Thus our motto: “The Thinking’s Built In.” Established in 1986, BCCI is a leading commercial general contractor with offices in San Francisco and Palo Alto. BCCI’s team is honored to have worked on numerous projects that have been awarded local and national design recognition. We have been ranked as a top contractor

by ENR California and continuously ranked among the “Bay Area Best Places to Work” by the San Francisco Business Times.

With a portfolio that includes new construction, major building renovations, historic restorations, seismic upgrades, and tenant improvement projects, BCCI offers a unique range of preconstruction, design-build, project management, sustainable construction, and LEED and WELL consulting services.

As part of our commitment to sustainability, our team of green building experts has completed nearly 60 projects that have achieved or are seeking LEED certification, including California’s first LEED for Commercial Interiors (CI)–certified project and the first LEED v4 CI Platinum–certified projects in the United States. Additionally BCCI is currently working on a handful of WELL projects ranging from core and shell to new and existing interiors, including California’s first ground-up building seeking certification through the WELL Building Standard for Core and Shell.

BCCI is pleased to sponsor CREW SF and support its mission of elevating women in every sector of the commercial real estate industry.

We invite you to find out how BCCI can add value to and deliver exceptional service and quality on your next construction project.

Contact us at info@bcciconst.com or (415) 817-5100, or find us online at www.bcciconst.com.

BCCI Construction Company Headquarters, photo by Blake Marvin

27

A NG E L P ROFILE KRISTINA OWYOUNG VINSON

Director of Culture & Communications | Pankow Builders Company: Since 1963, Pankow has benefited clients through creative problem-solving, engineering expertise, and construction innovation.

Pioneers of design-build and integrated project delivery, Pankow provides design-build, design-assist, and tenant improvement services on page facilities 4) and specializes in both complex projects(continued and work in occupied for a diverse range of markets and building types. Its headquarters are in Pasadena, CA, with offices in San Francisco and Oakland.

Background: Born in Walnut Creek, CA, I was exposed to the AEC industry at a young age and loved helping to carry bricks—while still in diapers—during my family’s home renovation. My grandfather was a civil engineer, and my father is an architect and residential developer.

I am passionate about leading and inspiring others to communicate more effectively. This understanding began with my major in communication studies at UCLA and developed as I studied to become a certified integral coach. As a lifelong learner, I feel blessed to work with clients that inspire me through their commitment to their growth and development. In 2005, I joined LCA Architects in Walnut Creek as their Marketing and Business Development Manager. I joined Pankow Builders in 2011.

I am a fourth-generation Bay Area native and live on the Peninsula with my husband Todd, with whom I am expecting our first child, a little girl, in February 2017.

CREW history: I joined East Bay CREW in 2007 and became a CREW SF member in 2011. I have served as vice-chair and chair of the Communications Committee (two years as chair), Board of Directors Membership Liaison (2015), and Rising Leaders Liaison (2015-2016).

I attended the CREW Network Convention (2014–2016) and the Leadership Summit (Fall 2015).

Charities: World Vision, SF Child Abuse Prevention Center First job: Dance teacher at the California Academy of Performing Arts in Moraga, CA Extracurricular passions: In my spare time I enjoy scuba diving, traveling, dancing, and wine tasting.

Travel tips: Try scuba diving! It is an underwater world that’s fun to discover!

Recent travel highlight: I attended CREW Network Convention in Manhattan in October. CREW SF had 46 chapter attendees. It was fun sightseeing in New York, watching shows on Broadway, and building camaraderie with other CREW members.

Top Bay Area restaurant picks: Street on Polk Street 15 minutes of fame: I was the first runner-up in the Miss Chinatown USA Pageant in 2010. I began my reign on a float in San Francisco’s Chinese New Year parade and spent the year as a goodwill ambassador for the Chinese community across the United States.