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Spencer Levy
In the real estate business, we talk about the dirt; site location, the land itself, and then it's about brick and mortar, steel and glass, the power and air quality systems, everything that makes the built environment stand and function. What goes inside those buildings; the floor plans, fixtures and furniture. Those are some of the last choices owners and occupiers have to make. But those details involve much more than aesthetics and can impact business in a variety of important ways. On this episode, a discussion of design and why design has been elevated to the top of many corporate decision trees.
Amanda Schneider
Now you've got the CHRO. You've got the Chief Technology officer. Maybe you have a head of hybrid, head of remote, especially when you get in that office sector. You've got a lot of different people, sometimes with a lot of competing priorities. And that gets very challenging when you have creatives that are trying to kind of take into account all of these different perspectives to try and get somewhere that is actually most beneficial for the people that will be occupying this space.
Spencer Levy
That's Amanda Schneider, founder and president of ThinkLab, a design research division of the publishing company Sandow. Based in Chicago, Amanda originally covered design as a Huffington Post blogger before she founded an independent consultancy in 2011. That firm was acquired by Sandow in 2018 and rebranded as ThinkLab, which today helps businesses understand the entire design ecosystem. Coming up, we visit the Windy City and a space designed for podcasting at the Allsteel Experience Center to bring you insights into functional space, device free zones, an emerging trend of nostalgia at the office, and lots more. I'm Spencer Levy, and that's right now on The Weekly Take.
Spencer Levy
Welcome to The Weekly Take. And this week I am delighted to be with Amanda Schneider, President of ThinkLab. Amanda, welcome to the show.
Amanda Schneider
Thanks for having me.
Spencer Levy
Let's talk about what design is. Okay, so I'm not trying to bring it down to the basic level, but most of our listeners are in the real estate business. Not all of them are in office. But just in basic terms, do you cover office, retail, hotels? Tell us a little bit about the scope of your practice.
Amanda Schneider
Absolutely. So I think that there's an issue with interior design, because there's things like HGTV that really promote interior designers as color pickers and pillow pickers, and some of them that are very famous and well known are actually not even degreed interior designers. So the true field of interior design does cover residential, and it does cover decorators, but it also covers the commercial side, and the commercial side includes corporate interior design, those that design hospitals. It includes hospitality, education and a whole slew of other vertical markets. So a lot of what we do is really try to look at where design work is happening, what's growing, and really help our clients stay ahead of trends, of shifts and changes that are happening. And of course, corporate. We can't miss corporate as well, because a lot of conversation is happening around that today.
Spencer Levy
So your personal practice covers all of the above, but would you say a disproportionate amount of your practice is around the interior of office space?
Amanda Schneider
I would say that's where our industry naturally focuses is office, because office is the largest sector. And my team and I also run all of the Interior Design Giants of Design numbers. So think of that like the Fortune 500, except for interior design firms really looking at what work is happening. And corporate is by far almost double any other sector when you look at interior design work.
Spencer Levy
So take me through where you see the market today from where we were pre-COVID. What are some of the major changes?
Amanda Schneider
Yeah. So a lot of our Interior Design Giants of Design, which again is the top 200 firms, looking at detailed metrics about where their fees come from, what they're earning. So corporate is the largest sector. And corporate is actually down 19% since the onset of the pandemic. So we look at 2019 numbers compared to our most recent numbers. It's fallen 19% and is expected to kind of stay at a steady state for a while. We've seen interesting shifts where actually, for the first time, during the pandemic, health care surpassed hospitality, which is typically the second in that bar chart. And it's stayed ahead since the onset of the pandemic. But I predict when we start to get, we're just now analyzing actuals from 2023 and looking at projections for 2024. I think healthcare is probably cooling a little bit. We've seen a bump in hospitality, so I expect hospitality to bump back up. And then the next one typically is residential followed by education. And we're seeing some really interesting early indicators that education is actually doing quite well right now. So we're trying to dig into that as we analyze these numbers for 2024.
Spencer Levy
So education meaning universities or high schools or all the stuff like that?
Amanda Schneider
There's more inter design work done in universities, kind of that higher ed sector than there is in like K-12.
Spencer Levy
Got it. Got it. And so when I look at interior design, there are two ways to look at it. Because workplace isn't just a place to work, it's culture, it's mission. It's all these things coming together in a physical manifestation of all of that. And the way I look at it is, and the continuum, the continuum on one end of the spectrum is efficiency. Let's make this cost effective and work as best we can. The other end is productivity. How do we make these people better? How do you look at it?
Amanda Schneider
So I think what's interesting from my point of view as we think about interior design and offices, is kind of form meets function, and how do we make it pretty? You don't have to know interior design to know that you feel good in certain spaces versus others, but also form, is there's really a function to these spaces, and interior designers do much more than just making things pretty. They really look at furniture layouts. They look at behavior of people. They really try to make spaces that make more productive teams. And I think that's especially important as we look at the office sector. I know you're exceptionally interested in the office sector and what's happening there, especially with this back to office conversation that's happening in 2023 and probably is not finished in 2024. I think the power of interior designers is matching that form with function to really make it beautiful, so you feel good in a space. Even if you're not a designer, you know when you feel good in a space, but also the form. Really looking at how we need to reinvent the office, because I think a lot of people are coming back to offices that maybe shut down pre-COVID, maybe have been less occupied for a while, and it's a little bit, this is a depressing example, but it's a little bit like going to someone's house after they've died, right? It just feels like it's sat there for a while. Right? So how do we need to reinvigorate these spaces to make them places that people want to be? I just attended a presentation that you gave at a CoreNet luncheon here in Chicago, and I think one of the things you said was Covid was like a big asteroid. Did you say asteroid or meteor?
Spencer Levy
I said meteor…
Amanda Schneider
Meteor!
Spencer Levy
… hitting the earth. Close, though. What's the difference between an asteroid and a meteor? that
Amanda Schneider
I don’t have the answer to that.
Spencer Levy
I'm not quite sure myself. I think an asteroid is when it's out in space.
Amanda Schneider
Okay.
Spencer Levy
It's a meteor when it comes down into Earth.
Amanda Schneider
Okay.
Spencer Levy
So it's an asteroid until it becomes a meteor.
Amanda Schneider
Alright, well, something hit us.
Spencer Levy
Yes.
Amanda Schneider
And it changed the way we think. And I think it's going to change the way that we do offices as well. I was a blogger for the Huffington Post in 2017, is when I started blogging for the Huffington Post. And I started coworking, and I thought coworking was fascinating because it was basically people paying for something that they essentially got for free. Right? You get a job, you get a badge, you get a badge into an office. So what would they pay for? And one of the most interesting things about that is for when you think of co-working spaces, I think you think of, you know, open office places, you know, where there's a beer on tap and people just want to come for the community. But actually, one of the top spaces to sell out were private offices, and they sold for the highest fees. So some of this was the asteroid, the meteor, hitting us. But some of this is human behavior that I think we just haven't tapped into because we haven't had to.
Spencer Levy
In terms of the changes you're seeing post-Covid, the meteor, I think we've both, I think we agree it was the meteor hitting the Earth. How did it change design? So one of the things you mentioned is individual offices and demised space versus open, collaborative. And there's issues there both practically and culturally. The cultural issues have to do with the hierarchical nature of having an office versus not, the size of your office or not. And then the practically is, it's more expensive, to demise more space than it is to have more open space. Any changes there post-Covid?
Amanda Schneider
I would say definitely. And I know one of the questions that we kind of talked about before was, you know, can design help with this? And I would say that depends, because a lot of it depends on how much they're empowered to take control of. For so many years we've been focused on how many people can you get in? What's the cost per square foot? And I think if we're invited in to really make it effective and make sure, how do you measure effectiveness, make sure that's clear measures. And then we measure it and repeat. I think that there's certainly a lot we could do there.
Spencer Levy
So we're in a beautiful space today with Allsteel, which is a major manufacturer of furniture. And I'm looking out at the furniture within this office right now, and what strikes me is that even though it's primarily an open office design, they have breaks in the lines. So like right in front of us, we have a, not a wall but like a half of a wall. And then they have a slotted wall and things like that. So I think that pure open office isn't the answer. I think it has to still have a sense of place, even within that office. Is that a fair way to put it?
Amanda Schneider
I think that's a fair way to put it. And I think that rethinking the office is going to have to happen. It's not going to be a sea of cubicles. It's not going to be a sea of desks coming in just for individual work. It's going to be a sea of spaces that really can support how people need to work today and how they want to collaborate today. So that means different zones, different areas, different heights, different acoustic treatment, because I think some of the statistics I've heard say that while it used to be about 80% of the office was individual workspace, 20% was that collaborative meeting space. I think post meteor, we're going to see that probably flip flop with 80% of the space much more collaboration focused, and maybe less space in only physical heads down work.
Spencer Levy
One of the changes that we've noticed in the real estate business is that we're dealing more today with the HR function and increasingly, the C-suite function than we were prior to that, which was procurement or the financial function, because I think people are now realizing that the office is not just a place to work. It's a functional device to increase productivity, and it's at risk. Who are you dealing with today as your customer?
Amanda Schneider
So many more people, I would say. So one of our statistics says while pre-COVID and pre- all of this change, pre-meteor, we’ll say, the average number of decision makers was probably about two on the average project. If you think about a manufacturer like Allsteel. Today, they're dealing with as many as 14. You used to have the CFO, the CEO maybe making the key decisions. Now you've got the CHRO. You've got the chief technology officer. Maybe you have a head of hybrid, head of remote, especially you get in that office sector. You've got a lot of different people sometimes with a lot of competing priorities. And that gets very challenging when you have creatives that are trying to kind of take into account all of these different perspectives, to try and get somewhere that is actually most beneficial for the people that will be occupying this space.
Spencer Levy
So, I go back to that continuum once again, which is the continuum between efficiency and productivity. And I think that the reason why that's not a common way to look at it in the business is because productivity is very difficult to measure, right? People have to use proxies, and a proxy for productivity would be a survey where they'll use happiness as a typical proxy. I’m happy, you must be productive. Well, not necessarily. How do you look at productivity? How do you measure it in the context of interior design?
Amanda Schneider
I think that's one of the biggest challenges. I have not seen a super effective way to measure productivity, especially as it relates to the design of the space. Now, some of the things I've seen is measuring, you know, occupancy. You can look at who's occupying a certain space more than others. You know, let's say you've got five equal conference rooms, but each of them have slightly different designs. When you often dig into those numbers to understand why, it could be because of technology in this room functioned a certain way. It could be because of the comfort of the furniture in something. So as you mentioned earlier, when you were talking about each building has its own, you know, unique story. Even when we get those data studies, kind of looking at why people use one space over another, it's often so nuanced, it's hard to relate back to a hard productivity number.
Spencer Levy
Well I guess we're all working on that. People have been measuring efficiency, productivity, those types of things for hundreds of years in labor studies. PhD level articles written by Cornell. Stanford has several. And you would think that the academic side would have caught up. But we're dealing with a psychological issue more than we're dealing with a widget issue, so to speak, of producing more generic things.
Amanda Schneider
Agreed. And how do you measure if you feel good in a space or not? Because if you feel good, you're probably going to be more productive. I think that there's a lot of exploration to be done. And I would say oftentimes these projects don't have budgets to go back in and do extensive studies. Plus, once a capital buildout is done, there's often not a lot of money left over to make changes, would they discover something different.
Spencer Levy
So we're sitting here in a great office at Allteals offices, and it's got a big screen TV and it’s got a bunch of lights. Looks like an old fashioned spaceship. And in certain ways, a lot of technology going on here. But technology to me is a double edged sword, right? Because while technology can make you more productive, can it make you less productive? And so the example I use is a speech I gave in Los Angeles in June, where I gave it on a Friday afternoon. And it was downtown L.A. Friday afternoon. You probably gave the speech to yourself, and it was a full house. And part of the reason was we decided not to zoom it. So what's your point of view on technology, its use in the workplace, it's use outside of the workplace, the hybrid workplace, all of the above?
Amanda Schneider
Yeah. I think one of the biggest things we've got to figure out is this hybrid equity and really how to make technology work for us when we're in a space. And it's been really interesting because I think it's often who's in the room that kind of feels like maybe you want to be in that room, and if you're remote, you're a bit left out. But what's actually happening sometimes now in this hybrid era is when you've got ten faces in one square versus single faces on the other square, it's making, kind of, a different kind of inequity. So I think a huge opportunity for design for these spaces is really to kind of integrate the technology with the furniture, with the architectural space in the room, so that it's much more seamless and really gives opportunity for that equity. And I think that's a huge challenge today. I'll say one of the other things is that most furniture is designed to last decades and decades and decades, right? It's designed to be sustainable. It's designed to stand up to college students beating it up to rotating corporate clients beating it up. Technology is not. Technology changes so fast. So it's very, very difficult to integrate technology with things like furniture and architecture that aren't changing as fast as that technology is.
Spencer Levy
So let's go back to that sustainability question. These chairs that we're sitting in right now, they may be brand new and I suspect they are, but it's going to last well beyond the fashionability, if that's the correct word, of these chairs. So to what extent when you're looking at designing a space, now in the space that we're in today, has exposed ceilings, exposed vents. So that means we don't need to drop down ceilings and things like that. But this chair. Will it ever be used again?
Amanda Schneider
It depends. Historically in our industry, I've been in this industry a little over 20 years, used furniture has been kind of the lower end of the market and perceived as less than. With the rise of the importance of sustainability, I am seeing that grow. We are seeing little pockets of things. There's a couple of new, really interesting businesses, one of them called Reseat, that is really trying to take furniture that is used and tag it so you know what the life of it is, kind of like a Carfax vehicle history report. You know, kind of where the life of that product is and you can kind of track it. So there's some innovators that are really in this space and trying to push forward to make used furniture a little bit sexier. And I hope that we see more grow on that front. There's a lot of work to be done to get everyone kind of adopted into that. And the complexity around, you know, you're looking around here, all the furniture that's in here, literally any color, different bases on a table, different finishes of wood. The possibilities are endless. So you end up with this kind of cacophony of all of these amazing pieces, and to catalog those and track them and if you're trying to reuse them in another office, kind of find what can be used is so labor intensive. As much as our industry likes to talk about flexibility, reconfiguration, even things like demountable walls, the truth is, the labor here, and it goes back to your labor story, the labor to do all of that cataloging and finding it and designing with it is almost more than it would be just to buy new. So our industry has a lot of work to do there.
Spencer Levy
So this is a complete non-sequitur. I'm a big barbecuer, and in my backyard I have, right now, three barbecues. I have two smokers and one regular barbecue. And I recently got a new barbecue about a year ago. And the reason I got a new barbecue is because I've tried to price out the cleaning of my existing barbecue. It was three times the price to clean my existing barbecue versus getting a new one. And so labor is everything. So this chair that we're sitting in here right now, if I wanted to move it from here to say New York City, just the labor cost of moving this one chair from point A to point B, hundreds of dollars, at least, because of the cost, the weight, all that stuff. I don't know what this chair actually cost the manufacturer versus what they sell it for, but the value of a car falls by, what, 25, 30% the minute it drives off the lot. The furniture, I'm not saying it becomes functionless, but it may become worth less once you factor in these other costs. Is that an unfortunate place where the industry is right now?
Amanda Schneider
It's an unfortunate place that this industry has been for a long time. Now I will tell you, I am seeing some kind of data indicating that we might be shifting outside of that. And I think that a lot of that is because of this big meteor that hit as well. So I think the design industry, all of the product manufacturers that serve the design industry have long really cared about sustainability. Many of them are very passionate about it. Many of them tell a lot of stories around it, though, when it comes down to things like reusing it, you know, sadly, a lot of the take back programs and things that many companies have tried to kind of put into place have failed in the past.
Spencer Levy
Let's go beyond the reuse of furniture, and let's just talk about sustainability more generally, because putting aside reusing furniture, there are other elements of light and air and environmental cleanliness, clean air, those types of things. Tell me about how those changes are being incorporated today versus years ago.
Amanda Schneider
Sure. So I think a lot of these are the LEED practices that we all know and love, that we're all very familiar with. It does go beyond just used furniture. It does go beyond materiality of the furniture and recyclability of the furniture. It goes into light, views of the outdoors. It goes into, you know, the health and the wellness of the people that are in the space. But I would say one of the things that's changing now is really the demand for this. So we have the industry's first ever persona study that really looks at these design specifiers: why they're choosing what they're choosing. And in the last year, the sustainability first persona has actually doubled. So meaning that is the reason that they do it. And I think a big reason that that demand has shifted is around that awareness of the world to really care about these sustainable attributes as well. Not just the designers, but their clients are actually asking for them. You know, when things shut down and we saw the smog over LA lift, we saw a lot of things get a little bit better, especially as Gen Z kind of rises. That's a very important thing for their generation. I think the need to do things more sustainably is effective. Now, a couple of newer things that really fall into sustainability, but not just sustainability of a building, but also sustainability of the humans within the building, is we're also seeing a shift towards more wellness rooms. We're seeing a shift towards electronic free zones and things that help with mental health as that rises in a conversation. We're seeing much more focus on those spaces that go beyond just the physical elements of a building.
Spencer Levy
I have a client of ours, Crow Holdings. They have office space at the old Parkland Hospital in Dallas. And it, if you see it, is some of the most spectacular space you'll ever see. Just absolutely beautiful. And this is not me asking to get invited back. But yes, if anybody from Crow is listening, I love coming to your space. But I'm going to give them a shout out for one other thing. They have what they call a debate chamber, which is like three stories down. And I don't know how they pulled this off or if this was even intentional. There is no cell phone reception in that room at all. None. And I think it was intentional. I think it was. Because if you're going to listen to a speaker, listen to the speaker or don't be there. And they got all electronic capability out of that room. What's your point of view on that?
Amanda Schneider
I think it's brilliant. I mean, this is a debate room now? Like a place that they listen to speakers?
Spencer Levy
It's a conference room.
Amanda Schneider
Or a space that they actually debate?
Spencer Levy
It's not a conference room.
Amanda Schneider
Okay.
Spencer Levy
It’s not a conference room. That's not true. It looks like a Shakespearean theater in the round. It's super cool. And next time you're in Dallas, as an interior designer…
Amanda Schneider
Okay. I'm in.
Spencer Levy
Must visit. But in any event, it's a cool… and probably seats 300 people. And the speaker, rather than being on stage, is in the middle of the floor.
Amanda Schneider
Oh, interesting.
Spencer Levy
And there's no electronic devices that you can get in the… or at least my phone wasn't working every time I've been down there, and I think it's intentional. But I love that, to have an electronic free zone.
Amanda Schneider
And I think there's a renaissance towards that. I think the pandemic kind of created us back to kind of the core of who we are as humans, in some ways. We were forced indoors. Some of that was uncomfortable, but some of it was really beautiful. We are doing these dinners now around the country called Jeffersonian Dinners. Have you ever attended a Jeffersonian Dinner?
Spencer Levy
Do you have to dress up like in Revolutionary style?
Amanda Schneider
No, it sounds like that, but it's actually not that terrible. It's a dinner that dates back, the format of it dates back to Thomas Jefferson. And Thomas Jefferson would invite thought leaders into his home of varying backgrounds. So they got this great debate happening and these great discussions happening. And there are no electronics. We ask everyone to shut their electronics off. And there is one conversation. Typically there's about 8 to 12 people around a table. So you have one conversation which keeps you all kind of focused on one thing. So there's one question with the appetizer. There's a second question that goes around with the main course, which typically is the meatiest question. And the dessert question is a little something that is sweeter, something to end the night on. And every time we host one of these dinners, we've had quite a few CBRE folks at these various dinners around the country. Every time we host one of these dinners, they're like, oh my God, I can't believe that time went so fast. Most of them have gone close to five hours because everyone's so engrossed in the moment. And I think for where we are as a society, that's such a healthy thing.
Spencer Levy
Well, I'm not suggesting people should dress up in the Jeffersonian era.
Amanda Schneider
You can if you come to one.
Spencer Levy
Well I’ll tell you what? We were talking in the car ride over here, that I do go to the horse racing track a lot. And I go there not for the races, solely. I go there, I put on old timey gear. I wear the hat, the bow tie, the whole thing. And he's like, oh, who's this weirdo? I'm like everybody else there, right? If you go to Oktoberfest in Germany, people wearing lederhosen and things like that, and I know it's not interior design, and I'm not saying we should wear costumes to the office, but it is something that changes the flavor for sure.
Amanda Schneider
But I think it's a trend towards nostalgia. I think change is happening so fast right now. You've got A.I., you've got metaverse, you've got all these things that feel so uncomfortable because they're kind of coming at us faster than ever before, and this nostalgia makes us more comfortable because it's familiar. So we're seeing that from a design standpoint. I think you're seeing it in a lot of the different things that we just discussed.
Spencer Levy
So old timey design concepts coming back?
Amanda Schneider
I mean, you see like a lot of this retro stuff from the 1950s coming in. Look at the walnut finishes that are happening in here. Very much so.
Spencer Levy
Well, getting people back to the office. That is the primary question that you're dealing with, Amanda, and it’s the primary question we're dealing with as office professionals leasing, and sales agents. What's the future? How do we get to a future where we're in the right place? I certainly respect the hybrid work. I certainly respect the equity issue. But what's your point of view?
Amanda Schneider
Yeah, I just read an article that appeared in Forbes and went pretty viral on Forbes titled “Gen Z and the Great Back to Office Debate Won't End in 2023”. So I think fortunately or unfortunately, we are at this kind of inflection point and we can't put the toothpaste back in the tube. I think there are some ways we can get people back to the office, but I think it's going to involve really involving more people in that discussion. I don't know how old your kids are, but I have three boys, two of whom are teenagers. Teenagers are terrorists, as you know. Do you have teenagers in your house?
Spencer Levy
19, 18 and 14. So yes.
Amanda Schneider’
Okay. So you've been through it with some of them. And I think, you know, employees have this power today that they've not had in recent history, especially as it relates to the office. Many of them have proven they can do their jobs remotely. They've been given some of this freedom, and it's tough to give that back. But I think this is a huge opportunity for design. It’s a huge opportunity for the commercial real estate industry as we look at rethinking these offices for how they need to perform for the future. And I think historically a lot of the decisions around space, around budget for the space, around layout for the space, have been kind of passed down from leadership. And one of the opportunities is involving more people in the discussion to really look at how we can kind of co-create spaces that are going to be more functional and make people want to leave their home, give them something they cannot get from their home.
Spencer Levy
Are we at the new normal yet?
Amanda Schneider
I don't think so. I don't think so. And I'll tell you, I think everyone's waiting to see who else figures out the new normal. So I don't know if you ever read the study. In my MBA class, we read a study about McDonald's versus Burger King, and McDonald's would do all of this market research, looking at the exact corners, at the exact intersection of the exact markets of the exact regions that they wanted to be in, and hone it down to exactly which corner they want it to be on, to build. You know what Burger King did? They built across the street. So who was more successful there? I'm not sure. And I feel like a lot of us are waiting to see who takes these steps first, because it is a huge expense and we are in the unknown. We're in this great waiting period.
Spencer Levy
What is the future of interior design that is not only from a very practical standpoint, going to bring people back, but how do we make the interior environment better, and how do you see that changing over the next five years?
Amanda Schneider
I mean, my hope for this is that we bring designers into these conversations earlier and give them bigger roles, right? Like really help to bring them in this conversation of how, based on whoever the owner, whoever the tenant, whoever the landlord, whatever their goals are, how do we bring designers in to be a part of that conversation? I think as we've talked about since this meteor of Covid hit, it's really changed the way that we think about space. And I do think being together physically, face to face, breathing the same air in one space is more important today than ever and more important to relationships and mental health and being together. So by bringing interior designers into that conversation earlier, I think they could really help us creatively problem solve where we need to go from here.
Spencer Levy
Well, Amanda, I want to thank you so much for coming out today in this beautiful space by Allsteel in the Fulton Market in Chicago. Amanda Schneider, President, ThinkLab. Thank you so much for coming out. What a great discussion.
Amanda Schneider
All right. Thank you so much.
Spencer Levy
For more about design and related content, you can hear more from Amanda on a podcast that she hosts called Design Nerds Anonymous. Or you can visit our website, CBRE.com/TheWeeklyTake. We'd love to hear from you, too, so please send us your feedback, review the show and share it with your network. And of course, we hope you'll subscribe on Apple Podcasts, Spotify, or wherever you listen. We'll be back with ideas from other terrific thought leaders. Insights into topics such as how new kinds of data are influencing property management, real estate stories from industries including the media and higher education, and lots more. We look forward to sharing those with you soon. For now, thanks for joining us. I'm Spencer Levy. Be smart. Be safe. Be well.
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