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Spencer Levy
2022 has been a year of renewal, revival, redesign. A year of ongoing recovery. Of decision-making about return to office versus remote work. Redevelopment versus adaptive reuse. And a reminder of one “re” word no one likes to hear about: a possible recession on the economic horizon. We'll hear about all of those and more as we replay highlights from The Weekly Take in 2022, plus recall some outtakes that we found on the cutting room floor. On this episode, we rewind for our annual year in review. I'm Spencer Levy, and that's right now on The Weekly Take.
Richard Barkham
We do expect to return to the office. It won't be in a traditional way.
Spencer Levy
We began the year with Richard Barkham, CBRE’s global chief economist and the voice you just heard setting the stage with our annual forecast. With the rollout of COVID vaccines, the world spent 2021 getting back to business safely. So we predicted 2022 would not focus on if leaders should bring their teams back to the office – but how. This would be the topic of the year. How to create the workplace of the future? How to utilize real estate and develop workplace designs to give talent what they needed to be productive and wanted out of their culture and location? How to strategically combine a return to office and the endurance of remote work? Here’s Richard.
Richard Barkham
We expect hybrid working or the combination of in office and remote working to dominate. And maybe that's what we're seeing at the moment. We're seeing a kind of a slow return to the office. But it's not just COVID-related, it's this new form of working related as well.
Spencer Levy
Indeed, this year was about refining and redefining the workplace all around the world. CBRE’s global survey data backed it up.
Julie Whelan
We have been studying this topic for a number of years now, since the pandemic started – really before the pandemic, because we knew that a shift was underway around what we would call work from anywhere.
Spencer Levy
In July, Head of Occupier Thought Leadership, Julie Whalen came onto the show to reveal what CBRE’s global research team found in its comprehensive sentiment survey of occupiers around the world.
Julie Whelan
What we're seeing is that hybrid work – which means sometimes you might work in the office, sometimes you might work from home, sometimes you might work in a third place of your choice – has really picked up in terms of sentiment over the last couple of years. However, what we've also seen pick up in sentiment is the desire to actually have people together in the office. So I think that a lot of listeners sometimes want to have it be an either/or discussion: either you're going to be working from home or you're going to be working from the office and one or the other is going to suffer as a result. But actually, we are more so studying how the two will work together in the future, because that's where the magic of satisfying employee desires, along with employer needs for the correct type of culture, is really going to be a win-win situation.
Spencer Levy
From flexibility in the office sector, we turn to our next “re” word: retail, which is in the midst of its own paradigm shift. Facing dynamic challenges at both ends of the supply chain this year and a challenging economy at large, the notable trends we heard about could be described as going Back to the Future. Music to my ears since you know what an eighties movie buff I am. For a retailer such as Walgreen's – with more than 10,000 stores nationwide – that meant a return to simpler formats, harkening back to a time when stores were smaller and more focused or specialized.
Chris Noble
I think with a new build, the biggest thing that we landed on was just the ability to control the quality, consistency of the brand and how we show up for customers.
Spencer Levy
In October, we stopped over at the Walgreen's headquarters in Chicago's renovated Old Post Office, a gorgeous example of adaptive reuse, by the way. I met with Chris Noble, who heads the Walgreen's Property Group.
Chris Noble
A couple of years ago, we started really focusing on a much smaller format than what we had done in the past typically. Historically Walgreen's’ stores are about 15,000 square feet, freestanding main and main. As we've continued to evolve as a business we really wanted to try out a–really a pharmacy-only format. So instead of what we call the front end of the business where you've got seasonal merchandise and beauty and a lot of other products, this is really 2500 square feet pharmacy-only with maybe some vitamins and a really limited offering in the front of the store.
Spencer Levy
Rethinking the company's portfolio to become more efficient was a decision based on weighing convenience versus cost, he added, in ways that might not have been as much of a concern in years past.
Chris Noble
I think one of the things we found is that today it probably doesn't make sense to pay up for that main and main location. We can do quite well and candidly, we can do better financially in the bottom line by going to some of these what am I called these sites, or maybe one or two parcels off the main corner where we can pay maybe a third of the occupancy costs, still do great pharmacy business and maybe let go of some of that front end business that just that business has evolved significantly over the years.
Spencer Levy
At Fifth Third Bank, the strategy to go smaller and more efficient also includes transformational ideas for turning a trip to the bank into something very different than it used to be.
Valerie Garrett
The bank believes that design thinking is a strategic tool, and that design research using those methods creates a really nice foundation for creating a really good experience.
Spencer Levy
That was Valerie Garrett, the bank's workplace design leader, who was one of three leaders we met at their Cincinnati headquarters. They spoke for many guests, regardless of industry or role, who touted the value of creating spaces people want to be in – real estate that's quote-unquote “craveable” to use a term coined by Rachel Friedman, the founder and CEO of Tenfold and Tenspace, a leading design firm in Ohio. We spoke with her back in February.
Rachel Friedman
By building a craveable workplace for creating an environment that will foster those types of behaviors and enable businesses to compete and to win. And so it isn't just about getting the talent or attracting the talent to come into the office. It's because the success of your firm is dependent upon it.
Spencer Levy
We heard from an array of occupiers – including a multinational financial institution. Citigroup; a growing, wellness-oriented grocery chain, Sprouts Farmers Market; and more – learning how real estate is becoming more experiential and mindful of quality of life concerns. Returning to the example of Fifth Third Bank, competing with the virtual world of e-commerce and remote access has meant shedding old world ways in order to strengthen customer relationships. The bank's research inspired the creation of next-generation branches, that are more open and intimate, with lots of light and even branded ambiance, with custom made sound and scents inspired by the practice of aromatherapy. They are “Back to the Future” in terms of scale and service, but 100% “Futureworld” in terms of design. Here again is Valerie Garrett of Fifth Third Bank.
Valerie Garrett
Out of all that research came some insights that gave us essentially the next gen design that you see in our new branches. And we've built about 70 so far throughout the footprint. They're very open. The feedback that we get from customers is that my favorite is this doesn't feel like a bank, which is a home run for me, because one of the major insights was we need to be the “un”-bank. Customers don't want to walk in and feel like they have felt doing banking for the last hundred years. They want a space that is theirs. And so when a customer comes in and says, this doesn't even feel like a bank, my immediate response is, yes, we did it, and we get that over and over and over again.
Spencer Levy
We weren't all business on the air, of course. We talked about music with guests from Australia on multiple shows and discovered that INXS was their consensus favorite band from Down Under – not my pick, AC/DC. Listeners also heard personal revelations about me. For one, that my grandfather Harry was a pharmacy rep who made sales calls to the original Walgreen's drugstore back in the day. Also that my grandma Bess used to take me to Broadway when I was a kid. She would have loved our show about the revival of The Great White Way, which we recorded on location at historic Sardi's restaurant on West 43rd Street – which brings us to one of the other things I've learned this year, courtesy of Julio Peterson, vice president and real estate leader of the Shubert Organization, the century-old company that owns more Broadway theaters than anyone. In this outtake, Julio tells a story about real estate as a kind of living thing that changes with the times and interacts with everything from technology to social norms. I'm pretty sure it's also the first bathroom story we've ever aired.
Julio Peterson
Most theaters were built in the early 1900s, right. The building codes were a lot different, right. So, for example, ADA requirements for wheelchairs, that was like nonexistent. Women didn't use the bathrooms back then when they went to the theaters, believe it or not, they would wear those girdle belt things, and it was very complicated to go during intermission and take care of all that, then come back to the show. So a lot of it was that the women would use the bathrooms before the shows, and so the lounges were primarily for men. Now that's totally opposite, right? Yeah. So just so it's changed like that. The actual technology associated with the plays and the productions themselves has changed dramatically. I mean, you have all kinds of special effects. We have to reinforce our buildings with steel to support these super new heavy sets. Every production gets more elaborate than the other. You see, like things like Spiderman or just so many other shows. We had a King Kong, we had a big King Kong walking around the theater once. So it's changed a lot.
Spencer Levy
We shared this outtake because it's testament to how real estate tells bigger stories about the wider world. On that same episode, Julio shared the stage with CBRE’s Mary Ann Tighe, who's always got a story to tell. One that's worth sharing again here: behind the scenes of Mary Ann's dealmaking for the air rights of an iconic New York City landmark, one with a pretty well-connected tenant.
Mary Ann Tighe
This is not a Broadway rights story. This is St. Patrick's Cathedral.
Julio Peterson
More complicated.
Mary Ann Tighe
So we're trying to do a deal actually modeled on the theater district, air rights transfer. We're trying to do a deal to sell St. Patrick's air rights. And the Midtown East rezoning, I always say, was inspired by the fact that St. Patrick's has almost 1.2 million square feet of air rights that you can't do anything with, to Julio's point, because the streets that surround it are fully built. So now, of course, with our wonderful new district, as I say, emulating yours, we're floating. And now we're going to do a transaction. So we have to send it to the Vatican to get permission to sell the air rights because they're assets of the archdiocese. Back they come. You're selling St. Patrick's? Oh, no, no, no. We're selling the air above St. Patrick's Cathedral. And this went back and forth. It was hilarious because it was hard to express to them that, no, it's just the air. We're selling.
Julio Peterson
They didn't get that.
Mary Ann Tighe
We'll get that one. But eventually they came to understand.
Spencer Levy
From the evolution of historic places. Let's now turn to guests with their sights fixed on the future. One was Dr. Parag Khana. We sat down after he presented at a CBRE Symposium in Arizona last spring. We talked about, among other things, his latest book, Move: The Forces Uprooting Us – a page turner that had me frantically annotating the margins because of the ideas he ponders in the book.
Parag Khanna
I take two megatrends, which is demographic decline, meaning the plateau in the world population and climate change, among other factors. But those predominantly and I try to use those as a lens to forecast the human geography of the next ten, 20, 30 years. In other words, I set out to answer this one question: If the world population is going to peak at around 9 billion people over the next 20 to 30 years, where literally where will we be? How did we get there? And who are the people? You know, the young people of today are the mature adults of tomorrow. Who are they? What are their values, preferences? What are they doing and why?
Spencer Levy
Dr. Khanna sees an emerging bias towards mobility that's tech enabled and driven by geopolitics and climate change, and a rapidly changing world in terms of demographics, geography, business and more. Another futurist we had on the show was Erika Orange. Here she is to complement Dr. Khanna’s views on those realities with another trending topic for 2022: the power of ESG and Resiliency.
Erika Orange
You hit the nail on the head with the word resilient, and we don't think about how to redesign with an eye towards future proofed resiliency. Everything is about speed. It's throwing up these buildings and everyone is talking about the increased price of wood and steel in the supply chain and all of these things. And we can get beyond the current supply chain if we actually, from a materials perspective, just rethought about how we build. One of the last trips feels like a lifetime ago when I traveled before COVID was to Singapore, and what they're doing from a green building perspective is absolutely incredible. And why we can't do that more in this country is beyond me. It's just we build things. We throw kind of Band-Aids at it without really thinking longer term. And in terms of the biggest thing out of everything, whether it's work, education, real estate or construction, it all comes down to future proofing. How do we future-proof our built environment, our infrastructure, our workspaces, our own minds and our children? Future-proofing.
Spencer Levy
Those are important long term questions, indeed. But future-proofing is tough to answer now, while we're facing a bumpy economy. Despite the post-COVID recovery of the past year, year and a half, that dreaded “re” word – a recession – is probably looming. We tried to give our listeners informative perspectives to help navigate the uncertainty. One well-received episode was our explainer show breaking down provisions of the Biden Administration's major legislative achievement of 2022: the $1.7 trillion Inflation Reduction Act.
Duane Desiderio
I think the best advice we should be giving to folks is focus on what's at stake right now and see how this law can work for your facilities and for your buildings.
Spencer Levy
There was a lot to unpack in this episode – which featured Duane Desiderio of the Real Estate Roundtable, who you just heard, and Matt Werner CBRE’s, Head of Global Client Care – offering news you can use with many of the Act's provisions taking effect in 2023. I encourage you to go back and listen to our full conversation. It's an informative program, but of all the advice I want to share with you now, I'm afraid some of the best didn't actually make the air. So I'm glad we have this opportunity to second guess ourselves and play the following from Samir Goel, a social entrepreneur who co-founded an innovative credit platform called Esusu. He offered his take on building a business amid the tough economic conditions of our times. But I think it has even wider resonance, too.
Samir Goel
Number one, don't let perfect be the enemy of progress. Number two, make sure you find the right people around you. Building a company is hard. It would't be possible for me personally without my co-founder, Wemimo. But then more importantly, the team and the ecosystem we've built around us. So make sure you find those people. And then the third thing I'd say is just build something you really believe in. Because when things get hard and you're faced with those crises like a global pandemic that you didn't predict, the thing that gets you through it is your conviction in what you're building and the people you're surrounded by.
Spencer Levy
I love that advice. And speaking of advice, that's how we always like to end our episodes, with some takeaways or predictions. Final thoughts, I'd like to say. As we wrap up the year, let's recall the final thoughts of a guest who joined us to celebrate a milestone, our 100th episode – we're now approaching 140, thank you very much – in a year, by the way, that also marks the 10th anniversary of his tenure as CEO. Here’s CBRE’s President and CEO Bob Sulentic with lessons and leadership that still ring true as we look toward the new year and new business on the horizon.
Bob Sulentic
We're dealing with a lot of challenges right now. We're dealing with challenges in our economy. We're dealing with challenges in the geopolitical situation. We're dealing with challenges and the health situation with COVID still around in a big way. I would say if I were to give one piece of advice – and I talk to our leadership team a lot about that now – think about the ways that you might address, impact those challenges given the scope of responsibilities you have. Be really reflective about that. Develop a point of view and then act on that point of view.
Spencer Levy
Reflect. Develop a point of view. Act. I couldn't agree more. Now, here is my final thought: Thank you. Thank you for listening to The Weekly Take and making our show one of the top-rated business and real estate podcasts on the air. Your interest has allowed me to meet so many interesting people, week after week and year after year, and I thoroughly enjoyed sharing their stories and learning from their insights. Even when I disagreed with some analysis or opinion, every conversation was a pleasure and a privilege. If you missed any of our conversations, look for them on our website, CBRE.com/TheWeeklyTake or on the platform of your choice: Apple Podcasts, Spotify, Google, and others. As always, we hope you'll share your favorite episodes and also encourage folks in your network to subscribe, rate and review us wherever you listen. Your feedback helps our show find more listeners and helps us make The Weekly Take even better. With that in mind one last note of thanks — namely to everyone behind the scenes at CBRE and to the production team at Foglight Entertainment for a year of outstanding efforts and success. We’re already at work on new programming that will kick off in January with our annual economic outlook and more. So here's a fond farewell to 2022, and here's to a healthy and prosperous year to come. Happy holidays. Happy New Year. Happy listening. I'm Spencer Levy. Be smart. Be safe. Be well. And be back in 2023. Cheers.
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