When Mark Weiss, an executive at the real estate services firm Newmark Knight Frank, began a space search for Advent Software last year, he received what was then a familiar request; the firm wanted to reduce its office footprint.
Many tenants have moved to slim their offices amid layoffs and other grim effects the recession has had on their businesses.
But Advent wasn’t doing poorly according to Weiss. In fact, the firm, which creates software and provides consulting services for financial and investment companies, had just acquired its biggest rival, Tamale Software, and was growing its staff from about 175 employees to around 225.
Because the two companies had separate offices, Advent saw its real estate search as a way to unite the pair’s operations in a single location.
In a deal arranged by Weiss in November, the firm signed on at 1116 Sixth Avenue, a skyscraper with a distinctive sloping façade that faces Bryant Park.
Although its previous footprint had been about 37,000 square feet Weiss recalled, and despite the fact that it was now rolling portions of the new firm it had purchased into its own operations, Advent slipped into a lone floor in tower, the 33rd, which is just a little over 31,000 square feet in size.
“People who were in really big cubicles are now in smaller cubicles,” Weiss said, recalling the deal while speaking on a breakfast panel hosted by the Real Estate Board of New York in their offices in midtown yesterday.
Though it seems like a somewhat dramatic squeeze, the move wasn’t an austere real estate maneuver envisioned for tough times, but rather the slimmer footprint the company found it could fit within by adopting a denser, more efficient layout.
Weiss said that tenants were increasingly exploring similar strategies and that the prospect that many will find ways to wring more productivity from every square foot they occupy is one of the confounding factors that makes it difficult to predict when and how quickly the city’s office market will recover.
“I don’t see it reversing ever,” Weiss said of the trend among tenants to more efficiently utilize their space.
Ken McCarthy, an economist with the real estate services firm Cushman & Wakefield who participated on the panel as a moderator and who voiced optimism that the economy was in recovery, questioned whether the trend could dampen demand for space when tenants begin to grow again.
“When I started out in the business, I was in the bullpen at Edward S. Gordon and Edward Gordon would come around and say ‘what are you doing in the office, there’s no money here, get out’,” Weiss answered, explaining that more tenants were starting to see business in a similar way.
Many are beginning to take an increasingly utilitarian perspective on their space needs, Weiss said. Though most still view their offices as a necessary facility Weiss said, there is a greater understanding that business often comes as a result of networking and meetings; interaction that is difficult to initiate holed up behind a desk.
Weiss credited C&W as one of the only real estate services firms to so far employ the concept in their own real estate decision-making.
The company recently moved into a new headquarters space in 1290 Avenue of the Americas, where it was able to reduce the size of its office. The company occupies two large, open floors with a minimum of partitions that eat into efficiency. The space employs tightly packed communal style workstations surrounded by a glass-walled perimeter of modestly sized executive offices.
The company has stated that the new environment will facilitate communication and teamwork while reducing the total size of its occupancy.
McCarthy said that the new space, which employees moved into late last year, was “terrific.”
Brian Gell, an executive with the real estate services firm CB Richard Ellis and another participant on the panel, said that his company was going to construct a similar installation at 200 Park Avenue, where it recently renewed its lease.
Weiss did note that the process of converting to a more efficient occupancy model depended to some extent on whether the building could accommodate a tighter layout.
Older buildings for instance often have columns that can awkwardly partition floors, decreasing how many employees can be placed in a space and disrupting the intimateness and interconnectivity that the denser work environment is aimed at facilitating.
Weiss said that 1116 Sixth was virtually column free. The building is based on a prototype design for another midtown tower, 9 West 57th Street, which is widely considered one of midtown’s most exclusive buildings.
In this sense, increasing the density of offices may actually buoy certain portions of the market Weiss imagined, with tenants flocking to Manhattan’s higher end or newer buildings, willing to hand over more rent because they are able to more densely occupy the space.