Millennials open door to fun, functional office space

After Oaksoon Callahan graduated from college, she had the choice between working at ExactTarget's trendy orange-splashed Downtown offices or at a more traditional white-walled suburban financial institution in the suburbs.

The choice was easy. The 25-year-old was sold on ExactTarget's culture, which includes an open office space floor plan that companies are increasingly turning to in order to attract the best candidates, promote collaboration and save money on real estate expenses.

Callahan enjoys ExactTarget's mix of coffee bars and group work spaces with comfortable couches, all with stunning views of Monument Circle.

"I wanted to be part of a company that emphasized culture," she said.

Millennials and changes in technology are driving the transformation to a more mobile work force, say market watchers. And what's good for workers has been good for the bottom line.

Companies that have embraced the new workspace design, said Mark McNulty, chief executive officer of Indianapolis-based HR Dimension, say they've been able to make more efficient use of office space, while improving collaboration and innovation among their employees.

Changes in office design have helped businesses better utilize space to save money on real estate costs, reducing the average space occupied per worker to 170 square feet in 2013 from 225 square feet in 2010, according to a survey by CoreNet Global. But many businesses say that's not the biggest benefit.

"The open concept lends itself to a lot of collaboration between employees," McNulty said. "It's more of an environment where people can get together, as needed. They are not constrained by walls and doors."

Emerging tech-driven companies, such as ExactTarget, which provides digital marketing and analytics software, were on the front lines of the move to open office spaces. Now more traditional businesses, such as Eli Lilly and Co,. Roche Diagnostics and Rolls-Royce have redesigned their work spaces, too.

Businesses are catching on so quickly that Indy has a problem. Downtown is booming with new apartment projects, restaurants and bars, as Millennials and others flock to an urban environment. But trendy office space has failed to keep pace.

Andrew Martin, an office real estate broker with Cassidy Turley, said the vacancy rate of buildings with open floor plans is down to 8.5 percent Downtown . But including traditional office spaces, much of which is in Indy's high rises, the overall rate is at 20.3 percent.

Building owners, Martin said, will have to adapt for "the generation" that is going to "lead the work force for the next 50 years."

Mobility is driving change

Nikki Sutton, owner of interior-design firm Level Interior Architecture, said Millennials — the generation now in their 20s and early 30s — began driving the change when they entered the work force about a decade ago.

They were raised with technology — laptops, smartphones, and tablets — that allowed them to work from anywhere.

"Millennials didn't grow up studying in libraries," Sutton said. "They studied in coffee shops and more social environments, so that is reflected in what they expect when they go to work every day."

Sutton and other design firms are on the cutting edge of creating the new office space for employees. They're eliminating private offices, creating open work environments and adding comforts not seen before in the workplace.

A growing number of companies don't even have assigned seats anymore, said Jenny Schott Androne, president of Indianapolis-based Schott Design.

"You don't have to sit at one desk, if you are laptop-driven or iPhone- or iPad-driven," she said.

Ascension Health Ministry Service Center, which handles business functions for health-care clients with 530 workers, is expanding its Far-Northside call center and plans to add 549 new jobs by 2016. The call center features open, naturally lit areas; low-walled desks; and gathering spaces with comfortable couches and multiple computer connections for laid-back, impromptu meetings.

Tom Deuschle, Ascension Health's client relationship manager, said designing such an office was just a fact of life for the company because it's a great way to attract talent.

"We had the benefit of coming into a new environment as a new organization ... all of the employees came in knowing this was the environment they were going to work within."

A competitive advantage

ExactTarget promotes its "orange culture" — which includes a hefty dose of open office space — to attract the best employees.

ExactTarget has more than 1,000 employees spread among three buildings in Downtown Indianapolis. The offices feature orange-splashed walls, exposed ceilings and hardwood floors, open work spaces with great views, comfy couches and chairs, coffee bars, a fitness room and even a roof-top sun deck.

Todd Richardson, the company's executive vice president of administration said job candidates appreciate a positive work environment. ExactTarget is advertising for nearly 300 more openings.

"We sell the work environment to job candidates, as much as compensation or title or opportunity," he said. "We are able to recruit the best people, because they prefer to work in a vibrant workspace than in more of a traditional, colder, less-welcoming space."

Chief of Staff Mitch Frazier said the strategy has helped ExactTarget grow. Scott Dorsey founded the company in 2000, it was bought by Salesforce.com last year and it now has offices in London, San Francisco, Washington, New York, Atlanta, France, Germany, Australia, Sweden and Singapore.

"We created a space here that doesn't just allow us to compete for candidates in Indiana, but from all over the world," Frazier said. "It is a very clear part of our strategy when you think about recruiting and retaining the best and the brightest."

Better performance, lower cost

Businesses have found that changing the workplace environment can improve collaboration, innovation and attitudes — all in less space, which leads to lower rental costs.

Backhaul Direct, a logistics company, centered its open-area office room around a corner-view of Downtown, while the few executive offices are tucked away in the back of the building. Most days, the managers work from desks out in the main room.

Chief Operating Officer Nick Hoagland said the workspace has increased communication and collaboration.

"Face-to-face interaction is so important in our business," he said. "I can't imagine having cubicles and having to stick my head around something to talk to someone. It would drive me nuts."

Employees at tech marketing company Xiik — pronounced "Zeek" and sister business Nimble Jack have even more freedom in adjoining offices Downtown. Xiik employees work side-by-side from long tables while Nimble Jack employees share desks upstairs — when they're in the office at all.

Company founder Topher — short for Christopher — Overstreet doesn't even have a private office. He values collaboration and doesn't want to be walled off from his team.

"We have a very collaborative workspace, where designers and developers are sitting in one area," he said. "They face each other, so they can talk to each other very easily and show each other the stuff they are working on."

He also wants his employees to be able to relax at work. They can grab a beer off a tap — Wee Mac Scottish-style ale from Sun King was available during a recent work week — and even play a bit of Xbox. Overstreet is thinking of adding a grill to the patio space outside.

"You get stuck on a problem, and you just need to get away from it for a minute," he said. "They go grab a beer and go out to the deck, take a laptop out there, that's the main idea of having all of those things. If you want to attract the best people, you want to have something that sets you apart."

Jon Owens, an office broker at Cassidy Turley, said open floor plans allow offices to better utilize their space — sometimes abandoning entire floors in high rises.

"I don't think there is any question that the footprints of businesses in general are shrinking," he said.

Problems ahead

Martin and Owens, the Cassidy Turley brokers, say space for companies Downtown is limited, unless more building owners begin renovations.

The market is proving that there's a need: The overall vacancy rate Downtown increased from 19.2 percent in 2012 to 20.3 percent in 2013, higher than the rate for the whole metro area.

"If we really want to attract new job growth to Downtown," Owens said, "then they are going to need to modernize."

At least some building owners agree. Ambrose Property Group has redeveloped the 5,000-square-foot top floor of the Circle Tower into an open-office concept. The company plans similar work at the Landmark Center, which it also owns.

Company president Aasif Bade said the up-front investments will help better market the buildings.

"We have to be on the cutting edge to find ways to differentiate ourselves," he said. "We feel like we've made a great investment that will be more usable down the road, as opposed to keeping it as a more traditional space."

Call Star reporter Chris Sikich at (317) 444-6036. Follow him at www.Twitter.com/ChrisSikich.