Rethinking Office Space: The Rise of Remote Work and the Need for Flexible, Decentralized Hubs with Francis Saele - ep. 104

WEBVTT
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Hi guys,
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How are you doing, man?
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I'm doing great.
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By the way, I have a headset that I can switch to, but I frequently do these podcasts with just the Yeti mic and,
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As long as there's no echo on our end, you should be good.
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Do you hear anything?
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No, I don't hear anything.
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I think you sound great.
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Yeah.
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Okay.
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Well, don't, don't get over, you know, overwhelmed.
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It's early in this project.
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We are known for not getting
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don't get overwhelmed by my beauty.
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I get you.
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I get
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Well, no, no, you are.
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I'll tell you, you've got the best smile on LinkedIn.
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Oh, here we go.
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Here we go,
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how does he do that?
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You know, cause I mean, we sort of have the same thing that it, mine doesn't come through.
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I don't know why it must be older teeth.
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You're going to make me put that slow music on.
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We're going to
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good.
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That's
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baby.
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We're going to slow dance.
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Welcome back everybody to remotely one I am your co host, Rick Haney, joined by my esteemed colleague, Kaleem Clarkson.
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What's shakin brother?
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Look at you all dancing over
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Oh, pointing to myself.
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I'm feeling good, baby.
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How you doing, baby?
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You looking
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I'm pumped up.
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I'm pumped up.
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We've been laughing so much already on this show.
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Today's gonna be, it's what we like to call, folks, a real doozy.
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doozy.
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A
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A wicked doozy, as they say up north.
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Yeah,
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percent dude.
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yeah, yeah.
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So hey everybody, since you know us, you know how to find us now, do us a huge favor and go to ratethispodcast.
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com forward slash remotely one and just leave us a review.
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That's all we ask.
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Not a big deal.
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Not a huge time commitment.
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If you could do that for us, we would be ever so grateful.
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Since Since 2015, Remotely One Is one of the largest communities of remote work professionals, with over 3, 500 Slack members and 5, 000 email subscribers.
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Really?
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Man, we are going places.
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We are going places.
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It is free to join.
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Go check it out at remotelyone.
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com.
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And with that out of the way, Kaleem, my brother from another mother.
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Give us a tease or two about today's guest.
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sweet Mickey Mickey.
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Let me tell you about our guest today, man.
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Let me tell you about our guest today.
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Our guests, they are originally from Buffalo, New York.
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So they know about that snow, son.
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Oh, don't we all, don't we
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yes we do, but they currently reside in Cincinnati, Ohio.
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Let's see what else, what else we got here for our guests.
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Our guests today, they hold an MBA in finance and a BS in psychology.
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So they're up in their mind.
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They could tell you how you're feeling, but they
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lot of thinking going on.
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numbers.
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They can also crunch numbers.
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Um, let's see.
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Oh, our guests, they are a corporate real estate, commercial real estate professional.
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They built a startup earlier in their career that was acquired by CBRE.
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Just a little real estate company, CBRE, just a tiny
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I May have heard of
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company.
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Let's see.
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They've held various leadership roles at different real estate companies, such as Newmark group, another company, it's tiny, a consultant company called.
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No big deal.
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No big deal.
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No big deal.
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Rick, what are we doing?
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Is the question.
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What are we
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Uh, n not enough.
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not enough.
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Let's see.
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What else about I guess?
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There's just so much good shit about I guess.
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Oh, something, some things most people don't know about I guess.
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They once sunk, almost sunk, a 450 foot long lake freighter.
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Are you kidding me?
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And that shit moved cement, Rick.
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It was a cement lake freighter that, they've almost sunk!
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that ain't coming back up if you let it go.
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It's down.
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It's down.
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not coming back up for breakfast.
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Yup.
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And, and Rick, Rick, this is just, we definitely gotta learn more about this.
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Something A lot of people don't know about, I guess something else is that our guests, you know, they had to save money for college, Rick, they had to pay for college and they spent a summer as a hooker, Rick, a hooker.
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Okay little unorthodox, but we'll get to
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we'll get to that.
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We'll get to that.
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Let's see our guests today.
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They are a thought leader.
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In the emerging world of distributing work.
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That's what we connected.
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Transformation of work in the workplace.
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And he's just always published in all of these different places and how corporate, real estate and the office kind of build that environment.
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Right.
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Our guest today now serves as the managing principal of Morta Vita, an integrator of workplace, real estate, and technology that services commercial clients,
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Okay.
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listeners and viewers, please give a warm welcome to Francis.
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Let
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Kaleem, Kaleem, did you go to the old school of introductions or what?
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I like that.
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I
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me calm down, calm down studio on it.
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Shut up.
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hey studio audience we got a job to do here people
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Thank you, Francis, Fran.
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Kaleem, I havee to tell you, I checked and I have my mouse in my pocket.
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So when you referred to me as we, and they, and all my pronouns are right.
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So
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Yes.
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Yes.
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Well, we can't give away.
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We can't give away who our guest is.
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You know what I
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Oh, the edification is like the whole point The whole thing here, right?
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We want to make sure you are pumped up and
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but really appreciate you, man.
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I, you know, I connecting with you on LinkedIn.
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I feel like I've known you for 20 years.
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You post a lot of great.
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Content, man.
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And I.
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just appreciate you joining us on the show, man.
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Oh,
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as do I.
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Yeah.
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Well, thank you both.
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Great to be here.
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And I, and I've always enjoyed this show.
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I think it's kind of a fun place to go when you need to improve your attitude, you want to get up, you tune in here.
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Oh,
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you baby.
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much.
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what we're trying to do.
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That was the bolster of
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remote work.
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And if you need to lighten up your day, you start this show.
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If you're sitting there working remotely or hybrid or wherever, you can start your day off with a couple of dudes from Maine.
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yeah.
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Eat that Kathy Lee and Hoda.
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We're coming for y'all.
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And most importantly, I gotta know.
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I gotta know.
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What was it like being a hooker?
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Oh, you want to start with the hooker?
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Well, uh, you know, I know that sounds bad, but, but there is hope for hookers and actually hookers, hookers are doing pretty well, even, even in the old days when, when I had to do this.
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But, actually this was not the hooker that everybody's thinking about, unfortunately.
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And I have the job and somewhere I can bring it out.
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But, uh, this was a summer job that I was able to get at Republic steel, just South of Buffalo, New York.
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And he used to take a bus every day down there to go to the end was a midnight shift.
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We worked 6 days a week, midnight to 8.
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And it was a, it was actually a bar mill.
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They created bars of steel and then they take the bars and they wrap them up.
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And they would put them in a storage area until they were shipped.
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Okay, and how did the steel get from the storage bins, which were huge, loaded with different kinds of steel and different customers.
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They're all sold waiting to be shipped.
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Okay.
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send out a technician who had one assistant.
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So there were, you know, about five or six teams like this.
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And we went out and these, you know, steel barns, we found the steel usually wasn't where it was supposed to be.
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You had to find it.
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And then you had to lift the steel up.
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Those were overhead cranes, right?
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And the primary guy would put the first side on and they would lift it up.
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So this is, you know, Tons of steel hanging up like this with other things right around it.
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And then my job was to reach underneath this, the, this bundle of bars with a long hook and hook the chain and then hook the chain on the time this side, and then
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hook!
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it's, it is the hook.
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That's right.
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So you were called the hooker because you had to hook the steel!
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That that's exactly right.
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Oh, there it is, baby.
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Well, don't I feel like a horse's patoot?
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I've been to union.
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I had all the union protections, you know, with all that stuff.
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But I'll tell you a couple of times, more than once, I'd say four or five times, the guy put the bar up, bars up, and I would go in there with my hook.
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And all of a sudden something slipped off and, you know, boom.
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So if you were too far under the bars, you could lose a lot.
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Mm.
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Mm.
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was a great job.
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And yeah.
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job!
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No, I mean, you
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Not
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cost me an arm and a leg, but it was a great job.
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that there's a lot of relaxation on the midnight shift.
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We started at maybe 1230 that did one or two loads.
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And we came back, it was time for lunch, you know, so you went, what do you eat at four in the morning?
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and then you would go back and maybe do one other load then wait for the sun to come up.
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So it wasn't really that intense, but when you got out there, you had to really be awake,
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Yes, you did.
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You sure did.
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So take that, Richard Gere, okay?
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Take that, Julia Roberts.
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you're not the heroes you think
00:09:53.239 --> 00:09:57.519
you're not saving our guest today, Richard Gere, okay?
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He was lifting steel, son.
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all that aside.
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Thank you for sporting our juvenile sense of humor.
00:10:08.634 --> 00:10:09.804
mean, everyone was thinking it.
00:10:10.144 --> 00:10:11.184
Everyone was thinking it.
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So we had to get it out of the way.
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Of course, of course, of course, you know, we know that was a long time ago and you've had a host of professional experiences since then, and, uh, obviously these times we're in, everybody knows the pandemic changed the entire work landscape, but more specifically the emergence of distributed work has had a dramatic effect on physical office space.
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Can you talk to us about some of those challenges and how they're being addressed?
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Well, that's a great question actually.
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And you know, when people talk about workplace, maybe just get into it with this comment.
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The workplace, when you thought about workplace before 2020, And this was a fun corporate services function that everybody in real estate knew about.
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Basically, what workplace management was decide how big a space you needed for whatever the team was.
00:11:04.742 --> 00:11:18.542
And as that lease came up for renewal, they would figure out maybe how many more people they expect to add over the next three, five years, add that all up and then say, okay, instead of 80 people, we need a space for 120 people go out and find a space.
00:11:18.581 --> 00:11:21.211
And you go out and find a space and you'd lay it out and that's it.
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That's it.
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That was all workplace was.
00:11:23.352 --> 00:11:23.652
Okay.
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Workplaces become much, much more complicated and that's not, although that function still exists.
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It's a very late decision as to where you go exactly in terms of an office environment.
00:11:36.892 --> 00:11:42.701
But to your question, I think clearly the office has changed quite a bit in terms of what it does.
00:11:42.862 --> 00:11:45.961
And frankly, I think there is no single answer yet.
00:11:45.961 --> 00:11:51.362
I don't think there's no definitive answer and there may never be, you know, the office is designed to do this.
00:11:52.002 --> 00:11:56.002
My sense is that for different organizations, the office does different things.
00:11:56.451 --> 00:11:58.072
But other things are gone elsewhere.
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They've gone into the distributed environment.
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They've gone to homes, they've gone to third places.
00:12:02.542 --> 00:12:04.972
They've gone to other, you know, coworking places.
00:12:05.022 --> 00:12:10.451
It's a really, an evolution that is extraordinary and I'm looking forward to somebody writing a really good book about this.
00:12:10.451 --> 00:12:11.502
I'm sure there'll be several.
00:12:11.711 --> 00:12:11.982
Okay.
00:12:12.282 --> 00:12:15.572
But to your question, what happens to the real estate that exists?
00:12:15.602 --> 00:12:25.662
This is a kind of a problem for certainly it's a problem for most landlords, but it's also a problem for the occupiers whose people are now not there all that much.
00:12:25.932 --> 00:12:34.091
You know, most organizations are operating on some type of hybrid schedule, or they may be in the office two, two and a half, three days a week, maybe, maybe not.
00:12:34.752 --> 00:12:36.272
Some of that's enforced, some of it isn't.
00:12:36.432 --> 00:12:38.782
So you don't really need as much space as you.
00:12:39.257 --> 00:12:41.017
As you had before, that's one thing.
00:12:41.216 --> 00:12:45.887
The second thing is that when you are asked to come into an office, what do you do there?
00:12:45.927 --> 00:12:55.807
You know, I mean, you see a lot of complaints about people who spend an hour and a half taking a train into an office to sit there on a zoom call that they could have done, you know, from their next, next room in their home.
00:12:55.937 --> 00:13:02.913
So, there are all kinds of things like that going on which suggests that the role of the office and where the office is.
00:13:02.913 --> 00:13:02.969
Okay.
00:13:03.229 --> 00:13:14.679
Or should be, are changing and I think that's a couple of the big things that are happening in my mind, but about legacy office real estate is that historically most of it was centered in a downtown area.
00:13:14.719 --> 00:13:24.019
Yes, there was suburban nodes, but still, you know, the biggest node was downtown and the downtown area while central in the community is likely to be the farthest away from most people who.
00:13:24.419 --> 00:13:25.979
Tend to live remotely.
00:13:26.299 --> 00:13:31.788
So over time, my sense is that as the office requirement, whatever that is grows.
00:13:32.163 --> 00:13:37.094
It's probably not going to grow where the existing legacy stock of office exists.
00:13:37.124 --> 00:13:44.283
Now, I think we'll see office emerging in places that are more certainly closer to where employees are.
00:13:44.344 --> 00:13:48.759
It's the Adam Newman concept of flow where, you know, you would have.
00:13:48.939 --> 00:13:57.169
Where you go to, to collaborate with people in person, fairly close to where you live and where you shop and where you go to the show or whatever.
00:13:57.179 --> 00:13:58.658
So these nodes are going to emerge.
00:13:58.699 --> 00:14:01.239
I'd like to call them central living districts.
00:14:01.339 --> 00:14:05.859
The central business district is, is really up in the air in terms of what's going to happen there.
00:14:06.429 --> 00:14:15.149
I mean, there's a sense of what people moving into conversions of office to residential, other, um, uses, but those are very difficult to pull off.
00:14:15.158 --> 00:14:16.209
And they're expensive and.
00:14:16.724 --> 00:14:20.754
And we've seen some of that, but it's not going to be an opportunity for everybody.
00:14:21.653 --> 00:14:22.729
Fran, let me ask you.
00:14:22.929 --> 00:14:26.599
So you start your career.
00:14:26.599 --> 00:14:27.679
I'm just kind of curious.
00:14:28.469 --> 00:14:28.829
Okay.
00:14:29.028 --> 00:14:29.189
I
00:14:29.294 --> 00:14:29.804
you know,
00:14:30.444 --> 00:14:31.179
do
00:14:31.364 --> 00:14:32.614
transition your career.
00:14:33.124 --> 00:14:34.694
Yeah, yeah, exactly.
00:14:34.994 --> 00:14:41.574
So, you know, you kind of start off your career and You build a great startup and it gets acquired by CBRE and you start working for them.
00:14:42.134 --> 00:14:47.964
And you're finding spaces kind of like what you explain for companies, right?
00:14:48.454 --> 00:14:53.114
And you're doing that, but then all of a sudden pandemic happens.
00:14:53.394 --> 00:15:30.144
And probably even a little bit before the pandemic, you were probably starting to see a little bit of a shift towards some flexibility from even a, you know, some of the tech sector and some other sectors, but how did you as a Commercial real estate professional, how did you embrace this idea of remote work and workplace flexibility when it's obviously impacting your career and your pocket specifically, like, like how, and why do you feel this need or this desire to talk about workplace flexibility as a person who manages these spaces?
00:15:31.524 --> 00:15:33.334
that's an interesting question.
00:15:33.364 --> 00:15:35.153
I will tell you at the time this happened.
00:15:35.254 --> 00:15:39.264
I was working in Dallas and lived in Dallas for 2, 3 years.
00:15:39.774 --> 00:15:43.924
We had a team in Dallas, a US team in Dallas and a team in Pittsburgh.
00:15:44.624 --> 00:15:47.044
But then about half of the people we work with were overseas.
00:15:47.074 --> 00:15:51.644
We outsourced a great deal of processing work to the Philippines and, India.
00:15:52.403 --> 00:15:55.864
And what happened, it was an interesting evolution of thinking because.
00:15:56.309 --> 00:16:04.639
Uh, when I started the job, everybody came to the office all the time, but if you live in Dallas, I don't know how familiar you are with Dallas traffic.
00:16:04.999 --> 00:16:17.769
But we had a lot of people that were driving an hour, hour and a half, some even more than that each way every morning, on the highways in and around where we were, which was on the Dallas North freeway.
00:16:17.769 --> 00:16:18.619
If you know the city.
00:16:19.229 --> 00:16:25.709
And the first event that happened actually, I think the one or two people who came to, they came in and said, we have a problem.
00:16:25.709 --> 00:16:34.949
We like working here and everything, but you're our competitor had offered to let them do the same job from home because they could do all the work from home on a computer.
00:16:35.309 --> 00:16:36.809
What year is This Fran roughly?
00:16:36.809 --> 00:16:37.109
Just
00:16:37.309 --> 00:16:38.819
This is, let's see, 2017.
00:16:40.969 --> 00:16:41.679
wow.
00:16:41.689 --> 00:16:43.549
So like before this is not
00:16:43.709 --> 00:16:44.209
Oh, this is yeah.
00:16:44.209 --> 00:16:45.209
They're way before the pandemic.
00:16:45.412 --> 00:16:45.759
wow.
00:16:45.759 --> 00:16:46.269
Okay.
00:16:46.422 --> 00:16:51.682
And we said, well, you know, we would be okay with maybe you, you staying working from home one day a week.
00:16:51.682 --> 00:16:52.782
It's the same evolution.
00:16:52.782 --> 00:16:55.142
It just happened earlier one day a week or two days a week.
00:16:55.252 --> 00:17:01.632
So you're, there's a negotiation going on with individual employees and then the employees start talking amongst each other and say, Hey, who's this guy?
00:17:02.302 --> 00:17:05.471
And that, so then so we lost that person really good.
00:17:05.561 --> 00:17:09.241
And about a month later, another person came in and said the same thing.
00:17:09.281 --> 00:17:12.862
And I think it was a different competitor because there were a lot of competitors in Dallas.
00:17:12.902 --> 00:17:13.412
It's a big MSA.
00:17:14.007 --> 00:17:15.567
so competition is offering.
00:17:15.946 --> 00:17:23.186
So just to clarify competition is offering remote and flexibility and people are leaving your company.
00:17:23.721 --> 00:17:24.001
right.
00:17:24.346 --> 00:17:25.686
Because, you know, it's not traditional.
00:17:25.706 --> 00:17:28.156
I mean, you know, Newmark is a great company, by the way.
00:17:28.156 --> 00:17:28.807
This is a,
00:17:29.277 --> 00:17:29.636
yeah,
00:17:29.966 --> 00:17:36.767
uh, I don't want to talk too much about the company, but they're very traditional New York and, and they're, you know, really polished, professionals there.
00:17:36.966 --> 00:17:41.986
And so the mindset of the company is, well, you know, every place you go, it's suit and tie and everything, and you have to be together.
00:17:41.986 --> 00:17:46.506
And the idea of working remotely was foreign at the time, frankly.
00:17:46.886 --> 00:17:50.866
And actually for computers, they would buy desktops so you couldn't take them out.
00:17:50.866 --> 00:17:52.856
You had to come to the office and do your work, right?
00:17:53.016 --> 00:17:53.336
Okay.
00:17:53.676 --> 00:17:55.376
It's a corporate strategy at the time.
00:17:55.537 --> 00:18:08.041
And again, that's not a put down of the company, but we did have people on some notebooks and those are the people who became vulnerable because they could, you know, if you didn't need a, I mean, if you had a notebook, you could do it, but Why couldn't I do it?
00:18:08.201 --> 00:18:09.591
Because someone in New York said no.
00:18:09.821 --> 00:18:15.731
So, after the second person left, we decided, well, we know if we should experiment with this ourselves.
00:18:15.942 --> 00:18:20.871
And so we had a team that figured out a strategy because a lot of the work actually was being done.
00:18:21.866 --> 00:18:27.586
In the air, you know, in Asia, so it didn't really make any difference where you were when you had that communication with them.
00:18:27.946 --> 00:18:38.836
But anyway, so we decided basically that we would take, you know, most of the staff, including the management staff and allow them to work from home.
00:18:39.375 --> 00:18:44.725
So I remember when I left in 2020, cause I was in Dallas in March of 2020.
00:18:44.725 --> 00:18:47.285
If you remember the messages were coming out, get out.
00:18:47.326 --> 00:18:50.475
Cause there won't be any flights available after Friday.
00:18:50.495 --> 00:19:01.086
You know, it's one of those messages, by that time in the pandemic, We only had two or three people that would came in on a regular basis, one to open the mail, basically, and another one who lived fairly close.
00:19:01.586 --> 00:19:03.025
Everybody else was working from home.
00:19:03.625 --> 00:19:10.115
So we got through that and, but then we figured, tried to figure out new ways to operate with our people who weren't there all the time.
00:19:10.125 --> 00:19:17.576
We would have a monthly, get together, would be a lunch and learn, or it would be a, some type of meeting, or we would create teams to get together periodically.
00:19:17.895 --> 00:19:25.556
So we were able to stay in touch and we sort of had primordial, you know, distributed work ideas, which since have matured quite a bit.
00:19:25.885 --> 00:19:28.306
But, so when the pandemic hit, it was pretty easy.
00:19:28.336 --> 00:19:30.195
Everybody, by that time, everybody was in notebooks.
00:19:30.225 --> 00:19:31.455
Hey guys, everybody go home.
00:19:31.635 --> 00:19:33.665
And everybody said, fine.
00:19:33.665 --> 00:19:35.515
So, That's how I got it.
00:19:35.515 --> 00:19:36.615
I don't know if they answered your question.
00:19:37.225 --> 00:19:38.545
Probably spent too much time on that.
00:19:38.545 --> 00:19:46.898
But at that point, I figured out that what I have been doing for the last 20 years was interesting and important and everything.
00:19:46.898 --> 00:19:52.989
But the interesting part of real estate and workplace was just beginning and I wanted to be involved in that full time.
00:19:53.487 --> 00:19:55.587
We'll be right back after these words.
00:19:56.697 --> 00:19:58.617
2020 was no joke.
00:19:59.327 --> 00:20:01.548
It changed the game for everyone.
00:20:02.397 --> 00:20:06.567
Workplace flexibility is no longer a perk, but an expectation.
00:20:07.407 --> 00:20:13.077
In fact, a recent study showed that a flexible schedule is more important than salary.
00:20:13.737 --> 00:20:15.447
Yeah, you heard that right?
00:20:15.977 --> 00:20:18.607
Employees want choices over cash.
00:20:20.177 --> 00:20:29.627
If you're a startup or a small business that doesn't have a remote work strategy, stop what you're doing right now and complete our free tree assessment at blendmeinc.
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Visit us at blendmeinc.
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That's blendmeinc.
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me for more information.
00:21:59.417 --> 00:22:00.707
And now, back to the show.
00:22:01.556 --> 00:22:07.037
So obviously lately, the sizzle term has been returned to office, right?
00:22:07.496 --> 00:22:15.076
A lot of these, corporations are literally forcing people back to work to, to the physical office space.
00:22:15.800 --> 00:22:23.530
Yeah, and we also hear a lot about hospitality and offices needing to improve on their you know, operational hospitality.
00:22:23.530 --> 00:22:28.300
What are your thoughts about that conversation and the concept overall?
00:22:29.265 --> 00:22:35.338
Well, I think what's happening now is there's, you know, you start out in a binary fashion and you wind up with something in the middle.
00:22:35.714 --> 00:22:37.924
it used to be you're in the office or you were at home.
00:22:38.304 --> 00:22:38.694
right.
00:22:38.694 --> 00:22:38.994
right.
00:22:38.994 --> 00:22:39.294
right.
00:22:39.345 --> 00:22:50.414
That was hybrid bef before the pandemic hybrid was somebody in the office Monday through Friday working in the office, and then another subset of people that were fully remote.
00:22:50.414 --> 00:22:50.504
You're
00:22:50.740 --> 00:22:51.069
Right.
00:22:51.069 --> 00:22:55.439
So, but that's now morphed into something very different.
00:22:55.649 --> 00:23:01.559
And, you know, for a lot of reasons, occupiers, tenants are very hesitant now to make big commitments.
00:23:01.710 --> 00:23:12.279
As a matter of fact, when leased space that we just had, this data came out a couple of weeks ago from CoStar, it's of the leases that had renewed in 2024, okay.
00:23:12.279 --> 00:23:21.129
So more than half a year, there was a reduction in space Total space leased by those tenants in their new space or wherever they were in a renewal.
00:23:21.379 --> 00:23:22.528
It went down by 17%.
00:23:22.528 --> 00:23:24.349
Now, 17 percent
00:23:24.404 --> 00:23:25.184
That's,
00:23:25.419 --> 00:23:29.250
legacy market is about just under a billion square feet.
00:23:29.829 --> 00:23:32.779
So, all of a sudden, kind of overnight, people are leasing.
00:23:33.554 --> 00:23:38.984
You know, a considerably smaller amount of space, uh, you know, that kind of makes sense.
00:23:39.064 --> 00:23:43.214
If you don't really know what's going to happen next, you don't want to make long term commitment.
00:23:43.224 --> 00:23:46.454
So there's a pressure on to make the commitment shorter.
00:23:46.484 --> 00:23:52.244
And when you make the commitment shorter, it becomes much more difficult to finance those from the ownership side, the landlord side.
00:23:52.824 --> 00:23:53.884
So how does this work?
00:23:53.904 --> 00:23:57.625
And you now have the, you know, the coworking firms and the flex firm stepping in.
00:23:57.944 --> 00:24:01.054
And they started out with, you know, one approach to how they financed it.
00:24:01.085 --> 00:24:08.694
Now they're becoming much more flexible and they're forming partnerships with landlords to help, you know, spread the risk and spread the return.
00:24:09.064 --> 00:24:10.724
So there's an evolution there.
00:24:10.804 --> 00:24:16.514
Those spaces, I suspect there's going to be a lot more of those because it's better to the tenants who, what the tenants really want.
00:24:16.564 --> 00:24:21.375
And when you're doing that, you can also create the additional spaces of service.
00:24:21.779 --> 00:24:26.419
Elements that an organization might want, and those can be discreet by occupier.
00:24:26.809 --> 00:24:38.214
So there's a lot of changes going on in the office world as to what's being done in the offices, how they're being serviced, what you get when you go to the office and, you know, what you get if you don't go to the office.
00:24:38.447 --> 00:24:40.288
So there's thousands of things we could talk about
00:24:40.393 --> 00:24:52.112
so when you talk about hospitality, where do you, like, to me I feel kind of torn when I hear about this concept because it's like, we understand that that employers want employees to go back into the office.
00:24:52.112 --> 00:24:56.782
And then obviously the landlords, the owners of the buildings want more people in there.
00:24:56.792 --> 00:25:13.292
but it seems to me just spending a lot of money on things to try to lure people in seems kind of counterproductive and really, I feel like kind of short sighted because it's like, well, that's going to be great for a little while.
00:25:13.292 --> 00:25:14.482
Kind of like the honeymoon period.
00:25:14.482 --> 00:25:17.832
Like it's great for a little Bob, but what happens when that wears off?
00:25:17.842 --> 00:25:25.667
So like has there been so much talk about hospitality and treating it more like a hotel, like why is there a ton of talk like that, you
00:25:25.788 --> 00:25:28.288
Well, I think that's what occupiers really want.
00:25:28.437 --> 00:25:35.387
They want to be able to figure out a way to reduce their commitments, but at the same time, improve the environment for their people so they'll come in.
00:25:35.727 --> 00:25:44.048
I mean, occupiers still, you know, this is still dominated by boomer types, like me, who, You know, have grown up in that environment as opposed to Jenny.
00:25:44.048 --> 00:25:46.067
You don't have any Gen Z presidents yet.
00:25:46.197 --> 00:25:46.387
Okay.
00:25:46.477 --> 00:25:49.457
So the mindset is to do things the way they had been done.
00:25:49.627 --> 00:25:51.137
I think it'll get better with Gen X.
00:25:51.137 --> 00:25:55.667
And certainly when millennials take over, you'll see a lot more creativity in how this is done.
00:25:56.067 --> 00:26:02.117
But, I mean, it's the commute is the thing that, that really throws everything under the bus because the average cost of the commute.
00:26:02.377 --> 00:26:05.288
Somewhere around a thousand dollars a month, 1, 200 a month.
00:26:05.597 --> 00:26:08.207
And in some cases, a lot more, some cases, less.
00:26:08.772 --> 00:26:20.772
But if you're telling an employee out of after tax money to spend 12, 000 a year to come to this office when I could be doing the same thing at the, you know, in my spare bedroom, you've got to have a rationale.
00:26:20.772 --> 00:26:24.972
So what's going to make what's going to be attractive to get them back other than being employed.
00:26:25.187 --> 00:26:34.417
You know, depending on where the market is for employment, having amenities and, you know, food and entertainment is helpful, but it doesn't overcome the commute and the cost.
00:26:34.832 --> 00:26:40.633
Frankly, in most cases, plus you'd have the flexibility that many single moms are married.
00:26:41.042 --> 00:26:48.903
If you have children, or if you have adults, parents and relatives who are, you know, need some care, you got to be much more flexible.
00:26:48.992 --> 00:26:57.982
So, I mean, that's where we find most organizations that are moving in that direction are progressive and they're coming up with ways to make that work for their organizations.
00:26:58.032 --> 00:27:08.062
It also obviously works for the employees and there tends to be a lot more loyalty, employee retention is higher and, recruiting is much, much easier if you have a flexible work environment.
00:27:09.482 --> 00:27:14.552
Well, I mean, we all think remote is great, but often the downside is connection, right?
00:27:15.182 --> 00:27:27.122
Um, how do you think, yeah, I know you agree, Kaleem, how do you think these office spaces will be transformed to satisfy that often lack of connection with people?
00:27:27.518 --> 00:27:33.307
I, I think, you know, the office still carries the burden of the, in-person collaboration on whatever.
00:27:33.457 --> 00:27:33.817
Okay.
00:27:34.097 --> 00:27:34.937
And it's there.
00:27:34.937 --> 00:27:37.367
And that kind of, that's a logical role for the office.
00:27:38.350 --> 00:27:46.721
we know the collaboration ranges from anywhere from 10% to 30%, maybe, maybe a little more of people's general work activity.
00:27:47.020 --> 00:27:56.721
So you've got 70%, or more that, you know, you would rather be doing someplace where you didn't have a lot of interruptions and, you know, where the, the facilities would be different if that's what you were doing.
00:27:57.010 --> 00:28:00.567
So, it's a challenging question, I think, for occupiers.
00:28:00.836 --> 00:28:07.476
A challenging question for certainly for anybody in real estate and the same thing with, uh, you know, if you're developing a strategy, how does that fit?
00:28:07.496 --> 00:28:08.406
How do you make it fit?
00:28:08.406 --> 00:28:09.886
And how does it change over time?
00:28:10.176 --> 00:28:15.276
I mean, even since the pandemic, so in four years, things have changed a lot.
00:28:15.666 --> 00:28:16.026
Okay.
00:28:16.356 --> 00:28:21.626
Uh, and we can only imagine we can only imagine what's gonna happen between now and the end of the decade.
00:28:22.047 --> 00:28:32.506
But what we do see is that the amount of real estate that's now being required being demanded by the users, okay, is shrinking, and it's getting much more flexible.
00:28:33.037 --> 00:28:35.956
The days of 15 year leases are kind of over.
00:28:36.386 --> 00:28:53.626
Okay, and if you look at the stats, if you look at the national stats on the rollovers of leases, and you plug in at the beginning of 2020, the number of leases that had, you know, 50, 000 square feet or bigger those on average had a remaining term of about 11 years.
00:28:54.436 --> 00:29:00.666
And that represents nationally about 300 to 350Million square feet of space.
00:29:01.071 --> 00:29:01.481
Okay.
00:29:01.706 --> 00:29:03.716
Those spaces are going to be rolling over the next.
00:29:04.121 --> 00:29:05.111
Five, six years.
00:29:05.386 --> 00:29:06.146
Oh my gosh.
00:29:06.216 --> 00:29:07.378
You mean Those leases are up
00:29:07.561 --> 00:29:10.051
and the CFO is going to say, Hallelujah!
00:29:10.686 --> 00:29:11.146
Yeah.
00:29:11.461 --> 00:29:14.031
I just saved 15 million dollars and that's big.
00:29:14.321 --> 00:29:15.251
You know, that'll happen.
00:29:15.721 --> 00:29:16.442
That will happen.
00:29:17.071 --> 00:29:26.121
And, you know, that's aside from any other shock, any other economic situation, you know, collapse in the stock market, major recession, war, any of those things that happened.
00:29:26.501 --> 00:29:28.621
And those would also have impact as well, but
00:29:28.761 --> 00:29:31.141
Well, you mentioned, you know, economic, sorry to interrupt.
00:29:31.561 --> 00:29:41.761
You mentioned economic impact and what are your thoughts on some of the, uh, more creative, like repurposing of some of these corporate spaces?
00:29:41.761 --> 00:29:53.011
I mean, are we going to be at a point where it's, we're looking at, you know, boutiques and Airbnbs that have been repurposed from corporate environments or, you know, what are your thoughts on some of those?
00:29:53.057 --> 00:30:02.797
Well, I think to a large extent in the legacy office environment, you know, I said this, uh, maybe a year or so ago, if I was 20 years younger, I would become a demolition contractor.
00:30:03.026 --> 00:30:08.037
Cause I think you're going to make a lot of money in the demolition business over the next 10 to 15 years.
00:30:08.446 --> 00:30:11.936
I think a large share of the legacy office stock is basically.
00:30:12.511 --> 00:30:16.412
It's not only functionally obsolete, but it's use is, is totally evaporated.
00:30:16.551 --> 00:30:22.951
Keep in mind when those, these buildings were built, every building that now exists basically was designed, even the new ones, right?
00:30:22.961 --> 00:30:25.871
But even they're better and they're better environmentally, et cetera.
00:30:26.261 --> 00:30:32.611
They were all designed under the concept that everybody gets together in one place, you know, it was big, it was deep cores.
00:30:32.791 --> 00:30:34.741
It was a totally different use.
00:30:34.776 --> 00:30:35.666
offices.
00:30:35.976 --> 00:30:37.246
Tons of cubicle space.
00:30:37.471 --> 00:30:38.141
Right, right.
00:30:38.141 --> 00:30:39.631
So you have big floor plates, which.
00:30:39.946 --> 00:30:43.516
You know, as a, as an occupier, when that was in vogue, it was very helpful.
00:30:43.516 --> 00:30:53.846
You could do a lot of interesting things there, but today, you know, those buildings don't convert well to condos or apartment, we just don't, but you got a lot of space you can't use.
00:30:53.896 --> 00:30:54.616
What can you do in there?
00:30:54.616 --> 00:31:02.856
Well, you can do vertical farming, or you can do the blind association, or you can do other people who don't really care about looking outside.
00:31:02.856 --> 00:31:05.506
And there are people who, you know, don't want to look outside, but.
00:31:05.791 --> 00:31:06.601
Most people do.
00:31:06.741 --> 00:31:08.141
So it's a problem
00:31:08.781 --> 00:31:09.261
Right.
00:31:09.571 --> 00:31:12.172
you can fix them, but the cost of making those changes.
00:31:12.381 --> 00:31:13.111
outside.
00:31:13.211 --> 00:31:13.361
Yeah.
00:31:13.412 --> 00:31:16.491
that's actually, you know, they have these new technologies.
00:31:16.501 --> 00:31:24.621
So helpful because they make these exterior windows that are actually TVs and they fit on the wall and they look like a window and the, and you actually have that camera on the outside.
00:31:24.621 --> 00:31:27.621
So you see exactly what you would see if you were, if that was a window,
00:31:27.731 --> 00:31:28.101
Right.
00:31:28.731 --> 00:31:30.071
it's a wall, yeah.
00:31:30.071 --> 00:31:30.641
It's a camera.
00:31:30.771 --> 00:31:32.471
It's a camera on the outside of the bill.
00:31:32.471 --> 00:31:33.162
It's sick.
00:31:33.861 --> 00:31:34.692
Oh my god.
00:31:34.951 --> 00:31:35.281
Yeah.
00:31:35.281 --> 00:31:36.131
It's crazy.
00:31:36.162 --> 00:31:36.731
It's crazy.
00:31:36.891 --> 00:31:39.061
Oh, I mean, you could do that on a boat.
00:31:39.071 --> 00:31:41.231
That would be a good thing for an inside cabin, you know, when
00:31:41.251 --> 00:31:41.951
Definitely.
00:31:42.041 --> 00:31:44.201
a wall there with a picture of the outside,
00:31:44.451 --> 00:31:46.141
but yeah, I hear what you're saying.
00:31:46.141 --> 00:31:48.291
I, Fran, I think I agree with what you're saying.
00:31:48.341 --> 00:32:08.586
A lot of these buildings, and I think downtown's a part of this association where they talk about city planning and the future of how to get traffic in and out of the city and how, whether they should use, you know, public transportation, Rideshare all that stuff and green space.
00:32:08.586 --> 00:32:15.376
Downtown's are, the new it, you know, Pittsburgh has a really new downtown project that they did.
00:32:15.376 --> 00:32:18.156
And it's all about walkability and connectivity.
00:32:18.166 --> 00:32:19.307
So I'm right.
00:32:19.307 --> 00:32:19.766
there with you.
00:32:19.766 --> 00:32:29.926
I could see people knocking down skyscrapers that were built in the fifties and sixties and having, you know, new green space and some of these new mixed use spaces.
00:32:30.011 --> 00:32:33.321
That people are developing and designing are, absolutely amazing.
00:32:33.371 --> 00:32:37.201
You know, with restaurants, coworking spaces.
00:32:37.321 --> 00:32:37.912
I mean,
00:32:38.396 --> 00:32:44.016
And you can do that in an existing structure, but it's, it's more complicated and it makes it much more expensive.
00:32:44.236 --> 00:32:47.047
But we won't see as much of that as, as some people would like to see.
00:32:47.166 --> 00:32:57.246
I mean, everybody would like to see a way out, but I think for this, uh, it reminds me of, um, I don't know if you've ever seen, there's a video, done by Mercedes called the journey that changed everything.
00:32:57.797 --> 00:32:58.636
It's on YouTube.
00:32:58.886 --> 00:33:04.896
If you haven't seen it, it's a story of Bertha Benz, who was the wife of the guy who started Mercedes Benz.
00:33:05.446 --> 00:33:24.101
And it's a story about, and this is a true story, about how in 1883 or something like that, they had a prototype, the first car, and, She was so hyped up on the car, she decided she was going to go to meet her parents were about 180 kilometers away and she took the car with two of her Children and started driving.
00:33:24.531 --> 00:33:26.682
And you just have to watch the video.
00:33:26.751 --> 00:33:32.912
It's the birth of Ben's journey that changed everything because that's, I think, where we are with office buildings.
00:33:33.131 --> 00:33:38.081
We think about work When we say we're going to do work, are you going to go to the office?
00:33:38.121 --> 00:33:41.391
You know, because the office was the heart of work.
00:33:41.432 --> 00:33:43.151
That's where everything emanated from.
00:33:43.422 --> 00:33:46.021
And that's been the case for, you know, a hundred years.
00:33:47.301 --> 00:33:48.901
A hundred years ago, it was a paper environment.
00:33:49.211 --> 00:33:51.341
Today, there's no paper in any office anymore.
00:33:51.351 --> 00:33:51.662
Really.
00:33:51.662 --> 00:33:57.331
You have, you know, maybe a trash can for little note papers, but people don't print out paper anywhere near that where they did.
00:33:57.331 --> 00:33:57.932
They don't scan it.
00:33:57.991 --> 00:33:58.961
It's all digital.
00:33:59.091 --> 00:33:59.401
Okay.
00:33:59.581 --> 00:34:00.711
So you can be anywhere.
00:34:00.831 --> 00:34:04.481
So now the heart of the, of work, It's not in the office.
00:34:04.721 --> 00:34:07.651
It's in the cloud and you have to start thinking that way.
00:34:07.801 --> 00:34:08.132
Okay.
00:34:08.331 --> 00:34:18.132
So if you're a bright CEO or CFO, you've got to be thinking about five years from now, 10 years from now, how is this work going to be done and what should we commit to?
00:34:18.202 --> 00:34:21.112
You're not going to sign a 15 or 20 year lease on anything.
00:34:21.711 --> 00:34:22.032
Okay.
00:34:22.731 --> 00:34:27.902
Cause the rate of change is now exponential and we haven't even talked about AI and we're probably
00:34:27.972 --> 00:34:32.162
Never enough time for
00:34:32.402 --> 00:34:32.541
AI.
00:34:32.641 --> 00:34:34.771
AI.
00:34:34.771 --> 00:34:38.731
Okay.
00:34:38.771 --> 00:34:42.182
tell us about a comical or inspiring moment you had while working remotely?
00:34:43.451 --> 00:34:43.791
Sure.
00:34:43.822 --> 00:34:45.862
It won't be as good as the hooker story.
00:34:46.081 --> 00:34:53.961
Um, but I will tell you when I first started, this is now in the last century, cause I go back a long time,
00:34:54.211 --> 00:34:54.552
Okay.
00:34:54.561 --> 00:34:56.132
when I first had my business, right.
00:34:56.163 --> 00:34:58.094
So what year just what year?
00:34:58.134 --> 00:35:00.063
Yeah, give us give us the setting where we at
00:35:00.353 --> 00:35:01.433
1994.
00:35:01.923 --> 00:35:03.223
Oh shit, okay.
00:35:03.253 --> 00:35:03.683
Okay.
00:35:03.923 --> 00:35:04.213
Okay.
00:35:04.233 --> 00:35:04.804
I'm pimping.
00:35:04.804 --> 00:35:08.973
I think I have a six pack Well, not a six pack but a two pack at this point.
00:35:08.973 --> 00:35:10.384
I have a two pack bro.
00:35:11.958 --> 00:35:21.869
So anyway, so I started this business is just me, you know, I quit, I went, you know, I started opened up, and I'm sitting in the same room actually in the same house.
00:35:21.969 --> 00:35:23.128
We've been in the same house all the time.
00:35:23.348 --> 00:35:24.028
It's great house.
00:35:24.458 --> 00:35:26.108
But we have two small children.
00:35:26.108 --> 00:35:30.018
Now, my son would be about two or three and my daughter was one and we had the world's.
00:35:30.188 --> 00:35:31.219
best nanny.
00:35:31.338 --> 00:35:37.148
We somehow found this woman who was a, she was a grandmother type person and she did a wonderful job with the kids.
00:35:37.159 --> 00:35:38.828
She did everything, did the laundry.
00:35:39.308 --> 00:35:42.098
But so we, and we were really sorry to lose her after about five years.
00:35:42.098 --> 00:35:51.328
But so the kids would be in the downstairs with the nanny who would be, you know, entertaining them and feeding them and doing whatever you could do with kids, which is a lot of fun stuff.
00:35:51.998 --> 00:35:56.449
So occasionally my son would kind of escape and call up the stairs.
00:35:56.733 --> 00:35:59.744
And knock on the door, you know, cause the door would be closing.
00:35:59.903 --> 00:36:00.953
Daddy, you know, daddy.
00:36:01.543 --> 00:36:04.953
So I remember this one time, there was a new client, prospect.
00:36:04.953 --> 00:36:06.703
We were just about to do the deal with that.
00:36:06.703 --> 00:36:15.003
And of course at that, in that period, sounding like you were working, we're working and weren't working in an office, you're working in a home who would want to deal with that guy.
00:36:15.219 --> 00:36:17.058
You know, you started in an office, right?
00:36:17.058 --> 00:36:20.808
It was a big push for me to go to the office, figure out how to finance that.
00:36:20.828 --> 00:36:26.608
But the door knocked and I, you know, explained that I thought my son was downstairs.
00:36:26.608 --> 00:36:26.688
He
00:36:26.804 --> 00:36:28.134
you're on a car you're on a call.
00:36:28.134 --> 00:36:29.014
because there's no vid.
00:36:29.034 --> 00:36:30.233
There's no, video back
00:36:30.318 --> 00:36:30.889
no, nobody.
00:36:30.889 --> 00:36:32.828
This is the phone call, speakerphone, I think.
00:36:33.199 --> 00:36:37.415
And, so, you know, the client said, Nope, don't worry about it.
00:36:37.436 --> 00:36:37.985
It's not a problem.
00:36:38.085 --> 00:36:39.425
So he left.
00:36:39.425 --> 00:36:43.655
And then, you know, Actually, about the next week at about the same time, somehow he did the same thing.
00:36:43.686 --> 00:36:50.835
And I'm on this, on the phone with this same client and I thought he was going to get really irritated, you know, and he's like, no, no, no, bring him in.
00:36:50.835 --> 00:36:54.326
I want to talk to him, you know, so I bring my son and he has this conversation.
00:36:55.045 --> 00:36:56.545
Damn, if he didn't sign the contract.
00:37:00.121 --> 00:37:00.630
So,
00:37:00.681 --> 00:37:01.400
you a solid!
00:37:02.141 --> 00:37:11.190
yeah, so I didn't, well I, you know, what do you, you know, it was just, it was fun stuff and you know, who are you, are you working with my daddy?
00:37:11.190 --> 00:37:11.460
You know?
00:37:11.681 --> 00:37:13.240
It was just a, it was a great memory
00:37:13.451 --> 00:37:14.311
that's precious.
00:37:14.679 --> 00:37:16.148
but that's a long time ago today.
00:37:16.148 --> 00:37:18.818
Now you have, if you have a child to come to you to put him on the video
00:37:18.818 --> 00:37:19.288
yeah.
00:37:19.288 --> 00:37:32.003
Yeah, but I mean just thinking about 94 like the conference call how intense it was, you know, like you had it in the middle of your thing you just put it on speakerphone and you were still remote.
00:37:33.293 --> 00:37:33.813
You're still
00:37:33.848 --> 00:37:34.298
Exactly.
00:37:34.778 --> 00:37:35.078
Yeah.
00:37:35.083 --> 00:37:35.304
Yeah.
00:37:35.449 --> 00:37:37.398
We're gonna be so much better in the future.
00:37:37.398 --> 00:37:39.228
You're gonna have holograms, they're gonna be great.
00:37:39.978 --> 00:37:40.148
oh.
00:37:40.929 --> 00:37:41.808
You're not going to have cars.
00:37:41.808 --> 00:37:45.628
The car is going to pick you up with the right class car for wherever you're going.
00:37:45.628 --> 00:37:47.328
It's going to be such a wonderful world.
00:37:48.298 --> 00:37:48.478
Hope
00:37:48.498 --> 00:37:49.929
We're really looking forward to that.
00:37:51.639 --> 00:37:54.598
So friend, where can our listeners and viewers find you?
00:37:54.833 --> 00:37:55.293
Yeah.
00:37:55.293 --> 00:37:58.683
Fran's
00:37:58.808 --> 00:37:59.219
come over,
00:37:59.398 --> 00:37:59.878
where you are.
00:37:59.878 --> 00:38:01.048
You're going to be where you're at.
00:38:01.098 --> 00:38:02.068
me up in the phone.
00:38:02.153 --> 00:38:03.244
is no, I'm just
00:38:03.389 --> 00:38:03.958
There.
00:38:03.998 --> 00:38:08.668
No, I say, um, uh, a couple of places that you can go to LinkedIn.
00:38:08.679 --> 00:38:10.668
A lot of people watching are on LinkedIn.
00:38:10.679 --> 00:38:13.739
It's Fran dash Saele, uh, you know, linkedin.
00:38:13.768 --> 00:38:14.199
com.
00:38:14.348 --> 00:38:18.398
I am, and then Fran Saele, uh, you just put in Fran or Francis Sally.
00:38:18.398 --> 00:38:19.568
I usually come up there.
00:38:19.619 --> 00:38:20.259
That's okay.
00:38:20.409 --> 00:38:22.148
we have a website, but we're redoing it.
00:38:22.208 --> 00:38:23.958
But you can come in and leave a message there.
00:38:24.128 --> 00:38:27.878
It should be up in about a month or so, maybe two months, mortevita.
00:38:27.978 --> 00:38:28.409
com.
00:38:28.828 --> 00:38:31.148
M O R T E V I T A dot com.
00:38:31.748 --> 00:38:32.858
And of course there's email too.
00:38:32.858 --> 00:38:34.739
If someone wants to email me, they can do that.
00:38:34.748 --> 00:38:36.369
That's on the website or it's on LinkedIn.
00:38:36.398 --> 00:38:37.378
You can get the email
00:38:37.528 --> 00:38:37.958
Cool.
00:38:38.293 --> 00:38:38.703
Great.
00:38:38.838 --> 00:38:40.768
Well, we cannot thank you enough.
00:38:40.827 --> 00:38:41.777
What an episode.
00:38:41.913 --> 00:38:43.413
Great time, Fran.
00:38:43.413 --> 00:38:44.492
Thank you so much.
00:38:44.793 --> 00:38:45.032
Well,
00:38:45.677 --> 00:38:46.177
but you know,
00:38:46.393 --> 00:38:47.262
I don't think we'll get.
00:38:47.532 --> 00:38:48.012
Good point.
00:38:48.012 --> 00:38:48.402
Good point.
00:38:48.402 --> 00:38:49.603
Can we, we'll find out.
00:38:49.603 --> 00:38:50.462
We'll find out if it.
00:38:50.462 --> 00:38:51.543
passes the YouTube thing.
00:38:51.614 --> 00:38:52.030
heh
00:38:52.188 --> 00:38:54.097
It's a good thing we didn't talk about OJ Simpson.
00:38:54.097 --> 00:38:54.688
That's all I got to say.
00:38:55.063 --> 00:38:56.052
that's a very good point.
00:38:56.052 --> 00:38:57.012
You are from Buffalo.
00:38:57.012 --> 00:38:57.882
We are from Buffalo.
00:38:57.882 --> 00:39:00.462
But thank you so much, man, so much knowledge in here.
00:39:00.853 --> 00:39:02.052
Really appreciate it, man.
00:39:02.052 --> 00:39:03.222
Come back anytime.
00:39:03.572 --> 00:39:06.273
So, uh, yeah, we'll talk to you, uh, soon, man.
00:39:06.273 --> 00:39:06.932
Appreciate you.
00:39:07.407 --> 00:39:07.958
It's a fun time.
00:39:07.958 --> 00:39:09.458
Thank you very much for the opportunity.
00:39:09.538 --> 00:39:09.797
Great
00:39:09.887 --> 00:39:10.288
Yes.
00:39:10.547 --> 00:39:11.097
you for an hour.
00:39:11.688 --> 00:39:12.438
Oh, likewise.
00:39:12.518 --> 00:39:12.978
Thank you.