News Category: Industry Insights

On October 6, 2022, Skender Project Executive Joe Pecoraro was invited to speak on a panel at the Bisnow Multifamily Annual Conference (BMAC), which brought together leaders from across the commercial real estate industry to discuss the current state of the multifamily market in the greater Chicagoland area. Held at the stately Loews Chicago Hotel off Navy Pier, the conference featured discussions on new technology and innovation, design trends, financing options and the challenges of construction in the current economic and international environment.

Pecoraro was featured as a participant on a panel called ‘Forward Thinking Development, Design & Construction,’ which focused on how top firms are building, designing and delivering product in the different regions of the Chicagoland area post-COVID.

The panel was moderated by Thomas Roszak of Thomas Roszak Architecture and, in addition to Pecoraro, included panelists such as: James Letchinger, Founder and CEO of JDL; Phillip Beckham III, Principal at P3 Markets; Aaron Galvin, CEO of Luxury Living Chicago Realty; Jeffrey Zogby, Vice President, Chicago at Project Management Advisors; and John Lynch, Executive Director at Oak Park Economic Development.

The conversation began with a lightning round, in which each panelist described their role at their respective companies and the multifamily amenity they are most excited about. While the other panelists mentioned features like indoor-outdoor facilities, public transit access and communal space, Pecoraro declared his favorite multifamily amenity to be “a great construction budget,” which got more than a few hearty chuckles from the crowd in the Loews ballroom.

Next up, the panel discussed the Chicagoland neighborhoods where they’re seeing the most activity and opportunity for future projects. Several panelists pointed to the Fulton Market and West Loop area, which has seen tremendous growth over the last few years and is in many ways the current “favorite child” when it comes to real estate development in the city.

“There are about 25,000 units in the later stages of development in downtown Chicago,” said Aaron Galvin of Luxury Living Chicago Realty. “12,000 of those are in the West Loop or Fulton Market area, and that doesn’t even include some of the most recent announcements that are just now being conceptualized.”

The group examined how the West Loop’s recent boom in multifamily construction was made possible because of the area’s previous growth in office and retail. As a result, rents in the area have gone up considerably, and these are only going to get higher as taller buildings in the neighborhood are erected and can offer view premiums. Other areas noted by the panel as prime for expansion were the Southside Chicago neighborhood Bronzeville, the River North, Gold Coast and Old Town markets, and the northern suburbs of Elmhurst, Skokie and Wilmette.

While rents and wages are still on a healthy incline, moderator Thomas Roszak noted that many of the challenges felt by CRE professionals over the course of the pandemic remain, which Pecoraro agreed with from a construction standpoint.

Pecoraro said his team at Skender used to make two to three phone calls and one site visit to make sure long-lead-time materials arrived on time, but that same process can now take 10 or more phone calls and multiple site visits, as supply chain issues and material costs have driven up lead times for essential materials. Beckham and Galvin agreed, pointing specifically to glass as a material that’s seen some major hold-ups on an international scale.

While there are certainly roadblocks on the horizon in the form of supply chain issues, rate hikes and worker shortages, the panel ended with optimism about the future of Chicago’s real estate market.

“Ultimately, Chicago is a great city,” said Galvin. “There’s a lot of growth here in terms of jobs, and no city has had more Millennial growth since 2010. I expect this will continue with Gen Z down the line.”

Across all property types, both ground-up and renovation projects are facing the dual challenges of price volatility and scarcity of supplies.

The U.S. Bureau of Labor statistics reported staggering spikes in construction material prices between May 2020 and May 2021: increases of 146% for refined petroleum products such as diesel fuel and asphalt base, 114% for lumber and wood products, 107% for cold-rolled steel sheets used for metal studs, and 39% for copper wire and cable. In mid-June, lumber futures for July delivery were down 42% from their record high reached in early May.

Across all property types, both ground-up and renovation projects are facing the dual challenges of price volatility and scarcity of supplies. And with general contractors, subcontractors, and suppliers unable to guarantee pricing of materials more than a few weeks out, many are shifting the risk associated with price uncertainty to owners and developers. Mitigating these risks can be challenging, but the following tactics can help alleviate the effects on a project’s bottom line:

1. Assemble the team early.

At Skender, we’ve found that combining project teams sooner rather than later can significantly increase speed-to-revenue. When architects and contractors collaborate early in the process, either in a design-build or design-assist delivery method, schedules can proceed more quickly, and expensive, time-consuming redesigns can be avoided. For example: in a ground-up project, a smart design choice regarding the location of the major vertical circulation (i.e., stairs and elevators) can result in significant cost savings.

2. Invest in Lean Construction.

To achieve greater stability, reliability, efficiency, and flexibility, owners and developers should leverage Lean construction principles and tactics. In addition to navigating material shortages, a Lean builder such as Skender can help maximize ROI by conducting ongoing research, monitoring economic trends, and providing counsel on lifetime costs, environmental impact, inflation, and other factors. A builder with a Lean approach specializes in optimizing projects for efficiency and reducing waste during all stages of construction — both of which can help mitigate risks associated with rising material costs.

3. Amend budgets.

Historically, material cost increases have slightly exceeded the rate of general inflation (3-5%); in the current environment, PMA advises owners and developers to consider escalation contingencies of 10-15% per year. Predicting exactly when material prices will stabilize is impossible, but establishing strategic budget reserves, contingencies, and reinvestment plans can help owners and developers manage risk.

One budgeting approach Skender’s teams have employed involves building a strategic buffer and establishing a timeline for reassessing risk, then gradually releasing reserved funds back into the project as economic conditions improve. For a project with a $15 million budget, aim to spend $14.5 million, and systematically release the balance as appropriate. Converting surplus contingency adds real value and can enable developers and building owners to secure wish-list items, from upgraded finish materials to appliances and landscaping.

4. Explore alternative or unconventional materials.

At both PMA and Skender, we are firm believers that expanding materials options for every component of a building, from the foundation and superstructure to the various systems and interior building materials, can help control costs. Pre-cast concrete, ready-mix concrete, DensGlass, zip-board, and alternative wood species can all be useful substitutes for materials that are over budget or difficult to procure. For wood-framed projects, prefabricated wall panels and framing systems can limit material waste, decrease labor costs, and potentially expedite project schedules.

Now more than ever, owners and developers should be challenging architects and engineers to exercise their creativity and incorporate unconventional materials in their designs, as well as ensure that extending the list of acceptable substitutes does not compromise on safety, quality, durability or functionality.

5. Procure materials well in advance.

In addition to exploring alternative materials, both our firms suggest procuring materials in advance whenever possible to mitigate risks around pricing and availability. Buying materials earlier typically results in cost savings and greater decision-making power about other factors later in the project. It mitigates unknown exposure to shortages and can ensure access to materials when needed. Some owners and developers have made the decision to purchase materials directly, believing it will avoid markup costs. But going that route also eliminates a variety of services and introduces a higher level of risk, so it’s not something to undertake without examining the full picture.

6. Manage contracts and partner with contractors.

Developers and owners should be mindful of how material price volatility can affect both new and existing agreements. At PMA, we emphasize the importance of fully understanding any material cost escalation clauses. Often, force majeure clauses will be modified to allow for recovery of costs (not just time extensions) for catastrophic events, which can lead to cost escalation. Developers should also avoid contracts with open-ended allowances for material costs. In the current environment, partnering with contractors and suppliers to set an indexed price point with a cap, with an agreement to share in the savings or overages up to the cap, is a more appropriate approach to mitigating risk. This approach also allows for owner participation in any upside as prices stabilize.

Last but not least, owners and developers should keep in mind that steep increases in material costs may lead to subcontractor defaults or bankruptcies. Staying abreast of subcontractors’ and material suppliers’ financial health is critical to minimizing project disruption, even when construction agreements are properly structured to protect the owner from subcontractor defaults. Prompt payment and properly structured agreements can go a long way in helping subcontractors manage cash flow. Ultimately, avoiding default is a better outcome than merely being protected if the situation does occur.

The economy is uncertain, and owners and developers have no way of knowing exactly when the prices for building materials will stabilize. Fortunately, the risks associated with material price volatility are generally tolerable and quantifiable. A combination of the above strategies—along with a little extra planning, creativity, and flexibility—can help mitigate economic variables and ensure reliable, on-time, on-budget delivery of construction projects.

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This article is authored by Andy Halik, VP and corporate interiors co-lead of Skender, and Roger McCarron, President and CEO of Project Management Advisors Inc. (PMA). It was originally published by Facility Executive magazine.

The Johnson Controls Asia-Pacific headquarters in Shanghai, China, is one of the most sustainable corporate complexes in Asia. In the summer of 2017, the campus opened as the first building in China to earn three green certifications: LEED NC Platinum, the World Bank’s EDGE, and China’s own Green Building Design Label.

Although just one example, the Johnson Controls building is indicative of a larger move toward green building worldwide. According to the World Green Building Trends 2018 report, three emerging trends in green-building technology are advancing the sustainability revolution in architecture: energy-analysis tools used at every stage, the promise of generative design, and the use of data from design through the building’s entire lifecycle.

Dodge Data & Analytics, publisher of the report, surveyed more than 2,000 architecture, engineering, and construction professionals and found global growth in green-building projects: 47 percent of industry professionals expect more than 60 percent of their projects to be “green” by 2021.

NBBJ, one of the architecture firms surveyed for the report, takes green building quite literally for its project The Spheres (Amazon’s new Seattle office complex)—its interconnected steel-and-glass domes form a conservatory for more than 40,000 plants from the world’s cloud forests. However, the report defines “green” projects as including, at a minimum, efficient use of resources; waste and pollution reduction; high indoor-air quality; and as much renewable energy, nontoxic and sustainable materials, occupant quality of life, and environmental adaptation as possible.

Many incentives now entice architecture and construction firms to create buildings that meet those requirements. Owners are seeing a 10 percent or greater increase in asset value for new green buildings compared to traditional ones—as well as decreased operating costs and a shorter payback period. Survey respondents were also much less concerned with the higher cost of green building, with only 49 percent of them citing it as a factor, compared to 76 percent in 2012.

Continue reading the full article at Redshift by Autodesk.

The first wave of major development in the Fulton Market neighborhood is coming to an end, but a new one is just beginning.

Sterling Bay set off the development explosion when it bought 1000 West Fulton, a cold storage building that towered over the once-industrial area west of the Loop, in 2012 for $12M and by 2015 transformed it into 1KFulton, the regional headquarters of Google. The influential tech firm’s arrival signaled that Fulton Market had become a true office submarket.

“That gave everyone the green light,” Skender Vice President Clayton Edwards said.

His firm recently built out a number of Fulton Market office spaces, and  Edwards will be a featured speaker at Bisnow’s State of the Office event Feb. 14, which will explore what the future holds for the West Loop.

Developers renovated many of the industrial loft buildings around 1KFulton, which were quickly populated with creative users.

Much of that renovation work is done, and developers have now kicked off construction on a set of new office towers, including ones built on spec, that will continue the neighborhood boom by placing more traditional users alongside Fulton Market’s creative and high-tech pioneers.

McDonald’s decision to abandon its suburban Oak Brook campus in favor of a new 490K SF Fulton Market office building developed by Sterling Bay late last spring was a signal, from an iconic traditional business, that the neighborhood was seen in a new light.

Continue reading the full article at Bisnow.

As material and labor prices escalate every day, building process economics are playing an increasingly critical role in every project. Firms involved in the commercial building process across the industry must look for innovative ways to deliver high-quality projects while stemming the tide of rising costs. Collaboration, transparency and waste reduction are key to an efficient, streamlined process.

At Skender, we recently released the “101 Ways to Build Smarter” report, which provides insight from our corporate real estate, tech clients and project partners over the past six decades. When employed comprehensively, this advice can have a huge impact on quality and costs. Following are 10 strategies to add value to your upcoming projects without driving up the budget.

1. Go lean. Start by hiring an integrated design and construction team with experience in lean construction, our industry’s take on The Toyota Way. These pros will share a focus on reducing wasted materials, time and labor costs.
2. Confirm an end-to-end team. Avoid costly hand-offs associated with siloed departments by establishing a unified end-to-end team at the outset. This will optimize cost, quality and schedule.
3. Engage in uncompromising collaboration. Finding widespread efficiencies is only possible if you have a lean team in place; a group of professionals fully engaged with one another, 100 percent committed to collaborating and cross-checking every process and decision.
4. Include end-users early and often. The users of the space, particularly the final-stage planners, are the ones with the core knowledge of what will meet their needs. If those needs change during the process, knowing sooner rather than later will reduce the need to redo, redesign or reconstruct—all activities that could add to the cost and schedule.
5. Engage the power trio: owner, design team, general contractor. Set up a system of frequent and thorough communication among the team members that impact the outcome most.
6. Understand the real meaning of efficiency. Increased efficiency means reduced waste, time and materials. It doesn’t necessarily mean cost savings on individual items, but does ultimately result in reduction of the overall cost of construction.
7. Embrace the irony of value and cost. Greater value doesn’t necessarily mean lower cost for any given item or component. When you consider the big picture and long-term operations, cost savings will come through.
8. Reducing risk means reducing costs. Less risk, fewer mistakes, safety, fewer Requests for information (RFIs), and fewer unresolved issues ultimately means the overall project cost plummets. Listen to the members of your team speaking up about risks, and don’t be afraid to mitigate them early and often.
9. Increased decision-making power means real-time cost savings. When members of the team are empowered to act on opportunities and ideas, cost savings result naturally.
10. Always over-communicate. When lines of communication are open, ideas can build on one another, and collaboration thrives.

This article was authored by Skender. It first appeared in San Francisco Business Times. 

As the Building Design+Construction editorial team wrapped up work on the 42nd annual Giants 300 report in late June, a number of intriguing industry trends and themes bubbled to the surface. Some are new to us, others simply confirmed our original notions.

The Giants 300 report agglomerates financial data and business dealings from the nation’s largest architecture, engineering, and construction firms (a record-number 480 firms submitted data this year). The AEC “Giants” are a powerful group. Collectively, they represent 60-80% of all design and construction work completed in the nonresidential buildings market in a given year, depending on the building sector and discipline.

Compiling the Giants 300 report gives BD+C editors a unique, bird’s-eye view of the market. Based on the 2018 report, we’ve identified five emerging trends that are likely to transform the construction market in the near future:

1. Offsite construction is here to stay. Once a novelty, offsite construction is taking hold across the industry, as labor shortages persist, the Lean movement grows, and tech-based workflows become prevalent. Major GCs are moving toward manufacturing-based operations, and select owners are requiring prefab on projects.
2. Silicon Valley is eyeing AEC. Billions in venture capital and strategic funding are flooding the AEC market, as nontraditional industries (especially tech) see dollar signs in the transformation of this antiquated, low-margin industry. A Built Worlds report identified 25 VC funds, strategic funds, and accelerators actively targeting AEC. The industry’s new darling, Katerra, nabbed a whopping $865 million from SoftBank. There’s plenty more to come.

Read the full list and article at Building Design+Construction.

Open ceilings are a signature element of most contemporary office designs because of the spaciousness and casual, cool vibe they add to a space. Many decision-makers also assume open ceilings are less expensive than drop ceiling because they use less materials, labor, and time. But, do those assumptions play out in reality?

A 2008 study of retail and office interior construction in five cities seemed to back up that assumption.  Sponsored by the Ceilings & Interior Systems Construction Association (CISCA), the study found that initial construction costs for suspended ceilings were 15-22 percent higher than for open plenums in offices, and 4-11 percent higher in retail spaces.

Unfortunately, those findings don’t give the full picture. Over the years, our experience has shown that open plenum ceilings have many benefits—but costing less isn’t one of them. It’s important to plan ahead for the unforeseen costs of open ceilings, which typically make them come in as more expensive, particularly over a building’s life cycle.

Deconstructed Look Takes A Lot of Construction

Open ceilings don’t require the new infrastructure that a suspended ceiling does, so it seems contradictory that they’d be more expensive. However, it’s not as simple as removing suspended ceiling tiles and walking away. Existing infrastructure that’s been hiding behind suspended ceilings is often unsightly, requiring major work to make it attractive to employees or customers.

For example, those exposed ducts seen in modern offices are often not original to the buildings they’re in. Old ductwork is typically blocky, dirty, oily and generally not aesthetically pleasing. Round or oval ductwork, as we used in the build-out for Glassdoor’s new headquarters, delivers a more “finished” look, but is significantly more expensive.

In addition to swapping unsightly ducts, space users want everything painted from the exposed ceiling to the ductwork and plumbing—a job that’s far more complicated than simply painting walls. This also helps tie together what you see when you look up with the color scheme, décor, and branding choices on the floor. In other words, the casual look of an open plenum is actually the result of a lot of skilled labor.

In Short: Skilled Labor Shortage Affects Ceiling Work, Too

As commercial construction has ramped up in recent years, developers are seeing a shortage of skilled labor in many trades, driving up construction costs. Open ceilings may involve lower material costs than suspended ceilings, in some cases, but any savings is more than offset by the cost of labor-intensive tasks required for open plenum.

For instance, added labor-intensive tasks may include running all electrical distribution conduit tight to the deck above with the associated additional bends in the runs, rather than running all of the conduit that crosses paths at different elevations.

For our work on Capital One’s tech incubator space in Chicago, ductwork, electrical conduits, and other infrastructure were all seamlessly integrated so the ceilings complemented the colorful, yet sleek space.

Can You Hear Me Now? Sound Considerations of Open Ceilings

Another invisible, but inevitable, cost in open plenum plans is the need for acoustical treatments. The panels in suspended ceilings are called acoustical tiles for a reason: they absorb sound to keep ambient noise levels from being disruptive. The hard surfaces of exposed ceilings –and the cement floors and glass walls they’re often coupled with – create an echo chamber. And, as people raise their voices louder to be heard over the ambient noise, the noise is amplified. White noise systems can help, but some people find the white noise itself to be disruptive.

If designers and construction firms don’t plan together to address sound issues, employee productivity, privacy and job satisfaction can suffer. For workplaces in which people must handle sensitive information, conduct frequent client calls, or collaborate closely with their colleagues, a noisy workplace is an ineffective one – and can create costly mistakes.

Solutions for noise problems in open plenum plans add to renovation bottom line. Office users may install acoustical panels directly onto the deck, or suspend baffles to absorb sound in critical areas. Spray-on acoustical material applied to the ceiling’s hard, reflective surfaces is another solution. These products soften the surfaces to absorb some of the noise, and typically have other benefits such as thermal insulation and fire protection. Spray-on solutions also cost less than panels or baffles, however, no work can be done in the space while the spray-on material is being applied. This adds seven to 10 days to the construction schedule, diminishing the savings.

Efficiency Over the Life of the Space

Even if open plenum ceilings can be installed cost-effectively, operational cost considerations can change the equation somewhat. Many planners and designers now consider the entire life-cycle cost of different solutions, including the cost of energy consumption and maintenance over time as well as the initial materials and labor.

The five-city CISCA study previously mentioned noted that energy costs were found to be lower in suspended ceilings than in open plenum ceilings, ranging from 9 percent to 10.3 percent energy savings in offices. In addition, CISCA noted that open ceilings required frequent cleaning and periodic repainting that’s unnecessary with suspended ceilings. The study concluded that when you consider both first-time and operating costs, suspended ceilings are extremely cost effective.

Open Ceilings Aren’t Going Anywhere, So Plan Ahead

All things considered, the additional cost of open plenum ceilings shouldn’t be a deal-breaker. Most companies that are investing in new or renovated offices will want the hip look and blank slate that open ceilings provide. And, designers’ primary goal is to create a space that’s appealing and productive for the employees who use it; incurring an incrementally higher cost structure is a secondary concern.

Designs teams and their clients who are getting ready to build out space should be aware of the true cost of different alternatives to avoid unexpected budget blows. Informal, exposed ceilings may seem less expensive than suspended ceilings—but reality is often quite different. Make sure to account for added materials, added labor, and long-term efficiency when you’re pricing out your project.

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This article was authored by Skender Vice President Clay Edwards and originally published by Work Design Magazine.

“Conversions, renovations, and franchise affiliation changes, oh my!”—this doesn’t have to be your theme song if you find yourself embarking on a hotel repositioning effort. It’s important to be aware of the myths surrounding hotel conversion projects to dispense with some of the headaches that plague others who are not in the know.

Myth 1: “To reduce renovation costs, commercial area HVAC, major mechanical, and plumbing replacement/repairs can wait until after re-opening when revenues start flowing.”

Mistake. This cash flow decision is not rooted in proper long-term asset management decision making and diminishes ROI unnecessarily because it defers true cash flow. During a recent $12 million conversion and renovation to become an upscale property, a full-service, 178-room, 30-year old midscale brand took this approach. Once open, old issues that previously plagued the hotel immediately came back to life. Repair costs surged with crews trying to avoid unsightly damage to brand new walls, floors, and public spaces. Meanwhile, guest scores tanked. If you’re contemplating renovating, you must budget accordingly for key components to the operation during that process, not after.

Read all seven myths at Lodging magazine.

Offering the one-two punch of cost savings and convenience, ASCs are increasingly becoming the venue of choice for both physicians and patients.

Few would argue that the healthcare landscape is rapidly evolving. Today’s healthcare consumer has become far more engaged, not only demanding a greater level of personalization and convenience in their healthcare experience, but also seeking greater transparency in areas such as network coverage and medical costs. These changing patient expectations, coupled with advances in medical technology, have created a paradigm shift in healthcare delivery that is taking emergent care and surgical procedures beyond hospital walls and into outpatient facilities such as freestanding emergency departments (FSEDs) and ambulatory surgery centers (ASCs). Offering the one-two punch of cost savings and convenience, ASCs are increasingly becoming the venue of choice for both physicians and patients because of their ability to perform increasingly complex surgeries thanks to improved anesthetic techniques and less invasive surgical procedures—services that typically come with a much higher price tag when performed in a hospital setting.

Given this market trend, it is quite feasible that ASCs will be receiving a greater number of high-acuity patients in the future. In fact, recent legislation in Florida proposed that ASCs should be able to keep patients for at least 24 hours, and then allow them to stay up to 72 hours in a post-surgical Recovery Care Center (RCC), while Arizona, Connecticut and Illinois have all established licensing standards for RCCs. If this trend continues, it will open the door to an entirely new type of outpatient facility where an ASC can take on more complex and varied types of surgeries.

Read the full article at Building Design+Construction.

Open ceilings, exposed concrete floors and glass-walled spaces are the hallmarks of contemporary interiors. These design choices convey a hip and modern mindset for the companies and retailers that inhabit them, but they can come with a drawback that impacts business: noise.

Without the sound-dampening effects of the acoustical tiles used in drop ceilings and wall-to-wall carpeting and other soft surfaces, ambient noises such as conversations, whirring heating and cooling systems, and shifting furniture are amplified. And plans to mitigate this heightened noise can add extra materials, labor costs and time to your build-out.

Head Off Office Noise Woes

As I described in “Heads Up: The 5 Hidden Expenses of Open Ceilings,” open or plenum ceilings come with hidden costs that should be considered before a build-out is planned. One of these costs is dealing with loud and distracting spaces created by them in conjunction with the popular open floor plans of contemporary offices. Without enclosed offices or high cubicles to retreat to, the cacophony of conference calls, impromptu meetings, and even innocuous email alerts and typing sounds can be overwhelming.

Ignoring the issue may lead to decreased employee productivity, feelings of privacy and job satisfaction. Noisy spaces may also make a poor impression on clients or lead to costly mistakes caused by misheard or overheard sensitive information.

White noise systems mask some noise, but employees may find the artificial noise itself to be a distraction. For open offices, acoustical sprays are increasingly popular for replacing the effect of the acoustical tiles that compose drop ceilings. The biggest downside from a build-out perspective is that all other site work must pause for a week or more while the acoustical spray is applied. The cost of the materials and labor to install acoustical sprays should also be factored into the budget.

Handling Ambient Noise in Retail and Restaurants

Creating inviting retail and restaurant interiors not only has to do with how they look, but also how they sound. Customers may avoid restaurants where the ambient noise level makes it hard to have a private conversation or retail spaces where they must shout to receive service.

Getting the industrial look without industrial noise requires using construction and interior design solutions that help absorb sound. In addition to acoustical spray, the team may want to incorporate banquettes or booths, upholstered furniture and carpeted areas, as well as curtains, wall hangings or other textiles. These measures create the potential for many new design choices, and add cost and time to your build-out, so they should be planned for accordingly.

Don’t Forget the Unseen When It Comes to Modern Interiors

Open ceilings and other contemporary design choices will continue to be popular because of their sleek, stylish looks. But, make sure not to neglect hearing when you’re designing to please the senses. One of the biggest complaints about work and retail spaces with these features is their noisiness. With some advanced planning and investment, using acoustical spray, white noise, and furniture and textile choices can help alleviate the echo effect that open ceilings create.

This is the two in a two-part series on pros and cons of on-trend office and retail design elements. Read part one of the series, Heads Up: The 5 Hidden Expenses of Open Ceilings.

Read more at blog.naiop.org > 

A great workplace culture where employees can thrive and take an organization to the next level can have a lasting impact on recruitment, retention, and the bottom line. But how do you get there?

Elevation 007

Hannah French, Capital One’s senior manager of design and construction, confesses that people just don’t think banks are exciting. But Capital One is not your average bank.

“We’re a top-ten bank on a journey to become a leading high-tech company and digital innovator,” she said.

French just wrapped up managing the design and construction of The Shop, a dazzling new space for the firm’s partnership credit card business that’s re-branding them as a player in the world of high technology. Designed by Gensler, The Shop occupies the 22^nd floor at 77 West Wacker Drive. Teams of developers create innovative and intuitive apps that enhance shopper experiences and drive sales for the company’s private label clients. The 22,000 square foot space is one of industrial chic, with raw concrete floors and graffiti-painted walls.

Making a powerful first impression, the elevators open to a darkened central corridor and an enormous LED light wall. The wall is programmable to stream text and images, such as the corporate logo of a visiting client. Circling the corridor is an open floor plan with one area of function melding into another.

A cheerful, fully-stocked café and coffee bar link to a great multi-purpose space with a raised stage, which can be used for large gatherings, training sessions and celebrations. Tucked everywhere are huddle nooks for all moods, including an indoor garden and a Ferris wheel chair overlooking Lake Michigan. There are labs for conducting consumer research, a mock retail store and a maker space complete with a 3D printer. Floor-to-ceiling windows capture skyline views in all directions.

The Shop was purposely designed to support Design Thinking, the method Capital One’s developers use to build the products and experiences to fulfill their customers’ needs. This human-centered methodology, coupled with a “fail fast” attitude, allows teams to quickly identify, build, and test their way to success. It was also important to attract young talent that might also be drawn to tech giants like Facebook, Yahoo and Google, said French.

“We want people to see our space and say, ‘I want to work here.’”

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Fast-Paced and Flexible

Capital One has 1,600 employees at 77 West Wacker and the Atrium Corporate Center in Rolling Meadows. The financial services firm entered the Chicago market in 2012 after it acquired HSBC’s U.S. credit card division.

The Shop has about 85 employees, with more being hired in the short- and long-term future. They work in tech teams comprised of six to ten employees with synergistic skills and assigned to various projects. As their assignments are completed, and new ones come in, team members often move around. Certain projects could require more or fewer team members.

The Shop’s creation has measurably transformed the teams into high-performance teams. As an example, product managers previously sat with a line of business serving a particular client. The technology pros were in a different geographic location. Now the product managers are grouped with the tech team, which is comprised of developers, engineers and data analysts. Their closer proximity facilitates communication and feelings of inclusiveness.

In addition to having greater access to each other, team members also interact more efficiently with other Capital One departments. The bank leases four additional floors in the building. Those floors are designed to appear more traditionally corporate.

Since the buildout was completed in Fall 2015, teams have dramatically shortened their delivery times, French said. “If we help our clients become more successful, we become more successful.”

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The teams are arranged in pods, but they decide how to arrange their individual stations to best accomplish their tasks. Some teams face inward toward each other and some face all in one direction, classroom style.

To make re-configurations possible without re-building and re-wiring the pods every time the teams change, Gensler came up with an innovative idea: Hard-wired, pivoting fences between workstations. The fences easily rotate to supply power no matter where the stations are placed within the pod. (Special permission to use flexible conduit was obtained from city building officials.)

And the overhead zig-zagging fluorescent light strips were carefully calculated to illuminate evenly throughout the work areas, said Skender project manager Dan Polito.

“If a team moves into a corner, they won’t find themselves in a shadow,” he said.

The concept of flexible floor planning is evident throughout the entire floor. Movable dividers are fashioned from imaginative yet practical media: embellished glass, chainmail curtains and even corrugated overhead garage doors.

“One quarter of the floor is dedicated to conference areas, and they are all modular,” said Tim Rogers, Skender senior project manager. “You can cordon spaces off and have smaller conference areas or open the partitions and go from medium to big. They are adjustable to whatever is needed.”

Elevation 007

As landlords know, renovating an apartment is an exercise in timing and coordination. But renovating an entire building is more like an Olympic event, especially when it is fully occupied. Skender Construction last summer took on the massive rehabilitation, inside and out, of two circa 1970 rental communities on Chicago’s West Side. Within weeks, hundreds of residents had brand new surroundings to call home.

The communities, both designated for low-income populations, are the Martin Luther King Jr. Plaza Apartments and Academy Square Apartments. They had been recently acquired by separate out-of-state owners who specialize in the preservation of affordable housing buildings. Although the two projects were similar in nature, they also bore remarkable differences. Both were challenging and ultimately rewarding for all who were a part of it.

Key to this accomplishment were meticulous advance planning, frequent and open communication, and a well-defined work schedule, said the Skender project superintendents, Bill Darrah at MLK and Dan Kenny at Academy Square.

The MLK project modernized 138 apartments in an enclave of nine low-rise masonry buildings in East Garfield Park. Between April and August, most kitchens and baths were remodeled with new cabinets, appliances and fixtures. All apartments were outfitted for the first time with air conditioning units, much to the delight of the residents. About 10 percent of the apartments were made partially handicap-accessible. After significant asbestos abatement, the team removed all existing galvanized piping and replaced with copper piping. The buildings were tuck-pointed and re-roofed, and new windows and lintels were installed all around.

Academy Square comprises 200 apartments in five buildings: A 7-story precast concrete tower for seniors and four masonry low-rises for families. The kitchens were gutted and rebuilt, and the baths were substantially remodeled. Heating and air conditioning units were replaced. Common areas were updated with new carpeting, light fixtures and paint; a maintenance room was converted to a library. Exterior renovations included an enhanced security system, new roofs and sidewalks, upgraded lighting, accessible entries and extensive landscaping. The duration of the project was from mid-March through September.

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Preserving Resident Life 

At both locations, the work had to be done with as little disruption to resident life as possible. The solution was to create a schedule that completed an entire apartment renovation in less than a week, and to group the apartments into batches, based on their locations and connection to the building’s infrastructure. The residents were instructed on how to arrange and protect their belongings, so the crews could move about. Then they were temporarily relocated to nearby hotels and paid a stipend for their expenses and inconvenience. Typically, they left on Sunday evenings and returned the following Friday evenings.

“The residents were very concerned at first that we were evicting them and making the community market rate,” said Nick Tufano, director of construction at Preservation Partners Development in Torrance, Calif. An affiliated company purchased Academy Square. “It was imperative that we treat them with the utmost customer service and respect.”

Managing both apartment communities is Chicago-based Evergreen Real Estate Services, LLC. John Noonan is Evergreen’s director of facilities and purchasing; he also served as the MLK owner’s representative during the rehab project.

Noonan credits the herculean efforts and tremendous input of site managers—Althea Collins at MLK and Zenita Monroe at Academy Square—who coordinated the tenant moves in accordance with the construction schedule and insured tenant needs were met. The site managers made sure everyone had a place to go at the prescribed times and received their compensation on a timely basis. They also affirmed the tenants had properly prepared and secured their belongings so the crews could do their jobs. Theirs was a vital role, Noonan said.

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Working in Batches

Dividing the apartments into batches was an essential strategy. Many renovations can be organized with one trade after another cycling through the building until the project is completed. Not this one.

“At MLK, we needed to shut down all the plumbing in the buildings for at least a couple of days,” Noonan said. “The batches made the job easier in terms of not having to schedule individual entries into apartments because the residents were not there.”

But making the batches logical and efficient took a massive amount of advance planning and collaboration. Skender was given a firm budget and absolute completion dates. That meant finishing between 12 and 20 apartments every five days to meet the deadlines. The project superintendents brought their trade partners and vendors into phase meetings to enlist their ideas and commitments. Each day was carefully planned out: On Mondays, kitchens were gutted. On Tuesdays, the cabinets were installed. Contingency plans for worst-case scenarios were developed. Deliveries were rigidly scheduled—storage and staging space was at a premium. In a few instances, vendors had materials delivered to their warehouses until they were needed at the jobsites.

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An Hour-by-Hour Schedule

“We even arranged times,” Darrah said. “The flooring guy came early in the morning, so he could get out of the way and make space for someone else to be right there. Everyone was working in the same place at the same time.”

“We really had to plan our manpower,” said Pat Story, project manager at Bensenville-based Ewing-Doherty Mechanical Inc., the MLK plumbing contractor. “We did whatever it took to get the job done, even if it meant overtime to meet milestones for that day. Most projects are based on weekly or monthly milestones, but because of the huge scope, our milestones were sometimes split up into two- to four-hour segments.”

The tower at Academy Square required special consideration. The water had to be shut off to remove and replace plumbing fixtures, but the building would never be entirely vacated. The batches followed the risers, which serve two apartments on each of six residential floors. Hence, 12 became the batch size. Meanwhile, in the rest of the tower, residents were traversing through the common areas as usual.

“Everybody had to be cognizant of that fact and be extra-cautious to keep the hallways clear,” Kenny said. “The common footwear worn by the residents is knit socks and slippers. We had to be sure no debris or sharp pieces of metal were left on the floor.”

During the first week of construction, a few minor glitches arose, but the crews soon found their rhythm and met all milestones. The MLK team even took off a week for the 4^th of July holiday. Then, as summer turned to fall, the work came to an end, and the residents were elated with the results. Many extended to the crews hugs, gratitude and a few tears of joy.

“I had initial trepidation about working with any contractor on a job of this magnitude,” Noonan admitted. “By the end of the project, I had so much trust worked up with Skender and particularly with Bill, and we had a very successful project.

Tufano credits Kenny with the transformation of Academy Square. “It takes a unique personality to oversee these projects,” he said. “You have to keep your cool while dealing with my needs as the property manager as well as the residents’ needs. He carries most of the weight, and he did it beautifully.”

Tufano’s advice to those embarking on similar projects?

“It doesn’t matter how much you plan,” he said. “Things will change. As long as you have a team that is good at problem-solving, you can get through it.”

“Spend more time on planning and coordination prior, and the construction time is less,” Story added. “We do some pretty substantial projects in unbelievable time.”

Elevation 006

When Senior Lifestyle Corporation set out to develop its first Signature Collection community in the country, they knew that architectural details and innovative amenities would be key to achieving new heights of luxury.

“We knew we wanted something first class,” said Jerry Frumm, executive vice president at Senior Lifestyle. “We wanted it to be very warm and comfortable for our residents, who have a level of sophistication that reflects the market we are in.”

While many visitors have compared the Northbrook assisted living and memory care community to a high-end resort or hotel, Frumm prefers the analogy “country club.”

The 175,000-square-foot, five-story, 156-unit, all masonry North Shore Place welcomes residents and their guests with a spacious marble entry, grand spaces, extensive cherry millwork and custom built-ins throughout. Among the common areas are a bistro and coffee shop; restaurants for casual and formal dining; movie theater; beauty salon; library; therapeutic fitness and exercise center; and craft and game rooms. While all units are fully licensed for assisted living, 116 units are appointed with full kitchens featuring stainless steel appliances, granite countertops and in-unit laundry. The remaining 40 units, designed specifically for residents requiring memory care support for Alzheimer’s and other forms of dementia, are located on the second floor.

“A lot of thought went into the layout and spatial planning,” said architect Jon Lindstrom of SAS Architects and Planners in Northbrook. “There are many opportunities for personal interaction, both indoors and outdoors. Some are private and secluded, and others are more open.”

Ground was broken in February 2013, but weeks of pre-planning took place first. North Shore Place was a complex project entailing an irregular footprint, numerous specialty spaces and more than 25 trade partners. The client established a budget but the interior design was not complete and the finishes had yet to be selected.

Working around these challenges and completing the job on time would require intense coordination. The project team used Building Information Modeling (BIM) software to virtually work out every detail of the structure and critical systems before construction began.

One enormous task was coordinating the placement of miles of wiring, piping and ductwork running horizontally and vertically through the building. That’s where BIM came in. Each subcontractor devised a schematic, and the schematics were interpreted into three dimensions and compared.

“The first time through, we had more than 500 conflicts on a single floor,” said Skender superintendent Brian Ribordy. “The HVAC sub wanted to put something in a certain spot, and so did the fire suppression sub. Or they would be running into rebar. We had to work out the details.”

“With a cast-in-place concrete structure, you have to know where the rebar is, and that reinforcement has required clearances should a contractor need to make a core or penetration,” said Lindstrom. “It gets pretty complicated.”

Later, trade partners used GPS locators to find the exact spots to penetrate the concrete decks for their particular jobs.

“With a traditional system, you have laminates or vellums on a light table, draw everything in 2D, and then perform the layout with tape measures,” said Skender project manager Blake MacGregor. “It takes an infinite amount of time. With BIM, we were laying out 30,000 square feet of floor plate in three days.”

BIM’s three-dimensional capabilities also proved valuable when laying out various components, equipment and distribution lines in the mechanical room of the basement, he said.

“When anyone questioned why we thought something wouldn’t fit, we had it visually ready in 3D form,” he said. “It ended those philosophical discussions.”

To help schedule each day’s work, Skender relied on the expertise of their trade partners to plan schedules in great detail. They provided input as to the amount of time they needed, what had to be finished before they could start and at what points they could work alongside other trade partners rather than independently.

“It’s easier to hold them accountable if they help make the schedule,” said Ribordy. “Instead of dictating the plumber’s schedule, we would ask him how many days he needed in order to complete his work.  When you approach the trades and actually ask for their input, they are more committed and can better manage their manpower.”

“Brian was very attuned to the scheduling process,” said MacGregor. “He was always playing out milestones. He would say, ‘We have to start this activity on this date,’ and then work backward to see that the shop drawings, procurement, reviews and everything was completed in time. That really drove the production of the project.”

Not finishing on time could potentially damage Senior Lifestyle’s brand, he added.

Scheduling was especially critical when it came to completing the masonry before the second winter set in. The building footprint, far from rectilinear in shape, was a stylized “S” with many ins and outs and an extension on one side. The decision was made to build vertically in batches, which were determined by the scale of the scaffolding, and to circle the building.

“When you’re working in small batches, you’re able to focus on that piece rather than monitor 200 people across a huge building,” said MacGregor. “Everyone is in one spot.”

“It also allows the trades to have consistent manpower,” said Ribordy. “Instead of 10 laborers today and 25 tomorrow, there’s no roller coaster. They appreciate that and want to keep working with you.”

And even though interior design decisions weren’t finalized until early spring of 2014, advance planning gave trade partners—particularly the electrician and finish carpenter—enough notice to organize and reallocate manpower for critical path work.

Many other efficiencies helped move the project through one of the worst winters and one of the wettest springs in Illinois weather history. North Shore Place was delivered to the client two weeks earlier than anticipated.

“Skender really stepped up for us and did a great job,” said Frumm. “They came to us with great solutions in terms of how quickly they could get the building done, and they hit every step along the way.”

“Value starts with the process and the team,” said Lindstrom. “When you have a team that can work together toward a common goal, there is value. In addition, being responsive when issues come up or questions need to be answered, that creates value. Not only does it keep things moving, it creates trust along the way.”

Elevation 005

The modern-day office environment has undergone a massive transformation. Spaces are smaller, but they also are smarter and more efficient. The walls have come down, both literally and figuratively.

“The way people worked 20 years ago no longer exists,” said Bill Conopeotis, founder and president at ConopCo Project Management in Hoffman Estates. “Before, they worked individually. Now they work in teams. People are working differently, so we have to design their spaces differently.”

The traditional workplace of yesteryear was configured like a hotel, with private offices branching from networks of hallways. The next iteration positioned executive-level offices along exterior windowed walls; everyone else worked in high-partitioned cubicles in the middle. The current trend is the open office: Workstations, separated by low or no partitions, ring the perimeter. Private offices, if any, are centrally clustered and fronted with glass walls for greater transparency.

Leonora Georgeoglou, associate and interior architect at Harley Ellis Devereaux in Chicago, noted that private offices are shrinking in size.

“We used to see a lot of 150-square-foot offices and 200-square-foot offices,” she said. “Now the standard is 100 square feet.”

Driving the changes are market forces such as escalating real estate prices, advancing technology, contemporary management theory that emphasizes collaboration, and the desire for healthier lifestyles. The build-out of ShopperTrak’s new 50,000-square-foot corporate headquarters is a prime example.

ShopperTrak is the leading global provider of shopper insights and analytics used to improve retail profitability and effectiveness. Its services and products are deployed in more than 70,000 locations and 90 countries and territories. As a rapidly growing high-tech company, it needed more space for its 150 Chicago-based employees.

They found it on the 41^st floor of Willis Tower. After a fast-tracked 13-week construction schedule, the company relocated in May 2013.

A key requirement was the build-out had to facilitate collaboration, said ShopperTrak’s chief operating officer Kurt Phillips. The company has adopted the Agile software development methodology, whereby problems and solutions evolve in real time through the collaborative efforts of cross-functional teams.

“Having easy access to one another is extremely important,” he said. “We needed everyone to be on the same floor and have room for future expansion as well.”

ShopperTrak also wanted many spaces for employees to congregate. Its previous location had four. The new headquarters has nearly two dozen such spaces of varying sizes. On the small side, strategically positioned sofas and loungers invite casual interchanges. The largest space, used for monthly all-employee meetings, is created by opening the glass walls of the conference rooms near the reception area. In addition, product displays and bright graphics in the reception area showcase for visitors the company’s expertise and global reach.

“Real estate is expensive, so people want their space to do multiple things,” said Georgeoglou. “No dedicated pantries that get used only at breakfast and lunch, for instance. Now they are set up like a café and used for meetings all day long.”

Even ShopperTrak’s furniture is multi-functional. Modular work stations, now seating two employees, can someday seat a third. Low-slung filing cabinets topped with cushions provide bench seating for small conferences at workstations.

A variation on the open office concept is unassigned seating for telecommuters and other occasional workers. Unassigned seating takes two formats: hoteling, which is reservation-based, and hot desking, which is not. ShopperTrak, which favors interpersonal communication, chose not to support unassigned seating.

“Some of our traditional clients, like in finance, are starting to implement work-from-home programs, but people are not signing up as much as corporations expected them to,” said Georgeoglou. “People don’t feel the trade-off of working from home two days a week is worth giving up your assigned space to work in a compact hoteling cube.”

Open offices have both proponents and detractors. On the plus side are improved collaboration and, as in the case of ShopperTrak, more employees who can enjoy cityscape views and natural lighting. Construction is faster and less expensive. As for the negatives, open offices can be noisy and are not conducive to private conversations concerning sensitive matters.

“You’ve got to have a balance of private and open space,” said Phillips.

Montreal-based DEGW is a global consultancy focused on the changing nature of work and its impact on people, places and performance. The firm in 2010 conducted a study on time use and time loss in the workplace. Among the findings, after surveying more than 44,000 knowledge workers:

Average response times are significantly lower in open office arrangements than in enclosed offices, especially when soliciting feedback from managers as opposed to peers. However, when managers work in open offices, their response times are similar to response times of peers.

A common criticism of open offices is that productive time is lost due to distractions, particularly from noise and unscheduled pop-ins (in-person, email and instant messaging). However, the study showed production time actually is not significantly different for open workplaces versus enclosed workplaces. Both were about 25 minutes.

The DEGW conclusion: The right office design depends on the organization and its goals.

Another factor impacting office design and employee production is advanced technology, particularly Wi-Fi and audio-visual systems.

“We had Wi-Fi before, but it wasn’t as robust,” said Phillips. “Now our employees can meet in the café or anywhere else. They don’t feel they have to be tethered to their desks because that’s where they get the best reception.”

“More money is spent in the tech area of build-outs than ever before,” said Conopeotis. “Clients aren’t as interested in having a beautiful granite floor. They are spending money on cabling, AV and security. Technology and infrastructure can be 50 percent of the project cost.”

They also are investing in sustainability. Greater numbers of clients, including ShopperTrak, are applying for certification under the U.S. Green Building Council’s green rating system, Leadership in Energy and Environmental Design.

“Today, between 30 percent and 50 percent of clients are going for some level of LEED,” said Conopeotis. “Ten years ago, it was under 5 percent.”

In the future, what will workplaces look like? Designers and construction professionals are already pondering the question.

“Today we are pushing the limits of new design, but tomorrow we will have to innovate differently than we are now,” said Conopeotis. “The world is changing faster than ever. We just have to get ahead of it.”

Elevation 006

It was the largest tenant build-out the city has seen in at least a decade: The Motorola Mobility global headquarters relocation to Chicago’s historic Merchandise Mart. Leasing 600,000 square feet on four floors, Moto’s new space has been likened to a 25-story high-rise turned on its side. But the massive adaptive re-use project constituted much more than fields of offices and workstations: It incorporated seven highly sophisticated research and development mega-laboratories, powerful new rooftop mechanicals, a grand architectural staircase and the services of two helicopters—all in 45 weeks.

As home to the renowned international telecommunications company, formerly in suburban Libertyville, the new headquarters spans floors 16 through 19 of the circa 1930 Art Deco landmark building. The labs, which are on the upper three floors, occupy about 80,000 square feet of the interior, and the two structures housing their dedicated mechanical systems cover an additional 50,000 square feet on the rooftop.

“The floor plates are so massive, we had to create an interior campus defined by various neighborhoods, paths and nodes, so that the employees could easily navigate through the space,” said Ingrida Martinkus, one of the project architects at Gensler. “The labs are the anchoring elements around which offices, meeting/huddle rooms and open workstations are organized. Corridors wrap and transverse the floors, with micro-kitchens and various ancillary spaces interspersed along the way, allowing for moments of expected, and unexpected collaboration.”

Among the most striking design features of the new headquarters are a trailer-sized LED wall and a monumental steel staircase linking the 18^th and 19^th floors. The staircase offers platform seating for small group meetings at the mezzanine level, and wooden slats enclose it on three sides. Many of the building’s vintage details such as columns and doors are melded into the new architectural elements.

Before construction could begin, the work had to be organized into a master schedule. The task was challenging in part because many program details were yet to be determined and, therefore, the schematic drawings were incomplete. So in order to get the ball rolling, the project management team engaged trade partners, asked for their input and brought many disciplines together to stay ahead of the planning process.

The lengthy, detailed pre-planning meetings were invaluable, said Martinkus. “Transparency and coordination were key. This allowed the team to identify any and all potential challenges and arrive at solutions before conflicts arose.”

“There were literally thousands of items that had to be completed,” said Dan Marijan, Skender senior superintendent and partner at the firm. “We worked backwards, dealing in milestones. We knew the end date, and that couldn’t be changed. Before that, the furniture had to go in. But before that, the carpet had to go in, and before that, the drywall. And so on.”

Multi-story build-outs like this one typically are phased one floor at a time. But because of the complexity of the labs, they had to be started early and simultaneously. Furthermore, they are located on different floors.

“Once the real estate was set aside for the labs, it was divide and conquer. The labs were the first and most important task that needed to be programmed because all of the major infrastructure was related and required the most amount of time to coordinate and build out,” said Marijan. “Once the real estate was locked down, we began our riser and infrastructure work. We phased the project in 50,000-square-foot batches, and we figured we could start four batches at any given time. Two hundred thousand square feet per floor seems overwhelming, but the way we broke it down was very manageable. For much of the duration, the work progressed not sequentially, but on parallel paths. That’s how we got it done in 45 weeks.”

Skender also took the innovative step of forming teams according to discipline: Separate superintendents and project managers were assigned for the labs, mechanical systems and LEED.

“When specific questions arose, they were directed to that team,” said Marijan. “It became a very fluid process.”

While Motorola was tweaking its program, the project team moved ahead with the infrastructure. The existing systems, according to Andrew Lehrer, ESD vice president, project manager and one of the lead mechanical designers, had to be upgraded to meet the project goals, and new systems had to be installed.

“The labs were stacked fairly vertically, which allowed us to have two central utility platform cores running straight down,” he said. “That made the distribution and infrastructure as efficient as it could be. Once we knew what equipment we needed, we found two spots on the roof to build the raised platforms that would support the equipment. Then we had to figure out how to get all of it up there.”

Building a crane that would hoist dozens of large pieces of equipment and 184 tons of steel to the upper floors didn’t make logistical sense, nor would it fit into the project’s timeframe. So, two helicopters made an unprecedented 180 lifts over a two-day period from a barge floating on the Chicago River. The mechanical contractor built further efficiency into the process by pre-sorting the materials into bundles and making sure each one was balanced before delivering them to the site.

As for the labs, each one is different in size and function as well as design requirements for technology, climate control and acoustics. Exterior walls are variously clad in materials such as wood planking or corrugated metal, and were inspired by the view of Chicago looking north.  They were about 70 percent completed when the client decided two of the larger spaces, encompassing over 20,000 square feet, should be shielded from radio frequency interference to contain cellular signals.

Marijan explained: “The Merchandise Mart is in close proximity to a 911 call center. Everyone was hyper-sensitive to disrupting emergency calls or even being associated with disrupting those calls. A lot of detail had to be ironed out to create these rooms, so there are no errant signals coming from them. The Libertyville location was more forgiving because it was not in close proximity to the same concentration of cell towers or emergency providers.”

“It was a difficult and costly change, but because of the flexibility we had, it was a change the owner could make without derailing or delaying the project,” said Lehrer. “That’s what was most valuable to them.”

Another big change was the decision to not locate Motorola’s manufacturing and production facility within the Merchandise Mart as originally planned. The facility’s miniscule tolerances for vibration, humidification and temperature were too difficult to control in a high-rise environment. Instead, it was moved to a nearby 63,000-square-foot, single-story warehouse, which the project team gutted and outfitted to the proper specifications.

“One of the key things they did, instead of trying to communicate solely by emails and phone calls, was meet with us in Libertyville with their tradesmen. They walked through our facility numerous times instead of only relying on paper layouts,” said Motorola’s Lance Vondrak, director of operations at the facility.

Vondrak also credited prep work, exhaustive reviews, design summaries and clear communication with enabling the team to successfully meet its milestones.

“At the end of the day, what is important to me is that the production lines came up on time,” he said. “We got things right the first time.”

Construction progressed, with as many as 500 tradesmen working on both sites at the same time. Meanwhile, the rest of the 4 million-square-foot Merchandise Mart was operating as usual, with frequent and hugely populated trade shows running through the course of the year.

“It was a stressful time, grinding through the details, but everybody did what they could to make it a lot easier, from the owners to our trade partners,” said Marijan. “Everybody knew we were setting out to create something bigger than themselves, and they were up for the challenge.”

Ultimately, the hard work paid off. The project was complete in 45 weeks, with the new headquarters at the Merchandise Mart earning LEED Platinum Status for corporate interiors.

Lehrer and Martinkus agreed that teamwork was the factor that brought the project to its successful conclusion.

“Value is not always about money,” said Lehrer. “Often, it’s about time. Motorola had a very compressed schedule and a complex project, but it was met effectively because of the team and the process. Everyone was working toward the same goal.”

“It was a collaborative team that challenged people to bring their best ideas and solutions, ultimately creating a creative and healthy work environment for Motorola,” said Martinkus. “This is one of those ‘once-in-a-lifetime projects,’ for which we would all jump at the opportunity to work on again.”

Stephen Monaco, Motorola’s head of global real estate & workplace services, said communication ultimately created value on the project.

“The toughest challenge was really not the tight schedule, the technicality of the labs or the lifting of steel, but managing the complex matrix of relationships between Motorola and Google at the time. The multiple consultants and the trades were always square and level on all sides of the conversation.  That was the driver for our successful outcome,” he said.

Elevation 004

When Northwestern Memorial Hospital set out to integrate shops and restaurants into its program four years ago, they discovered they were catering to a much larger population than the average hospital. A comprehensive study revealed that a staggering 13.5 million retail transactions were occurring in the medical campus’ neighborhood of Streeterville each year. With nearly 10,000 employees, 67,000 neighborhood residents, and 3,000 hotel rooms within a five block radius, one thing became clear: It was time to capitalize on the opportunities right outside its doorsteps.

But retrofitting the hospital with an array of restaurant and retail options is tricky business, according to Northwestern Memorial HeathCare’s Vice President of Real Estate Gina Weldy.

“Healthcare buildings are complicated places, and restaurants are a very different type of business and a very different type of build,” Weldy said.

From the beginning, Northwestern Memorial wanted restaurants and retailers that would fit into their mission and vision of healthy, fresh and uplifting concepts. But finding the right mix wasn’t always easy.

“We went out and found a team of retail brokers that started talking to our prospective tenants, and we found out that retailers and restaurateurs had been interested in our campus but didn’t really know how to talk to us or find us,” said Weldy. “We were able to tell them about changes we were making in the buildings that would make it more attractive for their uses.”

The first of these changes included exterior doors that welcomed neighbors into the space without feeling like they were walking into a hospital. Northwestern Memorial’s buildings are large, often taking up the full city block; and retail customers prefer to stroll into quaint shops and sidewalk cafés, Weldy said. Northwestern Memorial worked with research and design firm Kiku Obata & Company to create the retail program and the Shop & Dine Northwestern brand including storefronts on the first and second floors that would be welcoming, local, and strike a balance between retailers.

“The design goal was really to create a set of elements and materials that the hospital could use to complement its own interiors, but also to control the appearance of the retail,” said Kiku Obata’s David Leavey. “The wood and glass walls that make up the retail storefronts create a very recognizable pattern that patients, visitors and staff can clearly define as retail. It’s a modern, clean, timeless framework that works within the context of the rest of the hospital.”

The wood and glass storefronts are used by the second-floor retailers GRK Kitchen, Protein Bar, Pulse Gift Shop, Au Bon Pain and the newly opened Saigon Sisters. On the first floor, stores with windows to the street create a neighborhood feel that would welcome foot traffic and create a sense of being part of the city for visitors coming from within the hospital. One key retailer on the first floor was Barbara’s Books, which, since the demise of Borders, has become the closest brick-and-mortar bookstore to the Magnificent Mile on Michigan Avenue. The space also attracted a very unique new tenant. Dan Rosenthal, Managing Director of Trattoria No.10 and owner of the Sopraffina Marketcaffè fast casual restaurants, was eager to share his product with the Northwestern Memorial community. But in addition to his traditional fast casual concept, he is also introducing an upscale small-plates concept restaurant called Cicchetti.

“Being a block off Michigan Avenue and having thousands of hotel rooms within two blocks and 10,000 employees in the building are all music to a restaurateur’s ears,” Rosenthal said. “It’s all about opportunity, and we feel there’s a lack of quality restaurants in this area, which makes it a great opportunity for us. Also, our concept of making environments that we have today better for people tomorrow aligns with the hospital’s goals.”

The 9,200 square foot dual restaurant initiative is the largest space in the Shop & Dine Northwestern project, and it includes a 2,000 square foot mezzanine, which wasn’t included in the base building. Like many of the other restaurants, there were challenges with moving into the building.

“There is a fair amount of risk putting a restaurant in a hospital if the design and construction is not carefully managed and executed,” Weldy said. “Some of the required infrastructure is rather atypical. When you’re co-locating underground plumbing lines, black iron and linear accelerators, it can get interesting and it requires teams who are willing to sit down and work out all of the issues together.”

That’s where Skender Construction came in, according to Weldy. With experience building at Northwestern Memorial and building retail in general, Skender was able to bring together restaurant owners and the hospital to use Lean principles to plan and track daily activity. While start-up seemed like a slower-than-usual process to Rosenthal, detailed production planning was playing a big role behind the scenes.

“I kept asking when we were going to get moving and one day I walked in and there were nine lifts in the space. The mezzanine was completed in five days,” Rosenthal said. “It was an amazing thing to watch.”

With several spaces already completed, Weldy has noticed positive results popping up on the second floor.

“The second floor feels very different now. By adding retail, the general energy is very uplifting,” Weldy said. “For patients and their family members, being in the hospital environment is stressful. They might be dealing with long-term illness and unexpected life events. Now these shops and restaurants are providing a place to sit down and have a bit of respite.”

Making it Functional: Integrating Restaurants and Retail into the Healthcare Environment 

They say form follows function. But when the construction team started laying the infrastructural groundwork for Northwestern Memorial Hospital’s new retail and restaurant spaces, they found that many spaces would need to take on a new form.

Retrofitting what was once hospital administrative space for retail and restaurants meant that many spaces needed new black iron duct work shafts to deliver fumes from kitchens to the outside, new electronic systems to support retail and restaurant computers and pipes to deliver natural gas for cooking to various sites.

“It wasn’t possible for us to go in and verify all the existing conditions prior to construction starting,” said Skender Senior Superintendent Mark Bussey. “We had to learn and discover that process as we went along as well as remain on schedule.”

As each tenant moved, the team tracked the infrastructural conditions and found solutions as projects progressed. The team also ensured that each construction area was properly sealed off from the rest of the hospital so that dust and noise from construction wouldn’t disturb doctors and their patients.

“We were really sensitive to areas where there would be patients and communicated the expected noise levels day and night,” Bussey said.

In one case, the team had to reroute supply, return and exhaust ductwork from the first floor and decrease the size of the duct shaft to give restaurants on the second floor more space. The construction team found a unique solution that allowed them to do this without disturbing the existing first floor main lobby—they built scaffolding hanging down from the second floor into the mechanical shaft to get the work done, saving money and time and eliminating disruption to the hospital’s main lobby on the first floor.

“We were able to devise the plan with our key trade partners and then propose it to the architect and engineer,” Bussey said.

Elevation 004

Fletcher Jones Motorcars’ philosophy is to provide the same high-end service and satisfaction one might find at a five-star hotel or resort. As one of the most successful luxury automobile dealer groups in the country, their brand is built on creating memorable experiences and lasting relationships with their customers.

With an established presence in California, they saw an opportunity just east of Lost Angeles in the San Bernardino Valley. The Inland Empire, an emerging upscale metropolis, boasted an international airport and an interstate highway. But the area did not offer much in the way of public transportation. It was an ideal location to build a Fletcher Jones luxury automobile dealership: Mercedes-Benz of Ontario.

“The region was expanding; new developments in housing and retail were emerging at a healthy pace. The opportunity to have a presence and be visible just off the interstate was very attractive to us,” said Keith May, president of Fletcher Jones.

The family-owned company is known for making no small plans when it comes to building dealerships, and this venture was no different. The 100,000 square foot facility focuses heavily on architecture and an inviting interior environment.  About a third of the space is devoted to sales and showroom areas, and the remainder houses the service department. The roof deck offers an additional 60,000 square feet for parking. Guest amenities at the Ontario dealership include a children’s playroom, indoor lounge with business center, and an outdoor patio bordered by a soothing 120-foot linear water feature.

Construction was well underway when the client decided to make several major changes and upgrades. Among them were a massive LED sign and increased exterior lighting to catch the attention of drivers on nearby Interstate 10, the San Bernardino Freeway. Also, two free-standing buildings were added—another showroom area and a car wash, as well as a raised retaining wall and landscape enhancements.

These changes were not insignificant details. The car wash, for example, required greater site drainage and storm water management. A massive underground detention tank had to be installed to handle the run-off and meet municipal building codes. But an agile and collaborative project team quickly adapted and forged ahead.

Because the team members were assembled at the project’s inception, they worked in tandem with each other rather than the sequential norm. Skender simultaneously consulted with subcontractors and other specialists while the design was being created to provide feedback on techniques, scheduling and pricing. The innovative and efficient process allowed construction to be started—or re-directed—even before the final plans are confirmed. Every player was viewed as an invaluable partner in the project.

The results were remarkable. For Fletcher Jones, the Ontario dealership was delivered without delay and the original budget was reduced, even with the many deviations from the original design.

“There was value in bringing a building team together at the project’s inception. It not only brought all ideas to the table, it established a mindset that the end goal was to create the best product possible. It was challenging, but everyone from architect to contractor to subcontractor was personally invested in the end result,” said May.

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After an extensive search, Erie Family Health Center settled on the perfect building for a vibrant new community health center in Waukegan: A 1950s-era bank. Completely transforming a former financial institution into a quality medical and dental care facility that would serve 10,000 Lake County residents would be challenging, but the two-story masonry building was right for so many reasons.

“Our vision was to meet community health needs as well as plan for future growth,” said Amy Valukas, Erie’s vice president of planning and programs. “We needed to be accessible to public transportation, but we also wanted to be on a main thoroughfare in a place that was known, visible, comfortable and safe to the community.”

“One of the goals was redefining a strong iconic image—the bank—by converting it into a health care facility that would bring Erie’s brand to life,” said architect Casey Frankiewicz, director of health care at Legat Architects in Waukegan.

The new 25,000-square-foot Erie HealthReach Waukegan Health Center would greet its first patients in just 22 weeks. Examination rooms, nurse stations, laboratory, dental and vision suite, urgent care area and community education room with demonstration kitchen would reside on the first and second floors. The lower level would offer a lounge and fitness center for medical providers. The building would also gain new MEP, elevator and fire protection systems.

But the building had been expanded multiple times, and no meaningful documents existed. Both the schedule and budget were tight. There was no time or money for mistakes, even when there were questions about what was really behind the walls.

“We gutted the whole interior down to the exterior walls and rebuilt the inside, so there was no time for re-work or confusion. We had to make decisions, over-communicate and hold everyone accountable,” said Skender senior project manager Thomas Schlueter.

The team began with a major project: The removal of two large support columns on the second floor to provide more openness and longer sight lines. To compensate, the foundation had to be reinforced to support a huge galvanized beam placed on the roof to carry the new load.

“We were working with a building that had a different function and making an open floor plan out of something that previously had a lot of walls required adding tons of structural steel over the roof. Because of time constraints, everyone had to work together,” said Kazem Nemazee, project manager at David Architectural Metals in Chicago.

Erie also wanted to retain some of the design elements of the former bank. The most obvious was the dramatic spiral staircase connecting the first and second floors. But the staircase, which needed renovation, didn’t meet current building codes. Even if it did, the triangular-shaped treads were unsafe for those with mobility challenges.

“We knew it would cost more to try to bring it up to code than to put in a new stair that met code, so we proposed building an entirely new monumental stair after construction began. We knew a new stair would be safer and its modern look would add more value in the long-term,” said Schlueter.

But time was ticking, so the team used a design-assist approach to design and build the stair. This accelerated the process by reducing drawing and approval times. “Legat sketched the concept; then we worked with David Architectural to produce the drawings and help design to a target cost. The traditional approach of drawing, pricing, shop drawings, approvals and fabricating would have delayed the schedule for weeks,” said Schlueter.

The result was a new glass and stainless steel staircase extended to the lower level. Also, the front façade was torn out to insert a two-story extensive north-facing glass box that projected out of the building. The glass serves several purposes: It adds an inviting face to the façade and showcases the staircase from outside and inside. It also drenches all three levels with massive amounts of natural light. A small seating area adjacent to the stairs allows patients to wait and watch for their transportation.

The bank’s two vaults, however, were incorporated into the overall design. The cash vault on the first floor was turned into a touch-down area for visiting professionals. The safety deposit vault on the lower level became a cozy lounge with a decorated metal wall. Vault doors were removed for safety’s sake and bolted to nearby walls for ornamentation.

“Removing the vaults would have been difficult, so we celebrated them,” said Valukas. “They are really beautiful quiet spaces where our providers can be productive, and they are a reminder of the history of what was there before.”

While scope changes often play a role in adaptive re-use projects, the team relied on Lean Construction to manage scope changes, hold people accountable and ultimately fast-track the schedule. Trade partners participated in pull planning sessions, used the structural steel for the column removal and the monumental stair as critical paths, and planned backwards to capture every task on paper. The entire building was broken down into areas so the team could prioritize and build a production system. The lookahead schedule tracked all daily tasks and projected constraints that could halt workflow.

Although the schedule allowed for 22 weeks of construction, Erie HealthReach Waukegan Health Center was completed two weeks ahead of schedule.

“They have a great process of running jobs where they hold everyone accountable,” said Frankiewicz. “This job needed that kind of leadership on the construction end to meet the goal, and they provided it.”

“Skender is fantastic,” said Valukas. “There were multiple times that they made suggestions or value-added decisions that ended up having no material change in the outcome of the design but definitely saved us dollars. I don’t think any other general contractor out there could do what they did.”

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The work at 1871 is never done. Just two years after its launch, Chicago’s largest and most talked-about tech incubator created 1,500 jobs, expanded its physical footprint in The Merchandise Mart and introduced 1871 2.0, a place that reflects the organization’s ever-evolving objectives and desire to constantly keep raising the bar. But innovation, fast growth and results like these don’t happen by chance; they happen when you take time to build a community and when you take the long view (multi-year view) of your goals. Howard Tullman, CEO of 1871 explains.

EL: Nearly everyone in the Chicago business community has heard of 1871. What were you trying to accomplish with 1871 2.0?

Tullman: We were trying to accomplish some things that weren’t part of 1871 initially but which were certainly part of the roadmap. 1871 1.0 was about creating a physical space that assembled a community of startups, incubators, accelerators, universities and venture funds. Now instead of focusing exclusively on building a broad horizontal community, we’re very focused on establishing vertical, domain-specific, clusters as well.

We also wanted to create a space for alumni offices. We didn’t want our success stories leaving, so we built a new area with more identity that would give them the ability to have a distinct place, and yet they could still take advantage of all of the shared resources and opportunities here. We also wanted to make sure our alumni would not incur the costs and the distractions of starting out and worrying about security deposits and furniture because you soon discover that it’s easy to lose sight of their primary mission, which is to keep building their businesses.

The last objective was to bring in out of state venture funds and let them have a presence here in part to meet our companies, and to also act as a launching place for their out of town portfolio companies. Last month we had a dozen companies from Turkey visit for a few weeks; this month we’ll have groups from Israel. So the idea is, if they want to enter the United States global market, 1871 and Chicago are the best jumping off points they can find anywhere.

EL: How has the mission of 1871 evolved since it first launched, and how is the evolution reflected in the design of 1871 2.0?

Tullman: The mission has changed, as I said earlier, because we were initially constructing a community.  In the old days, bragging about how much startups raised was probably appropriate. Today I would say it’s about results. We’re a startup factory, but the factory’s value depends on its output, not its input. What we want is to have people focused on sustainable recurring revenues, real jobs and the creation of companies that are going to last. And so 1871 2.0 is consistent with that up-or-out idea where you’re either growing and expanding and creating a real business or we want you to be doing something else, maybe somewhere else. It’s aspirational—we want people to say, “When I grow larger, I want to have an office over there in 2.0.” That was the intention and part of the design was to make it look not like a frat house or the tech treehouse, but to make it look a little more professional while retaining all the flexibility, the connections, and the fun that we think is always present here.

EL: 1871’s goal from the start was to create jobs, and with the addition of The Bunker, LEAP Innovations and The Good Food Business Accelerator, it’s opening new doors and possibilities for those who don’t always get exposure in the tech industry. Tell us about these initiatives, why they’re important, and what they’ll do for the local economy and the community.

Tullman: I think we have been very successful with job creation. We’ve created around 1500 jobs, our companies have raised about $42 million now and we’ve graduated 70 companies. It’s doing exactly what the Mayor and the Governor asked for and that’s job creation and business creation. Having said that, this year will be very much about new initiatives designed to broaden the scope and broaden the reach of 1871, whether it’s to women or to veterans, or to minorities or to people in certain designated industries.

We’re also focusing heavily on social investing and social entrepreneurship, but there’s no downside or weaker economics associated with the social side of business. Impact Engine, one of our accelerators, is not comprised of non-profit companies; they are for-profit businesses trying to solve important social problems. They’ll have just as much or maybe more economic impact, especially with younger generations who want to buy a product that is connected to a cause or work at a company or get involved with a company that has an intention not to just make money, but to also make a difference. That’s a big part of the 2.0 culture too, because we want to have an impact.

EL: How does cluster development and understanding the assets of a region maximize the value of a large initiative like 1871?

Tullman: I think people didn’t necessarily appreciate that who you bring together and the people you’re building your businesses around (and with) are as important as the physical space. So when we talk about clusters, we talk about lateral learning and lateral learning leads to solutions that work. A lot of value is created in these clusters. It spurs innovation and spurs other people to up their game, and we think that you have to constantly be iterating, constantly be raising the bar, if you really want to create lasting, sustainable value.

EL: 1871 was built on a little of bit of faith. At what point did you and others who helped create this initiative know that it was successful?

Tullman: I don’t think we’re ever successful. We measure progress which is ongoing, not success which is an endpoint, and we’re continuing to progress. This is an arms race; the expectations of customers are always progressive. Miracles today are so-whats six months from now.

I think we knew at the beginning of last year that a change was required, which was roughly when a whole new team came in, and the change was about metrics and accountability and it was about placing a focus on results. And so we’ll know we’re successful when we look back in another three to four years, we’ll have met the Mayor’s objective to have created 10,000 to 20,000 new technology jobs, and many of them will be in The Merchandise Mart. The whole Mart is being transformed from the old Mart of showrooms to the new Mart of technology and there’s probably at least one million square feet here, which are already devoted to technology companies. The good news is The Mart has about 3.5 million square feet of space, so we’ve got some room to expand.

EL: What advice do you give to members at 1871 that would be of interest to our audience?

Tullman: Ultimately talent is great, creativity is great, enthusiasm is great, but hard work and perseverance are what make the difference. We tell them that you can’t be all things to all people, so focus. We also tell them that multi-tasking is a flagrant lie and nobody can be a successful multi-tasker. All you can be doing in that situation is doing a mediocre job at a lot of different things. You have to get your head down, put all of the wood behind one arrowhead, and really focus on what’s important.

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Since its 2012 inception, Skender Foundation has raised over $500,000, helped more than 50 charitable organizations, thrown four benefits and founded one subcommittee. But there’s one number that matters most: The number of lives changed, both now and in the future.

“Our vision is to perpetuate the legacy of giving. That’s what drives me,” said Cheryl Skender, the foundation’s chair and president.

A 501c3 nonprofit, Skender Foundation donates funds and volunteer hours to groups that support wellness and education. To raise money and attention for organizations, the foundation throws the annual fundraising fete Summer Eclipse, which kicks off this year on July 17. On that night, hundreds gather to connect with one another and rally around a good cause.

While the evening’s event makes a big impact, Skender decided to push it one step further: She founded the Builders’ Board subcommittee to help young members of the Chicago business community get more involved. The subcommittee aims to inspire sustainable change by choosing a charity, and hosting an annual event called Harvesting Hope. This year, Harvesting Hope will be held on October 16 and will highlight Urban Initiatives, a nonprofit organization that runs health, education, and character development programming for kids in the Chicago Public Schools (CPS). Just as importantly, the Builders’ Board participates in forthcoming educational workshops that tackle topics such as fundraising, marketing and networking. According to Skender: “By giving future leaders the right tools, they are going to be capable leaders. They’re going to empower the next generation and change lives.”

For Skender Foundation, change is already underway. Skender recalls a moment she felt the foundation alter lives — including her own. At last year’s Summer Eclipse fundraiser, Skender Foundation invited students to speak about their experiences in the Chicago Scholars program, the recipient of the evening’s proceeds. One discussed growing up in the foster system and petitioning the state to live on his own as a teenager. “I couldn’t believe what I was hearing,” exclaimed Skender, recounting the story. Chicago Scholars, which mentors under-resourced high school students, helped him access the funds needed to go to college and graduate with a degree. “Due to mentoring, he is on the road to success. And after all he’s been through, he’s now giving back — and that resonates with me.”

This year’s Summer Eclipse benefits The Chicago High School for the Arts. Known affectionately as “ChiArts,” the institution receives funding for academic classes from Chicago Public Schools. But the arts programming — which begins after 2 p.m. and runs about three hours — relies solely on contributions from individuals, corporations and foundations.

These funds support every part of the arts classes — high-caliber training often found only in pricey private schools. Because the students enter with varying degrees of skill, ChiArts executive and artistic director José Ochoa joked that the school is run with military-like precision: “Every minute from 8 a.m. to 5 p.m. is accounted for. We say it’s not enough time to give the students what they need. We know we have a lot to teach, and the students have a lot to accomplish.”

The wholehearted dedication, embraced by ChiArts’ diverse body of students, attracted Skender to the cause: “The average student commutes 45 minutes. That’s an average, so many families and students commute for more than an hour — both ways.”

Summer Eclipse benefits individual ChiArts students, covering pointe shoes or a field trip to the Art Institute of Chicago. Students will be present at the evening’s events, performing, playing musical instruments and displaying their artwork. It’s an opportunity for donors to see their gifts in action, but for the students it’s also an opportunity to give thanks. “For a high school kid to understand the gift they’re given and to say thank you, it’s so rewarding,” Ochoa said. Let the cycle of giving continue.

Skender Foundation hosts Summer Eclipse to raise funds and awareness for causes impacting education and wellness. This year’s event helps fund the arts programming at The Chicago High School for the Arts.

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When United Way of Metropolitan Chicago merged with its suburban counterparts a decade ago, the nonprofit human services agency was housed in a West Loop loft building. Its various departments and functions were physically spread out and segregated across three separate floors. That environment wasn’t optimal for an organization that views one of its primary roles as a “community convener.”

Cushman & Wakefield’s J. Frank Franzese and Steven Bauer identified these challenges very early on in the process and worked closely with the board of directors. When the board decided to sell the property and relocate the agency to the 30^th floor of the CNA Center, building out a new headquarters from scratch for 100-plus employees was the perfect opportunity to engage strategic design and construction to better reflect and support their mission. “We knew we wanted to change the way we worked as an organization, so there were some features we had to have,” said Joseph Vanyo, the organization’s chief operating officer. “One was that everyone must be on the same floor. We also needed meeting and work space for our agency partners and donors when they visit. And we wanted the design to reflect who we are and the communities we serve, but not in an ostentatious way.”

Those weren’t the only considerations. The budget was tight, and so was the space. The agency was downsizing from nearly 60,000 square feet to 28,000 square feet. Fortunately, large conference space was no longer needed because it was available elsewhere in the CNA Center.

The new headquarters began as a blank square box, with the elevator bank and utilities in the center. The exterior walls are nearly floor-to-ceiling glass, capturing impressive views of the city. From there, the architect designed a floor plan with workstations and small conference areas positioned along the perimeter and glass-fronted executive offices circling the core. The entire floor is filled with natural light.

Architect Michael Berger of Partners by Design explained how the office geometry conserves space while expanding function: Conventional build-outs place offices along outer walls, where their size is defined by window mullions usually set five feet apart. They end up measuring 10 feet or 15 feet on the perimeter side and are rectangular in shape. The United Way offices, unrestricted by mullions, are 13 feet square. The size is conducive for office use or for small gatherings.

“We can place a larger work surface or meeting table there, and get four or five people in the room,” said Berger. “They don’t have to sit across from someone’s desk. By doing that, we were able to cut down on some of the other meeting spaces.”

And employees get the best views, said Vanyo.

The organization’s departments are arranged so that associates with related functions can conveniently interact. The marketing department is near the community building and fundraising departments, and finance is near operations. To further encourage confabs and innovation there are three hub areas, each designed for different work styles: One with comfy lounge seating, one with traditional table seating, and one with high-top counters for those who prefer to stand.

“The open floor concept helps us build collaboration across departments and allows us to more expediently get the information we need to make decisions,” said Vanyo.

The décor, with input from an employee team, is contemporary yet inclusive. The color palette of mostly white furnishings and slate gray carpeting are punctuated with accents of mustard, brown, taupe and turquoise. Environmental graphics in key locations boldly pronounce both the agency’s legacy, and its current work to bring quality programs and services in education, income and health to communities that need them most. In the reception area, for example, a wall of reclaimed wood is engraved with the United Way logo. In the lunch room, another wall is imprinted with the names of the 58 communities the agency serves.

Vanyo credits the project team for understanding the agency’s culture and values, and then translating it into an exceptional space on a lean budget.

“Partners by Design shared the concepts, and Skender helped us get the best price,” he said. “They have a very creative approach. They would say, ‘We can get you a beautiful piece that is scaled down from the original design but still something very professional.’”

Among the cost savings: Creating reception area seating from reclaimed wood was less expensive than buying sofas. Custom millwork was limited to cabinetry for the marketing group and the reception desk; other furnishings were stock purchases.

The three-month project was delivered on time and under budget. All the agency’s goals have been met, said Vanyo.

“We feel a different level of energy and camaraderie that is much more effective in how we work in this space than we ever did before,” he said. “We hear much less about ‘I work in operations’ or ‘I work in marketing.’ Now we hear, ‘I work for United Way.’”

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In a little over a decade, BigMachines, Inc. has grown fast. What began as an internet start-up founded by MIT graduates in 2000 has transformed into a global company that has doubled its business year over year. Headquartered in north suburban Deerfield, BigMachines knew that their current office location was a temporary solution. When it was time to renovate and expand their current 55,000 square foot space, it simply didn’t make sense to go beyond the budget of the interior tenant allowance. But coming up with smart and targeted solutions to create an environment that would attract some of tech’s top talent was still a must.

The company’s growth created some challenges from a cultural and operational standpoint:  It wasn’t uncommon for patchworks of suites and spaces to enlarge as needs arose. They were adequate but not particularly consistent or cohesive. According to Sean Fallon, BigMachines’ chief operations officer and chief financial officer, the renovation offered an opportunity to step back and really think about how space could transform the company’s work environment.

“We wanted a large, open space that would encourage collaboration and innovation among our employees,” said Fallon. “It had to invoke a modern warehouse feeling, like you would expect to see in a leading tech company. We recruit a lot of young engineers and technologists, and we wanted to create a place where they wanted to work.”

But the budget for the job was tight. To make the dollars work, the project team scrutinized the design plan over and over to weigh every cost against every benefit. Many compromises and concessions were made.

The client elected to focus the major portion of the budget on three key areas that most supported its goals: The lobby, the café and employee work areas.

The lobby was critical because it visually introduces visitors to the company’s high-tech, high-energy culture—it had to make a strong impact. To do that, the ceiling was opened to expose wiring and ductwork and the concrete floor was polished to a shine. The primarily black-and-white palette was warmed by occasional punches of color and a wall of wood paneling behind the reception desk.

The new café is spacious and comfy, roomy enough for communal gatherings like the free luncheon provided by the company every Friday. Game tables invite moments of relaxation and camaraderie.

Major demolition was required to make way for clusters of employee workstations. These low-partitioned cube-and-seating arrangements facilitate face-to-face communications while their modular configuration allows for flexible expansion. In addition, huddle areas and a large meeting room enable teams of all sizes to collaborate as needed.

Along the way, the bottom line was a constant reminder for the project team to be efficient and cost-conscious. Every wall that had to be torn down and every foot of concrete that had to be cored was questioned. Each door, light fixture, hardware set and piece of furniture was shopped.

“Skender understood our budget, and that was a big deal,” said Fallon. “They gave me a lot of choices, which helped me make the trade-offs I had to make.”

Some of the much-desired items turned out to be far more expensive than expected. The client’s original vision included open ceilings and polished concrete floors throughout the space. However, neither was a simple matter. Tearing out the existing acoustic ceilings to expose the structure meant removing, re-aligning and re-supporting ductwork, lighting fixtures, sprinkler heads and other infrastructure. And wall-to-wall carpeting was more economical than prepping, staining and finishing the raw concrete floors. After much review, the client opted for an exposed ceiling in the lobby only and for concrete floors in the lobby and café. Faux concrete was also used for decorative accents.

“We looked at everything,” said Fallon. “We tried to be very disciplined about choosing finishes and making changes. We made many trade-offs no one is even aware of, but we did them.”

A few of the trade-offs came at additional cost, like the sidelights that frame doors to the perimeter window offices. The client had eliminated them from the original design to cut cost. After construction began, the realization set in that the interior floor space, where the greatest mass of work stations would be located, would receive insufficient natural light. The sidelights were reincorporated.

Construction took place over a fast-paced 11 weeks. Now settled into its new headquarters, BigMachines is well-poised and well-appointed for continued growth.

“It turned out very well,” said Fallon. “We have an environment that is far more collaborative and consistent, and our employees are much more in touch with each other. We got what we wanted.”

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The Great Recession is fading into the past, and construction is on the upswing. But many industry leaders have found they can’t simply pick up where they left off. An estimated 2 million jobs were lost to the economy, and that’s a tough blow. Even if the jobs come back, many of the best workers are gone forever. Companies must find creative solutions to address the skilled labor shortage, or projects will be delayed and more expensive. The savvy ones are already doing just that.

Tracking the numbers is FMI, one of the leading providers of management consulting, research and investment banking to the engineering and construction industry. According to its “2013 U.S. Construction Industry Talent Development Report,” which surveyed thousands of construction firms nationwide, 53 percent of the respondents said they were facing skilled labor shortages, 27 percent said they were not, and 10 percent said “not applicable.”

Although the severity of skills shortages varies geographically, most engineering and construction sectors are impacted by retiring Baby Boomers, leaving companies to grapple with finding good people to replace leadership roles, says Sabine Hoover, an FMI senior research consultant in Denver.

“In terms of the construction trades, it takes a long time to train workers like pipe fitters, welders and electricians,” she said. “Successful companies have instituted comprehensive career development paths, in-house training programs and are cross-training people to do more than one job. The ones who let people go during the recession and now have to fill key positions are going to be in a real crunch. In the oil and gas sector, for example, many firms are confronted with a chronic shortage of engineers, project managers and skilled tradesmen.”

Tom Villanova, president of the Building and Construction Trades Council in Chicago, differed: “There is no such thing as a skilled labor shortage in the Chicago area. We still have unemployment in our trades. What we have is a skilled labor shortage willing to make $8 an hour.”

He continued: The recession hit hard for three or four years, with some trades reporting up to 50 percent unemployment. People lost their benefits, homes and farms after not working for a couple of years. The U.S. Department of Labor, which controls the number and timing of apprenticeships, closed them off.

“It doesn’t make sense to train people if we don’t have jobs for them,” he said.

Now that the industry is recovering, apprenticeships are opening up, and demand is high. Three years ago, when the council was allowed to offer 300 spots, 4,000 people applied. Applicants represent a cross-section of ages and backgrounds, and many have earned college degrees.

“We’ll have no problem replacing Baby Boomers,” he said. “There is a steady stream of apprentices coming to fill those gaps.”

Villanova envisions a bright future, considering the projects coming down the pike. Among them, Wolf Point and the McCormick Place expansion represent several years of work. “These jobs have longevity,” he said.

At The Hill Group, a Franklin Park-based mechanical contracting firm, the sentiments are mixed. President Jim Hill and Director of Technology Integration David Pikey agree there’s no current shortage. But they are keenly aware the workforce is evolving.

“Our biggest hurdle in the next five years is making sure we have the right people to fill the jobs,” said Hill.

“Many unions are top-heavy at this point,” said Pikey. “That’s not the same as saying there is a shortage, but the demographics are not positive. We’d love for that age distribution to flip toward younger workers.”

Those younger workers are harder to find these days. Parents in recent decades have steered their children toward professions, not trades. Most adolescents and young adults prefer computer work over physical labor. However, that tide could turn as recent college graduates with huge loan debt realize they can’t make the same money in their chosen field as a union plumber.

“It feels like it is changing, we are seeing more apprentices taking the opportunity as a career and not a job,” said Hill.

The demographic challenges are spurring companies to seek myriad innovations that help them perform better with fewer resources. Some have adopted philosophies and processes like Lean Construction, Lean Manufacturing and Integrated Project Delivery, which promote collaboration and time- and cost-efficiencies. Others have turned to labor-saving prefabrication and modular construction to build components as simple as a wall or as complex as a complete mechanical system. Many are harnessing the power of technology, both in-house and on the job site; they are implementing software, hand-held devices, automation, robotics, virtual construction and more as rapidly as new uses and refinements are developed.

Technology not only is readily accepted by the existing workforce, but it also could help attract a younger one, said Pikey.

“One of the things we’ve done here, and what most construction companies are doing, is work hard to use technologies to create efficiencies and safe conditions in the daily process,” he said. Using iPad’s, virtual construction, and other advanced construction technologies on the jobsite creates a more attractive environment.”

In Hill’s view, the recession was an opportunity as much as it was a challenge. “It gave us time to become more efficient internally and stretched our abilities to construct virtually,” he said.  “A down market provides tremendous motivation to be more competitive and keep our people working. We think leveraging technology provides us this ability.”

FMI’s Hoover noted that while much progress is being made, greater steps must be taken to preserve the institutional knowledge of retiring workers and to stimulate younger workers and make them feel valued.

“The labor shortage and recession combined has forced companies to take a fresh look at how they build talent pipelines, develop leadership succession plans and build competency. Industry leaders are integrating their HR objectives with core business functions and tying them directly to strategic goals.”

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As the Affordable Care Act continues to unfold, this landmark legislation is providing millions of Americans with better health and better life quality.

It also is changing the delivery of health care and, in turn, the design and construction of health care facilities. A growing movement is replacing the traditional model of testing, diagnosing and treating the (sometimes advanced) ailments and diseases of patients with a holistic continuum of care that focuses on keeping people well in the first place.

This new focus has led to the rapid growth of community health centers such as those of the Chicago-based Erie Family Health Center. The nonprofit agency, founded in 1957, provides comprehensive primary medical, dental and behavioral health services to underserved communities in the city and suburbs. It has grown to 12 centers, with two more—one in Waukegan and one in Mundelein—under construction. At Erie, no one is turned away because of inability to pay.

“The biggest impact ACA has on us—and we are thrilled about it—is we believe more of our patients will become insured, and more patients will be seeking primary care,” said Amy Valukas, Erie’s vice president of planning and programs. “We very much want to be there to serve them.”

The most recent addition to the agency’s portfolio, which opened in November 2013, is the Erie Evanston/Skokie Health Center, a cheery, light-filled 16,000-square-foot facility transformed from a circa 1940s manufacturing plant. Key areas include a collaborative care-team center, clinical spaces, dental suite and an education center with a demonstration kitchen.

“ACA and health care reform, which are driving more individuals to be insured, are going to create the necessity for a greater number of centers to provide primary care and other ancillary support services,” said architect Casey Frankiewicz, principal and director of health care practice at Chicago-based Legat Architects. “This is a very exciting time to be working in health care.”

Meeting those comprehensive community needs requires thoughtful planning that is also sensitive to construction budget restraints, said Valukas.

“Of course, everyone wants to be good stewards of their money, and we do too,” she said. “We want to make sure we best use every inch of space we have and maximize every dollar we get. The fact that some of our patients may be uninsured does not mean they deserve to be seen in anything less than a high-quality facility, just like anyone else.”

The first step is finding the optimal location, which varies from community to community. Centers must be conveniently located, which generally means easy access to public transportation. They also must have adequate infrastructure to support the clinical needs of the center. Quite often, because of the lack of vacant land for new construction, existing buildings will have to be gutted and retrofitted.

“Every location is unique to the search,” said Bill Conopeotis, president and founder of ConopCo Project Management in Hoffman Estates. “Older buildings are clearly more challenging, but it’s a matter of what real estate you can find in that market, whether you can buy or lease, and what will be the best fit for Erie.”

Repurposing an existing building often meshes well with a center’s desire to be a vital community partner. For example, the Waukegan facility is a former bank, and architects have incorporated some of its more prominent architectural features into the new design.

“We try to capture the personality of the community,” said Frankiewicz.

“Existing buildings may not all be architectural gems, but they are landmarks in the community,” said architect Alan Bombick, a Legat principal and director of corporate/commercial practice. “When those things disappear, it becomes disruptive. When they take on new life, it strengthens what is already there.”

The interior environment replicates sentiments of integration and more, said Sylvia Kowalk, Legat’s director of interior design. In Evanston, where the community demographic is diverse, the color palette is bright and joyous—swaths of purple and flashes of turquoise against a ground of white and tan. An attractive children’s play area is stationed near the waiting room, and patient rooms are oversized to seat accompanying family members. The ambience more closely resembles a fine hotel rather than a hospital.

Near the front entrance is the education center equipped with a demonstration kitchen, a feature that presents opportunities for community outreach. The center hosts a calendar of wellness programs, events, such as new baby care and food preparation for a diabetic diet. It also invites local groups to use the space for their activities.

“Lifestyle is a huge driver for many of the health issues that impact patients,” said Valukas. “For us to be able to work with them in culturally relevant ways like learning how to cook their favorite dishes in a healthier way is a great benefit.”

Subtle design elements facilitate improved patient care as well as health care reform measures. And technology—in the forms of electronic record-keeping, laptop computers and wireless connectivity—plays a huge role while conserving space. Care-team centers keep staff and providers located closely together, where they can easily collaborate on patient care. Their work stations are separated by low walls or glass partitions, so they can stay tuned to their surroundings and maintain a degree of privacy. Sensitive conversations are held at strategically placed consultation rooms. Members of the care team move between patient rooms rather than requiring the patients to traverse, and they carry their laptops with them. Patient rooms are laid out so providers can make chart notations while maintaining eye contact, not while facing a wall. Numerous touch-down areas allow them to comfortably stop and make notations or look up information while either standing or sitting.

“The design is easier on the patients and is more caring for them,” said Kowalk. “It enhances the healing experience.”

“We are designing facilities for what we believe is going to be our new delivery model,” said Valukas. “It is about integrated team care, and making sure that comprehensive teams are working in a coordinated and seamless way to keep patients healthy and out of the hospital.”

Elevation 005

What’s it take to build a great culture? Some tout buzzwords in an effort to build culture, others try to meticulously design it from the top-down. One thing is clear: For those searching for that sustainable one-up over the competition, culture is becoming a critical part of the conversation.

If companies take a lesson from Google, a large part of culture starts with empowering project teams. Employees don’t think about improvement in 10 percent increments, they think about how they can take it to a completely different level. Many project initiatives are created by employees themselves because they have a generous amount of autonomy over how they work and use their time. To those Googlers, projects are not about building new code; they’re about solving really big problems using technology.

Jim Laumann, Google’s director of real estate, design and construction, has seen the company grow from 2,000 to nearly 50,000 employees in his almost 10 year career there. As a person who has played a major role in establishing a sense of place across the globe, he expresses that culture is really where vision, values, people and place collide. It’s a place where employees are expected to act as creators, promoters and keepers of the culture.

That’s only one part of the formula. Laumann describes Google as an open culture, one similar to start-ups, in which smart, curious people are constantly interacting, trading ideas and opinions on the matter at hand. This culture strikes a balance between work and life. People are empowered to have the courage to try new things. Failure is not perceived as bad, it’s viewed as a part of the process.

“I think culture is a fiber that holds a company together and gives people a sense of belonging. Larry Page, our CEO and co-founder, always felt Google was like a family. When we approach creating environments, we try to create that feeling of family, that feeling of place—almost home—that people have,” said Laumann.

So forget the cliché conference room. Employees meet up on a rooftop deck, a pub-inspired lounge or a comfy, enclosed egg-like structure. Every office or “campus” celebrates the flavor of the local community and culture. And every Googler is welcome to meals in cafes that double up as a place to collaborate and create the next big idea.

According to Laumann, it’s important to provide opportunities for spontaneous interaction and encourage people to explore the campus for all it has to offer.

“Our real estate group combines the principles of creating an experience while we promote health and well being, and sustainability within each campus.  And what Google strives for in every functional environment is finding the most creative and efficient way to optimize performance and organizational behavior,” he said.

As the company’s Chicago office prepares to make a move to 1KFulton in Chicago’s Fulton Market district in late 2015, Laumann is looking forward to what’s next for the company, the Chicago tech community and their newest campus.

“What’s interesting about Chicago is we’re seeing so many startups, and so much has happened at the Merchandise Mart with Motorola Mobility and 1871. I think this environment is going to provide tech companies with a good canvas to grow and really succeed in Chicago. With Google moving to 1KFulton, we’re going to have the opportunity to look at what the future of the workplace really looks like and start to bring more and more technology into the workplace,” he said.

What’s in store for Google’s new Chicago campus is still very much in the works, but one thing’s for certain: Culture will be front-and-center.

“I think success in any endeavor increasingly depends on innovation and collaboration. The marketplace is so competitive, and companies are competing for that advantage and skilled talent that can really take things to the next level. If companies want to compete, they must make the choice to create an infrastructure that provides people with a sense of ownership and freedom to shape their role. Physical space has the power to effectively encourage interaction, shared experience and community.”

Elevation 004

For anyone who works in commercial real estate, it’s no secret the neighborhood known for its meat packers and industrial chic is about to boom. Google and bicycle manufacturer SRAM are gearing up to call the area known as Fulton Market home. Others are following suit, making this location one of the most actively evolving sectors in the downtown Chicago market.

As more tenants head west to take advantage of its commercial and residential offerings —what challenges are ahead for the neighborhood that’s used to flying under the radar? Andy Gloor, managing principal of Sterling Bay Companies explains.

EL: Why is the Fulton Market area becoming an attractive option for commercial real estate?

AG: I think people are attracted to its authenticity. Personally, the buildings remind me of Chelsea Market in New York City’s Meatpacking District. The neighborhood is kind of messy but it’s genuine and pedestrian-friendly. A lot of tenants are looking for large floor plates and the neighborhood offers a very unique building stock. It’s close to the Loop, but its real allure is the residential amenities. People can live in this neighborhood and when they leave work, they can walk to great local restaurants. There’s something less sterile about this neighborhood and I think people are realizing that more options are available.

EL: Why did it take so long to catch on?  

A few years ago, many didn’t know this neighborhood existed, or they recognized it as a dining destination.  Any urban area that is primed for office space needs public transportation and this area’s lack of transportation was holding it back. When the city completed the new Morgan Street Green/Pink Line Station, it stimulated interest and really accelerated growth. The restaurants have been here and now developers are working to fill in the gaps with office, retail and hotels.

EL: Is there a particular demographic or type of company that is drawn to this area? 

I think the simplistic answer would be that Millennials and tech firms will dominate this area, but the ability to mix commercial with residential amenities is very attractive to a range of companies. Law firms are considering this area. My father’s generation thought you had to stay in the Loop, but today’s decision makers and my peers look at it differently—even traditional companies who would normally stay downtown are considering locations they would not have considered ten years ago.

EL: One of the more high-profile projects in the area is 1KFulton. What possessed you to purchase a building that was formerly a cold storage facility?

Honestly, we tried buying this building for five years. I liked it—it had unobstructed views of the city.  I always thought it had the potential to be a cool office building where people could work where they live and hang out in their own neighborhood. It doesn’t appeal to everyone but companies like Google really get it and they’ve made similar moves in New York and San Francisco. The co-founder of SRAM lives a few blocks away, so he understood the appeal right away.

EL: What kinds of amenities are going to attract tenants to this area?

Again, transportation is huge. The new El station is a block away, and a handful of DIVVY stations are within a few blocks as well. 1KFulton is going to offer shuttle service to and from Union Station and Ogilvie. We’re seeing less emphasis on parking and we’re focusing on bike storage. Our storage area will hold up to 1,000 bikes on any given day. Many end-users will choose to ride their bikes year round—even in the winter months. Employees want to bring their pets to work. This was a huge point for Google, so we’re creating a pet-friendly environment. Outdoor space and easy access to restaurants and retail are other amenities that we’ll offer. Our retail and restaurant choices will be unique and local—that’s what will fit in with the neighborhood and our clientele.

EL: Speaking of unique – how is this neighborhood going to keep its edge and develop into a major business hub over the next few years?

I think a lot of people are comparing this neighborhood to what River North was ten years ago. It’s a little true in the sense that there will be more hotels and retail – but this area definitely has its own character. It’s transitioning from manufacturing to commercial. I think some of the manufacturers and meat packers will still call this area home, and that will help retain its original appeal. All of the restaurateurs love that locals hang out here, but I’m not sure how anyone will stop all of the momentum. In the end, I think it will be an authentic and really convenient place for people to live, work and play.

EL: Obviously adaptive reuse projects such as 400 South Jefferson and 1KFulton are very challenging. Is it a personal passion?

Absolutely. There are always surprises. Considering 1KFulton was frozen, we didn’t know what we were buying and we really didn’t know what kinds of unforeseen conditions we’d run into when we started construction. But we focus on modernizing buildings and we concentrate on the architectural details that just don’t exist in new buildings. We like to remember what was there and represent it as opposed to changing it, whitewashing it and sanitizing it.

Sterling Bay Companies is a Chicago-based real estate investment and development company with expertise in the acquisition, financing, leasing, and management of commercial property across a broad spectrum of asset size and type. Founded in 1986, Sterling Bay focuses exclusively on commercial real estate investment and development.