Commercial Real Estate
When Smart Buildings are REALLY Smart
Stressed out? Try rock-climbing or have a barbecue at work.

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By Tim Loughran
Imagine that it is well into the evening and you are hard at work. You are hungry and stressed. At an Old Economy workplace, you’d have to buck up and endure it. Happily, however, you are employed at iXL, an Internet service provider. At the company’s spanking new building in suburban Richmond’s Innsbrook section, you take a break and work off some steam on the company’s 12-foot-high, indoor climbing wall. Then you go out to a barbecue deck and grill supper. To get your mood straight, you go into a themed room modeled to look like an aquarium or a desert. Refreshed, you return to your cyberjob.

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In these boom times, established brains-and-bytes companies like iXL — whose Fortune 500 clients include the likes of AOL, Chase Manhattan and Monsanto — expect to spend more than $100,000 per employee on recruitment incentives, training and education in addition to wages and benefits. Companies hoping to succeed can’t afford to lose valued staffers to rivals, so building worker-friendly office space is crucial to protecting human assets. "You can offer just so much" to attract and keep good workers, says Daniel J.Gonzalez, a regional vice president of the Staubach Co., a commercial Realtor. "If it takes an extra $50,000 to keep five employees and hire five more," that cash will be well spent, he notes.

Consequently, cutting-edge firms are routinely including such bennies as rooms for catnaps and child care, kitchens, snack bars, dining rooms, fitness centers, foosball, pinball and air-hockey. The aim: to help workers relax and recharge their creative batteries within steps of their cubicles and laptops.

Creature comforts aside, modern office buildings must also house the tools all companies need to continue operations around the clock, every day. That means workers must have turbo-charged communications access at their workstations, and tenants are guaranteed uninterrupted power supplies, backup generators and emergency batteries, so crucial systems and workers can keep plugging away should Virginia Power fail to keep the lights on.

In the process, developers are redefining what a "smart" building is. A decade ago "smart" office buildings were the ones that saved landlords money with timed and zoned lighting, heating and air-conditioning systems. Now first-class buildings have to accommodate rapidly evolving communications technology and adapt to volatile financial markets. The electrical and mechanical guts of buildings are exposed, so companies and landlords can remodel and upgrade offices. Quick, easy access to the Internet means less money is spent housing unproductive places like libraries. And modern buildings have fewer large conference rooms. They’ve been replaced by smaller meeting rooms and lounges where engineers and designers can meet on the fly.

"What makes a building ‘smart’ is the flexibility you build into a building," says Paul Kreckman, vice president of Virginia operations at Highwoods Properties. The Raleigh, N.C.-based real estate investment trust owns and develops properties in Virginia and eight other states. "What may be good technology today may be obsolete in five years. Does the new building allow you to pull out the old and put in the new cost effectively?"

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Luddites may sneer at this fuzzy theme park-cum-playhouse design philosophy. They may regard it as just another indulgence of nascent new economy companies that seem to eschew the need for profits. Yet architects contend that these new designs and amenities are serious business. Relaxed employees are creative and productive employees, and frequent face-to-face meetings accomplish work perhaps three times faster than videoconferencing and e-mail alone, Grinnell says.

"This may sound like some West Coast affectation," says William Scribner, a Richmond architect, "but workers whose labor is so intense and focused all day do need to change their physical environment from time to time. Companies that employ these expensive and highly intelligent resources need to create a pleasant environment so they can keep this human capital and benefit more from all the investment and training they’ve made."

Central to the iXL floor plan in Richmond, for example, is workers’ ability to invoke their muse wherever they’re most comfortable. The baseboards of all common areas are packed with high-speed copper and fiber-optic connections to company intranets and the Internet. Except perhaps in restrooms, laptop-toting workers can meet, brainstorm and deliver solutions to million-dollar problems. Moreover, the mix of advanced electronics, varied work environments and plenty of face-to-face space "give workers a sense of enterprise and ownership of something more than just their seat," and that stimulates creativity and loyalty, Grinnell says.

Web-centric iXL’s reliance on "analog" technology — like face time among staff — isn’t all that’s borrowed from the industrial age. The company’s new floor plan takes a page from the classic factory assembly line. Departments that process sequential parts of the Internet solutions the company sells are within steps of each other. Grinnell, who earned a master’s degree in industrial administration from Purdue University, says the new arrangement will speed iXL’s product development and delivery.

As with many things in Virginia, the idea that increased communication among inquisitive and creative individuals can lead to intellectual breakthroughs isn’t new, and may be at least as old as the University of Virginia in Charlottesville.

Thomas Jefferson, according to U.Va. chief architect Samuel "Pete" Anderson, designed the original campus almost 180 years ago in the belief that integrating faculty and student residences and creating different environments in which students could learn would help develop academic excellence. "To many people the academical village is nothing more than red bricks and white columns, but the real idea was that it was designed to be a community," says Anderson. "Students’ rooms, faculty lodgings and classrooms were placed together. There were additional classrooms in the library. The Lawn was the common area where both students and faculty could meet informally. The south section of the Lawn was a place for exercise and in back of the Pavilions were gardens where one could walk in peace and contemplate."

In the 21st century, Virginia’s high-tech companies have adopted and adapted Jefferson’s idea in different ways. One of the most well-known is the Morino Group’s self-described "knowledge cluster" at 11600 Sunrise Drive in Herndon. Developers and urban planners from Japan, Europe and across the United States have visited for inspiration. More than a dozen tenants — including a handful of venture capital firms, TV onthe Web, Intelidata and fantasy-sports.com — use the building’s indoor basketball court, fitness center, Via Cucina Italian eatery and outdoor bocce and beach volleyball courts to relax, recharge and talk business.

A building spokeswoman refers to 11600 Sunrise as "a coral reef" and "a living building" that thrives only because of its tenants. For his part, landlord Mario Morino, a high-tech venture capitalist and crusader for broader public access to the Internet, strikes a more evangelical tone. In the building’s promotional brochure he argues that all the resources Internet start-up companies need are available under one roof. "Here you’ll meet some of the best minds in the industry — your neighbors — who share the conviction that we’re in this together."

For its part, the Morino Group sees itself as a hands-off host for the free flow of information among tenants. Alexandria’s Paladin Cos. offers another variation on the theme: It plans to take an equity position in all the tenants it accepts for the 32,000-square-foot incubator it plans to open in September. To compete with executive suites that offer minimal administrative services and assistance to tenants, Paladin will provide a year’s rent, technical support, venture capital assistance, legal advice and accounting services to about a dozen Internet-qualified start-ups in exchange for a 10 percent to 25 percent equity stake. Tenants will pay their own way in the second and third years of their leases. Taking a cue from 11600 Sunrise, Paladin chairman and chief executive Bill Byrnes plans to offer his tenants a full range of first-class office amenities, including dining areas, lounges, conference rooms and a fitness center, all with a "fun, exciting feel."

As iXL and other high-tech firms show, there’s a lot to be gained by taking lessons from the medium they now use to create products and wealth. The Web has made it possible to do business better, faster and cheaper by improving collaboration between companies and their clients. Web companies have recognized those same lessons. At the workplace, easy and responsive communication among workers and managers is essential if they are to succeed.