Company Bio

Hattox Design Group, LLC is a full service space planning and interior design firm with extensive experience in commercial, medical, mixed use and public works projects. Based in Costa Mesa, CA, the team utilizes state-of-the-art technology to communicate seamlessly with clients and design team members in widespread locations. Their portfolio includes clients such as AltaMed, Baldwin & Sons, Pacifica Hotels, and Haas Avocado Board, and spreads all across North America. For over 17 years, Hattox Design Group has designed spaces that promote strategic objectives, inspire people to reach their full potential, and achieves sustainability.

Key Takeaways

  • Separating office build components into two lists, base level and add on, is the best way to assess initial project expense feasibility
  • Potentially costly unforeseen construction costs are best discovered early on in the test fit phase
  • Project budgeting should include construction as well as furniture, IT, cabling, move management, and more depending on your operation
  • Higher density office layouts are prevalent but there are limits in culture and employee experience balanced with project parking availability
  • Open office plans are still the norm however newer solutions for sound baffling and privacy are becoming more common place

Background

Justin Smith, Senior Vice President with Lee & Associate’s Irvine office, spoke with Liz Hattox, the President of Hattox Design Group, LLC, to get her perspective on industrial and office space, particularly when it comes to renewing or relocating one’s lease. She discusses timing, budget, program planning, space planning, technology, and how design comes into play in improving morale and company culture.

In today’s environment, are you working more for tenants and owner/users or for landlords and investors?

The market has changed with the rise of institutional investment. Although we have traditionally been 80% building owner work, we’ve been close to 80% tenant/corporate client work for the last several years. Large institutional investors often times only work with the national design firms for space planning, even if it takes longer or cost more, it often times doesn’t matter.

Whether you’re working for the tenant, or you’re working for the building owner, you have to be careful not to over design something that is going to increase the cost and kill the deal. Nobody wins if the deal doesn’t make sense. The tenant loses out on a new location while the landlord loses a new customer and source of income. This concept of project pricing and realistic assumptions applies to me when I’m working with a tenant who’s come to a landlord building, one of my big corporate clients, or even a small end user, for example, somebody who bought a 2,000 SF industrial/office condo. I have to make sure that everybody stays realistic about what can be afforded for the deal. You listen to the dream list that the tenant has and then sometimes you have to bring some reality to that for them, but not in a negative way. You have to say, “I have a feeling that might come in pretty pricey for what you might want to end up paying, but let’s get a price for it.” We’ll get a price for it and then be smart about splitting some of those things out like a shopping list. The first half of the budget will be your base build out costs, and everything needed to operate. The second half will be would like to have; items that they can still be in business without. It gives everybody a chance to make that deal.

When is the most likely time that people will be calling you for your expertise?

The most common time is when a client is considering a space and looking for a test fit. This happens when they’re looking at buying an industrial/office condo, for example, or hiring us to assist in evaluating potential lease space. Often times a broker has referred us to one of their clients who needs to look at a building. The optimal time for us to come in would be early on because we’ll determine if that property is efficient enough for them. We can also help them quickly determine what the build out costs would be. For example, if you’re going to buy an industrial/office condo and the layout has to be drastically changed, are you going to be able to get enough money from your loan from the bank to buy the condo and do the TI build out that would suit your business needs? We’ve developed some strategies that enable these tenants to get a real fast idea of what the build out cost is going to be.

It’s the same for industrial users. Most of them are responsible for their complete build out. They usually say, “Okay, here’s the building and here’s your rate.” Everybody comes to some agreement and then you’re responsible for your own build out, maintenance of the HVAC units, and everything else on the building. Those guys need to have good broker representation and planning representation to say, “Hey, did we check this out to see how old the units on the roof are? Did we check the accessibility?” They need to have professionals involved up front even if it’s just an initial, “Let’s just walk through this building and see if this looks like it might be a good fit for you. Or let’s eyeball quickly and see how many handicap issues we have here. Do we have to tear up sidewalk and half the drive aisle?” If so, that’s $100,000 right there.  These items need to be known prior to signing a lease and negotiated back with the Owner.

What are the main components of a budget?

The main component is the build out cost; what’s it going to cost to fit this out for your requirement? People also need to remember about cabling and move costs. Are their phone system and servers sufficient? Are they expanding? Do they have enough furniture? Do they need new furniture because their furniture is so old? They should also consider if they need something more current for their culture which should be evolving in today’s economy if they want to attract younger workers. Those are things that need to get factored in up front because those are real tangible costs and they do tend to add up.

We spend a lot of time interfacing with the client’s IT staff and their furniture people. Sometimes we’ll refer a couple of furniture vendors to them if they don’t have those relationships, but sizable firms usually have one or two furniture firms that they work with on a regular basis. We spend a lot of time coordinating with those individuals and with their security consultant. We trade plans and get technical requirements from them that need to be built out whether it’s electrical for a server room or sizing the conduit between workstations. There’s a whole technical list that we go through on a project to make sure we have all our bases covered.

 Can you describe how the program planning and space planning work?

When I have a small tenant that we’re working with, anybody 5,000 square feet and under, then we’ll program them if they don’t have a program prepared. A program is a summary, a list of their specific requirements that they need for that space. How many conference rooms, what size, how many people they need to seat in their workstations, what size. Breaking it down by department helps because once you start becoming a little larger, 5,000 SF and up, then you’ll usually be organized by departments. Accounting will be over here, sales will be there, customer service will be here, so the question becomes how many sizes of offices and then adjacency. Break rooms and server rooms also.

When I’m programming them, I also talk to them about their company culture. Do you spend a lot of time with everybody gathered together? Do people spend a lot of breakout time like one-on-one where they’ll sit at a counter, have a cup of coffee, and go over a project? That kind of gives me an idea of how the space is going to feel and lay out. Is the break room more open? Does there need to be more glass on the conference room? That’s the programming part of it. The space planning part of it is actually taking that program and fitting it into the space, into the suite, into the building, in the manner in which the tenant needs those adjacencies to work and for the office to flow. Space planning is like implementing or laying out the program requirements.

How is density being perceived in today’s marketplace? What kind of square foot per employee ratios are you seeing?

I get pushback all the time from ownership because tenants are still wanting to squeeze it down. Kaiser is looking at space that we’ve programmed and space planned for them and they’ve got people down to approximately 165 square feet per person. It’s mostly workstations, but then you get limited on the buildings that can actually park that requirement. So yes, clients are still trying to squeeze more into less space. Depending on the industry, I think the employees don’t necessarily like this because of course their workstations are getting downsized.

Benching only works for some kinds of companies such as IT and you have your head set on and you’re just focused on your computer and you don’t need to be really communicating with other people or handling paper or files. For other functions it’s not as efficient, effective, or the people are not able to work as well. Accounting would be one of those kinds of departments where benching doesn’t work at all.

How do you figure out the right type of test fitting for clients?

There’s a couple ways that tests can be done. You can do a down and dirty test fit for much less money than a full schematic space plan by literally just doing a block plan. If you know accounting needs to be this big and this many square feet, you can line these little rectangles up on the perimeter or wherever they want their offices to be because they need to be about this big, figure out it’s going to take up this much area here, and then maybe add circulation space. If you do a block layout like that, it’s very fast and very quick to determine if they should even be considering that space in that particular building.

Then there’s a preliminary space plan which has more detail in it than a block plan; enough where you actually are showing the rooms with doors, millwork, work stations.  You might still be using the same adjacency as the block plan, but now you’re showing here’s the conference room with the door on it and here’s the break room with the cabinet and a sink and here are the individual work stations laid out. That would be a preliminary space plan.

I think when a tenant is looking at quite a few buildings, they should consider a block plan especially if they have to pay for it themselves because it’s much less money and sometimes it can even be done just sitting down for an hour. I find that owners are willing to pay for space plans. It’s normal, typical and standard to see if the tenant is a fit and they can get a rough order of magnitude on pricing as well. I think a building owner is more apt to pay for a space plan if he doesn’t think a tenant is just shopping; that he’s really more serious about it.

What are the cool kids doing these days with design?

We’re still doing open structure, but acoustics has been a problem for everybody. So the cool kids are adding some really interesting kind of sound baffling systems that are also design elements. That’s one way to keep that real cool open structure look, but also start to control some of the sound issues that people are experiencing with too much echo.

There are really architectural design elements where new types of partial ceilings are being suspended from open structure. They’re made by companies like Armstrong and USG. You can specify them in colors, shapes, waves, different configurations that are visually interesting and functional for sound control. They’re also putting in small call rooms with glass doors on them so you don’t feel like you’re in a coffin. Because where are people going to go to make a critical phone call if everything is open space?

The cool kids are also doing larger staff relaxation areas. I call them relaxation areas instead of break rooms or lunchrooms. Some of them have small meeting pods that two to four people can sit down in and feel like they have a little bit of privacy. We have just designed two meeting pods for Tricentre’s tenant lounge.  They’re also great little breakout meeting areas too. Unless it’s the biggest companies, I’m not seeing people putting in napping pods. I think that’s Google. We have one big corporate client that has very sizable projects – 95,000, 75,000, 60,000 SF, 26,000 would be a small one for them – some of them are medical, but the 75,000 square feet of office they have they’ve maximized with workstations. They’re not putting in napping pods. They do have large break rooms with TVs, comfortable dining furniture, and banquettes, but no napping pods.

It’s interesting to see how workspace use and requirements evolve over time. I think some of it is driven by the larger companies. They’ll implement things that maybe are not really workable for the rest of the market. They’ll be setting the new trend, but then people will try to implement that standard and their employees will be pulling their hair out saying this doesn’t work for them; employees can’t concentrate because they have people talking on the left side, right side, and front side of them.  Then the rest of the market begins to adapt these trends in more user friendly ways.

What does the ideal process look like with project managers, move managers, construction managers, etc.?

I generally see project management and construction management provided by one company, one consultant. With project management, they’re going to manage the overall schedule for the client – the tenant – and budgeting purposes for all cost fit projects from inception to move in including my budget, cost of construction, cabling, and new server equipment.

We usually perform the programming, space planning, and project management as it relates to construction administration, so ensuring that the construction conforms to our design documents and the permitting process. We’ve never hired other people to do the permitting. We handle that ourselves because we have the relationships with the people at the city. On some industrial projects, we’ll work with an industrial engineer, and on the majority of projects we’ll also engage the MEP and/or structural consultants that are part of our project team. We will usually carry them under our contract umbrella.

The most successful collaborative projects, on bigger projects like 10,000 SF and larger, include a project manager/construction manager because they’ll monitor deliverables, monitor aall elements of project budget, keep their eye on the budget all the way through and also on change orders. We certify if the change order is valid, but they’re keeping the ongoing client budget together. There are companies that specialize in that segment of our industry. They make sure all the other tenant vendors are performing on schedule for phone systems, cabling installation and furniture delivery.  Those are usually the most successful larger projects I’ve worked on; when there’s someone assigned to that role.

Do you find technology helps communicate with the project and/or construction manager?

We’re sharing documents. I have an iPad pro and I see people walking around bringing plans up on their iPad then marking things up on the iPad and then sharing. We do a lot of electronic sharing. I’ll take a photo of something that is an issue in the field and I’ll take my stylus pen and mark it up on the picture and say, “This is what’s happening here. We have this issue and I’ll give you a call with what I recommend we should do” and then boom, I’ll email it or text it out to everybody so that they can get a visual of whatever the construction issue is. Technology has been really helpful. Of course we’re trading drawings with consultants routinely and with the contractor and clients.

For the last few years, I’ve been setting up screen sharing online meetings and space planning in real time with the tenant watching and responding in real time to their comments on the emerging plan.  Oh, you want these bathrooms over here. I’ll just move them over there. Let’s make this room two feet bigger and I’ll just block the space out with right then and there in cad.” At the end of that meeting, everybody’s really excited because the plan is already 80% done. People are not waiting around for three or four days to get a drafted out plan. It literally just takes a couple more hours to finish it off and out it goes.

Tenant amenity areas. Do you get involved in that at all?

Yes, we are involved in interior and exterior tenant amenity spaces. We’re redesigning the basement level at  in Orange. It’s a 10 story high rise. I’ve been the space planner at that building for 17 years now. They have a gym and a conference center downstairs and instead of closing the gym, the new owner of the building wants to keep the gym and refurbish it and make it a desirable amenity for the tenants in the building.  We are also upgrading the Tenant lounge and conference center as well as the main building lobby.

Balconies are tenant amenities and Owners are now looking at calculating balconies that are for the full use of a tenant into the tenant rentable calcs. BOMA standards now allow balcony amenities to be calculated for rentable purposes if the balcony is for the sole use of a specific tenant.

For more information regarding this interview, please contact:

Justin Smith, SIOR

Senior Vice President

949.790.3151

jsmith@lee-associates.com

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