Technology companies in the Bay Area have led the resurgence of the local commercial real estate sector. And these companies are also creating a new norm in campus design known as the Google Effect. Google may have been one of the first to create this type of “unique” work space, but more recent examples of this paradigm shift are everywhere and almost accepted as the new “norm.” Take Facebook. Facebook is akin to a mini college campus. Employees enjoy three meals per day, serviced by cafes, a BBQ restaurant, pizza parlor, taqueria and ice cream shop. Additional amenities such as gyms, laundry services, medical and dental clinics and even day care are showing up, to the point of being expected perks by the Bay Area’s in demand workforce.

You may think this “Google Effect” is about keeping employees at work longer, but that is only part of the story. Technology companies have hired architects and psychologists to critically analyze the concept of the work space prior to building. Thought is given to the culture of the company, promoting collaboration, stimulating imaginative thinking, enhancing random interaction, and much, much more. Consequently, this has turned the office space upside down. Many of these technology companies have “ubiquitous space” with few, if any, private offices. At Facebook, for example, there are no private offices—even for executives. Instead, employees are bunched together as part of teams, working together, elbow-to-elbow, with the goal of working collaboratively. The long term impact on facilities management, building costs, productivity, human resources and compliance are not understood, with positives and negatives likely to emerge.

Impact on Bay Area Companies

All this innovative design comes with its own set of issues. The most important issue you need to think about is density. The open floor plan has led to a rapid increase in employees per square foot not seen before in the traditional closed-door office layouts. Infrastructure such as mechanical systems, bathrooms, and adequate storage space for bikes and personal items must be in place to support the higher density demands, along with better acoustics and private space areas. Additionally, concerns about employee privacy, data security, and productivity need to be managed. These issues are easier to tackle when dealing with new construction, but present a bigger challenge when older buildings are modernized to accommodate the increased demand from technology companies. Either way, significant costs are incurred. This is just the tip of the iceberg in terms of challenges; other issues include load factors, security and access, confidentiality, and dealing with growth expectations.

With the projected increase in growth of the technology industry, the “Google Effect” on the Bay Area commercial real estate sector will likely be even more prevalent in the years to come. Stay tuned.

If you have any questions about commercial real estate issues, please contact (650) 342-9600 or Jennifer Johnson, Esq. at: jjohnson@carr-mcclellan.com or Manroop Purewal, Esq. at: mpurewal@carr-mcclellan.com or (650) 342-9600.