How behavioural psychology is shaping workspace

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1:16Susan Carruth: This is Eat, Sleep, Work, Repeat. It's a podcast about workplace culture. Another quiet week then. News is bananas at the moment, isn't it? The only salvation for me is how joyous tennis is right now. But if you're not following men's and women's tennis, you're missing out because it's been an extravaganza. What a summer. Now, it's been a while since I revisited conversations on offices and how property is doing this. I follow a couple of people who seem to only post on newsletters and social media about return to office mandates, about where we are with the return to offices. I find it boring, to be honest.

1:56Susan Carruth: Most of the data suggests it isn't really changing. It isn't really moving. And most of the organisations I talk to are sort of in a state of equilibrium. They've got resolution on it. They're settled on how they use their office. It's not a debate. So I do find some people going on about it a touch irrelevant, to be honest. But I am interested in offices and our relationship with offices. There was a headline this week that really intrigued me, made me feel that there's still drama to come in some way about how we're using our offices. It said that in the US, 12 % of mortgage-backed office purchases were delinquent.

2:34Susan Carruth: And that's a phrase meaning they're not being paid back as scheduled. Now, to try and sort of benchmark that for you, that's higher than around the time of the 2008 crash. And it's actually rising really steeply. I've linked to the chart of that because it's sort of really dramatic. And it made me feel that there's more change coming, maybe largely with the worst offices. But this change to the commercial real estate market. I wanted to hear, based on that, just a sense from the market about what's happening. We've heard about this idea of a flight to quality and better offices are more in demand.

3:12Susan Carruth: And I wanted to get a sense of where the world of offices was right now. Also wanted to get a sense of how our needs are being accommodated in different ways. So I went along and I met up with a couple of experts to try and sort of help us understand how maybe behavioral psychology is playing a part, what the office of the moment looks like. I chatted to Susan Carruth, who's a partner at 3XN, an architecture firm who think about the needs of occupants in sort of major property projects. And Mike Wiseman, who is head of campuses at Britishland. We discuss how offices are changing, whether we'll ever see a return to the four or five day office and more that those mortgage delinquency stats in the US, whether we should be worried.

4:03Susan Carruth: loads of links in the show notes if you're interested in finding out more here's my discussion with susan caruth and mike wiseman

4:13Susan Carruth: i wonder if to kick off you could introduce who you are and what you do so i'm susan caruth

4:19Mike Wiseman: i am a partner at gxn and we are a strategic consultancy for the built environment of all around sustainability, social and environmental. I am an architect by trade originally, but now I'm located in Copenhagen working with research and innovation.

4:37Susan Carruth: My name's Mike Wiseman. I work for British Land. So we're one of the bigger UK listed landlords. We own retail around the country and then in central London and sort of the wider Golden Triangle, we own office campuses or office led campuses and we talk about that as our workspace business and that's the part of the business that I'm responsible for as head of campuses at British Land. And I guess my perspective is that I'm someone who thinks about work I think I think about the sort of the dynamics of work and so one of the things that I was interested about this conversation was thinking to tap into your insight and your perspective really how people in the business of creating workspaces or providing workspaces think the demand side of that has changed how they think about the expectations have changed and so i wonder if we could kick off with just that really how have things changed there's so much discussion about the probably more discussion about the use of our office spaces now than there's ever been you know people may be questioning whether they use they're essential whether whether they're questioning the contribution and so i'd love to get the sort of the the bird's eye view like where are we right now how do you think about the office space is it an essential of working with other people and how do you seek to to have that that consideration really it's been an interesting like few years to be doing what i do there was definitely a period friends of ours when they found out what i do would look sort of look at me with um sympathy or horror or something that i was like the last person selling traditional cameras or whatever it might have been um but i think the like the journey we've been on in the last couple of years has ultimately been quite a positive one for the sort of space we're in because I think like offices have gone from being an automatic decision that every business just took because that's what you did to something that is far more strategic and there's a lot more thought into what the role of the office is, what the purpose of the office is.

6:38Susan Carruth: There's a danger doing what I do that you have to believe this but we've definitely questioned this, I've questioned this personally, we've questioned this as a business but the role of the office like is that opportunity to bring people together and you talk about this a lot but like the culture is what you know drives businesses um it's about like you know the people and sort of the productivity and all that stuff within them and um it's offices that you know create that environment to bring people together to sort of get the best out of people get the best out of the business and so i think we've seen a real shift from the people that we talk to um about making much more conscious decisions about what they're doing and i think that's ultimately a really good thing.

7:16Susan Carruth: We roll back the clock, I don't know, 10, 15 years ago when I really started focusing on this sector. And there probably wasn't a huge amount of focus on the people in the buildings. We spent forever talking about the facades or the raised floors and the technical specification of the building. That's what we used to lead with in our marketing collateral. It's like, how big's the raised floor? But not much thought to what goes on inside the building. And we were already on this journey pre-COVID of starting to think about how do people use buildings? What's the purpose? How do we get the best environment for people within them?

7:53Susan Carruth: And the last three or four years have just really accelerated that to a place where now that's absolutely front and centre in everything that we do, everything that we as a developer of offices think about. And that's why we work with super talented people like these guys to help get the best environment.

8:08Mike Wiseman: As a behavioural designer, the fact that that role exists, the fact that people at Britishland are commissioning us to be part of the design team, that they value those inputs, those insights and that research and to apply that into their projects. It certainly was not like that pre-COVID 10 years ago. I mean, it just wasn't really a thing. So it has been a bit of a roller coaster. We don't need offices at all. It's impossible to work without. It's hybrid. It's this and that. There's been all sorts of points of view on that and countless, countless articles written on the subject. But I think ultimately there is that shift towards if you're going to make the commute worth it, if you're going to believe that the physical environment plays a role in the culture, and I would certainly argue that it indeed does, then we need to start paying attention not just to square metres, but the quality as well as quantity of space.

9:08Susan Carruth: You raise a really interesting point there, the idea that our workspace might contribute to our culture. And I guess, you know, the most visible way that we might see that is on those coming together moments, on those moments of congregation where we're together. But it contributes in other ways as well. And one of the things I loved in the stuff that I'd seen that was sent was that sense of deep empathy for different states of people working. it's the first time i heard someone else who was designing a workspace about 12 months ago talking about different temperature tolerancies and they had one area at one area of the office that was slightly warmer yeah we've all seen female colleagues with blankets or cardigans around their shoulders as they're and so suffering the air conditioning and it was like the first time actually i'd witnessed this sense that the office seemed to be directly learning and responding to the members of it was really really sort of promising to see but you raised that question about culture being built by our workspaces i'd love you to try and elaborate how you think about that how can a workspace enhance build develop a culture i think there's different uh levels of it

10:16Mike Wiseman: it can be about the functions right is there a gym in there is there a you know coffee shop is and what that indicates, what that sort of affords people to do and a sense of what their workday would look like. But I think it's a lot more than that. It's about how it feels as well. We've got, I think I've seen the latest statistics, something between 25 to 50 % of Gen Zers now identify as some sort of neurodivergent. We see a great more respect and attention paid to, well you spoke about temperature but all these other things you know how daylight impacts your focus how different people can and can feel physiologically in spaces and then you've got that top layer of around the sort of psychology of space as well is this somewhere that truly does invite for different emotional needs different ways of working different needs that we see psychologically so from the sort of function to the physiological to the psychological there's all sorts of ways that can invite people to enjoy work more to perform better to have greater well-being and i think these things are all interconnected right it's uh if people are happier to be somewhere and feel good about it that follows through and there's good research that shows that that follows through into performance and do you think about modalities

11:44Susan Carruth: do you think like um oh we need more private booths we we need big meeting spaces we need And do you think, we often hear the statistic, Microsoft say, that we spend three times as long in meetings now as we did 10 years ago. Does that change how you deck out an office?

12:04Mike Wiseman: I think so. A lot of it, I use the word all the time, I think, around diversity of space, diversity of atmosphere as well. Everyone at different times has different needs for what they want. So I suppose the office traditionally was seen as desks and a lobby where that was just about getting people in and up to the said desks. I think now we've seen that an understanding that there's a much wider and more new spectrum of what sort of spaces that can be. I mean, if we think about collaboration spaces, yes, a meeting room is a form of collaboration space. but there's also different settings for much more informal meetings there's passive social interactions which is about people kind of being alone together right civil inattention so that you can you can hang out together but you're not necessarily directly interacting and then you've got spaces at the other end which are really about i just was listening to these guys having their monthly meeting big groups of people coming together you know celebration show and tell So if we just take that one category of gatherings, that's not just one thing.

13:18Mike Wiseman: That can be many different sorts of setting.

13:20Susan Carruth: Just on that meeting room point, I definitely recognise that too many meetings culture. We've been talking to a business that recently took the decision to take meeting rooms or take a chunk of their meeting rooms out to try and stop this. And so what they've done, rather, they have pods of people working. and rather than having fixed meeting rooms for people to go into, they've got sort of an open environment where people can get together because if you're not going in and closing the door, apparently that's going to encourage quicker, more efficient meetings, which makes a lot of sense because there's definitely a culture of, you know, book a meeting for an hour, get everyone in a room and then keep them for an hour no matter what.

13:58Susan Carruth: That sense that people might be sort of trying to find a space to put a pair of headphones in and take a meeting anywhere, does that need to be accommodated though? Do you need... Yeah, so look, I think that's one of the challenges. Like if you look at how, and we've got a big, diverse group of businesses within our portfolio, and we've kind of been doing this for a long time to sort of see what people have been doing. And there was, go back 15, 20 years, like everyone's in private rooms and no one came together. And like big reason for people to come into an office is like that shared experience, the shared learning, the cultural sort of aspects that come from that.

14:32Susan Carruth: It then moved pretty much all open plan, which is fine but doesn't necessarily work for everybody and it doesn't create those environments where people um can sit down and have a quiet meeting room i think that's where and that's why we work with the likes of these guys now it's that world where now you have to think a little bit more about like all the different ways that people need to work and that's that's absolutely something that needs to be catered for but you've got to be thoughtful about how you do that i know of a business um that's created lots of those environments people to do it but they are commonly described as the cells because they're not enough fresh air, no windows, not a particularly nice environment to go and do that call and definitely not getting their best out of people in those rooms.

15:12Susan Carruth: Anecdotally, when I look at the businesses that I work with or I go in and I see firsthand, the idealised version of how they use an office is very visible. I can see that their office is enhancing what they're doing. There does seem to be a degree of compromise or degree of trade-off that they need to require the most healthy businesses that i witness quite often people have got if not their own space they've got a protected area that they and their team sit in that's got some familiarity and the businesses where i witness maybe the greatest sense of unease is the ones where the office doesn't have personal spaces people can venture in they often don't see a colleague they find themselves nomadically going around trying to find anywhere to sit down and take a call.

16:01Susan Carruth: Work can feel a degree lonely. They're being told that they've got to come in for culture, but they don't see anyone that there's some culture. And I just wonder if the root of all of that is financial. The organisations who have decided they want to save a bit of money have made a trade-off that maybe wasn't evident to them. So I'd love to understand your perspective. If you were going to advise people, you're going to advise organisations, what the things that are worth spending a little bit of money to keep what would you say those things are is it about having a team area is it about having personalized spaces are these investments that are worth um committing to when it comes down to trying to save that money on the on the bottom line i think you've got i would advise people to take the time to like think about how they really want to use the space what the purpose is so that they can get it right because you know you've described the scenario that definitely lots of people face as you come into an office don't necessarily sit with the people who you want to sit with you feel disconnected from it and it's like well what's what's the purpose of doing that and when you know you've got a lot of leadership of businesses trying to get more people in well if that's the experience why bother like you it's got to be worthwhile hasn't it and so I think thinking about you know the different settings that you need I couldn't agree more I think the importance of being able to get the groups of people together that doesn't mean necessarily everyone needs to get a desk because clearly that doesn't work for most businesses.

17:29Susan Carruth: But, you know, having a home, somewhere where people can land and thinking about, you know, who the right, sort of the right adjacencies are so that, you know, they're interacting with the right people and you're trying to engineer some of those connections. That absolutely has to make sense. But yeah, I think fundamentally, like investing in the right space is going to bring more people in. And I'm a big believer in it. And I think more and more people recognize that, you know, you get people together, it's good for the business. It's good for people wanting to be, part of that business, keeping people in that business.

17:57Susan Carruth: And I think it makes a stronger, more resilient business that is probably going to perform better. So yeah, invest and get it right. And we've definitely seen a few businesses that came out and made decisions in the last couple of years that were probably too aggressive in their assumptions of how much they could squeeze space. And now there are consequences to that. So yeah.

18:21Mike Wiseman: I agree totally with what you just said. And whilst it does vary depending on, you know, are you a tech company, are you a finance sector, it does vary. But I suppose the two key things from 3XN, GXN and how we try and work is making sure that every space works hard and making sure that there's inbuilt adaptability. So by working hard, I can think about in a project that we've worked on together to Finsbury Avenue, whereby right from the beginning, there was intention that the lobby would be a social lobby. And we were more or less tasked with saying, what does that mean? How do we turn the lobby into being not only about circulation, not only a sort of transition space, but that it works hard, right?

19:07Mike Wiseman: Because at mid-morning, you can take an informal meeting down there. after work you can celebrate a new launch, you know, that it can at different times of day and week, that that space hosts more than just that pure circulation. And in terms of adaptability, well, it will always change, you know, and we've done projects as well with using camera sensors to monitor how spaces are used, how do not just occupancy level, but how people behave in those spaces and so making sure that the design and this kind of links back to environmental sustainability as well but that there is the possibility to to change your mind later on and to reconfigure spaces is important as well because that two finsbury avenues is a stunning space and

19:53Susan Carruth: you can see i mean often it's worth reflecting the offices are the most beautiful spaces that we actually find ourselves in that's got a winter garden it's got these really high ceilings it's up these wonderful social uh reception areas or greeting you stunning you know to spend time in there is is life affirming um the challenge then is trying to ensure that people are coming in and getting some benefit because as we say people are coming in and not seeing colleagues i have seen some organizations who say i heard one organization say we want to flatten the curve because everyone was coming on tuesday wednesday thursday and what typically happens there is finance directors and finance directors have always had a perspective about desk space because they used to look at sensors that said that desk occupancy was 70 pre-covid and they'd say what if we could save that that little bit of money then we're and what strikes me is that actually if you focused on what the objective of the office is rather than on the amount of money you can save you get to a very different outcome and so to achieve that you need people advocating for what the benefit of the offices that transcends the financial it transcends the the sense that monday is going to be quiet or friday is going to be quiet and and trying to sort of assert those things and it strikes me that it's it's an argument that needs to be made you need a visionary leaders to say there is a benefit to us

21:18Mike Wiseman: being in this space i realize this is a kind of capex but the amount that a company might spend on the difference between having some surplus desk or space that isn't used 100 % of the time. That financial compared to the people financial of attendance, of sick leave, of low churn, of all of these things around, I mean, that's vastly a whole other magnitude of cost there. So it's about being able to somehow communicate that though, right? And make that clear that these things are not fighting against each other, the experience and the performance, they can work together.

22:00Susan Carruth: But I think that's been one of the good things of the last couple of years, because you're absolutely right. There was that sort of immediate post-COVID period when people were thinking about this more than ever. And it's like, well, is this an opportunity to save some money? I don't think people really thought about how much of their total costs were property costs. But depending on who you are, it's like 10 %-ish in either direction. So it's not a huge number, particularly relative to the people cost and you know people i think i've realized like you know you get it right and it is it's going to make you a better business and um that we we very much believe that and i think more and more people are recognizing that you know in the last couple of years and you know making decisions accordingly have we seen a change in the breakup of space then that you we've talked about sort of meeting space changing when we think about the percentage allocation of space is there less going into desks more going into communal areas how are those trends reflecting on how offices are being used?

22:54Susan Carruth: I think there's a lot more going in now to those communal areas to bring people together. And you've touched on it previously. Big challenge most businesses face at the moment is Tuesday, Wednesday, Thursday are the peak days. The whole point of having an office is bringing people together. So you don't necessarily, you talked about flattening the curve. I think people seem reluctant to do that because they want to get people together. So you've got to accept that and you've got to have the spaces to be able to bring people together on those days. That's part of the reason, and you're talking about Two Finsbury Avenue, the building we're delivering.

23:26Susan Carruth: What you're seeing from landlords is a lot more focus on the shared areas within buildings and businesses starting to recognise that they can use those as well. So, you know, you talked about the winter garden that we're building. Well, that's for everybody to use and so people can kind of see that as an extension. So that, for us, when we're talking to the CFO about that sort of, you know, how are they going to kind of manage cost, having those things that they can rely on that they're not paying for directly within their own space, they start to sort of speak that language and help with those issues.

23:56Susan Carruth: We've not really seen, as far as I can see, a great level of adaptability yet, have we? So in the sense that I've not really seen the notion that businesses would adapt and just go for Fridays, Mondays, because they could get some shared space somewhere else. I've not seen that adaptability. Do you think that would happen? There's a few that have tried. So I did hear early on that somebody had moved their ex-co to a Friday because that's when everyone went into the office when their ex-co were meeting. I don't know where their experiment got to on that and whether that's actually dragged people in.

24:31Susan Carruth: I think most of the people that we talk to have kind of accepted that Friday is as it is now. Monday, you know, getting busier. But we're not really seeing people make those decisions. And really trying to compress a lot into Tuesday, Wednesday, Thursday seems like the standard. Are we going to see a total bifurcation? So the one thing I was looking at in the last couple of days is that in the US, I don't have stats for this in the UK, but CMBS, commercial mortgage-backed security, delinquency rate is called. So people who aren't keeping up with their mortgages for commercial real estate is 12 % in the US.

25:11Susan Carruth: It's the highest level it's ever been. And broadly, that's a reflection that there is a segment of the office market that just isn't making money, probably unoccupied, and is, I guess, in danger of defaulting. Is that a reflection? There's a whole load of really bad offices out there. And I'm going to sort of bring that over and say it's probably common in the UK as well as the US. there's a whole load of bad offices there that aren't responding to people's needs that maybe aren't in desirable locations that don't have winter gardens and high ceilings and we're going to see a degree more fallout yet because we're going to move to a world where there's beautiful offices in these empathetic organizations and then a lot of offices that are just undesirable that aren't better than working at home leasmen often talk about the leasman index they often talk about you're competing you've got to be better than what's available to people at home are we going to get that even more than we've got it now we're definitely seeing that flight to

26:10Mike Wiseman: quality i would think but you can tell me what you think here mike that at the opposite end that there's still a need for a pretty cheap raw you know startup new business that sort of a space It's very affordable. So it's kind of the middle that has become the issue. It's what I recognize.

26:32Susan Carruth: Yeah, I think so. Going back to your US example, and I don't think this is just my bias towards the UK and London. I love the States, but I do think that their office stock and the quality of their product across most of their key markets is quite a long way behind where we are. So, if you think about, like, you know, go to New York, think about the age of a lot of that stock and sort of those big buildings. It's old and they've not necessarily invested it in the same way that we have. And I think there's been, until recently, much less of a focus on, you know, we talk a lot about meanity. I know it's real property speak, but that wasn't really a big thing in the US until quite recently.

27:17Susan Carruth: So, I do think we're ahead of the curve there, but it is still an issue in the UK. It's not as much of an issue as it is in the US, but it is still an issue. I absolutely agree on the flight to quality. I think it's moved on a little bit, though. Everybody's been talking flight to quality, us included, for the last few years. Quality is definitely important, but location, massive, massive factor as well. And so what we see now, and without talking too much of our own book, our assets are in the right places. We've got really strong performance of the lowest cost space that we have, if it's in the right location, right up to the most expensive product that we have in the right location.

27:57Susan Carruth: Because we think occupiers are more focused than ever more on that. And they're thinking about transport connectivity, but what goes on around those buildings? What's the environment that people are in? Because as you say, we've put a big global hedge fund into 2 Finsbury Avenue. that's a building that works for them and their price point and where they are in their sort of stage of their business. But, you know, earlier stage businesses with different financial drivers, that's not necessarily the building for them, but they still want to put their people in the right location, right micro location, right things on their doorstep.

28:30Susan Carruth: And so there's definitely a place for sort of more value end of the market as well. How do you see things developing then? So like, maybe sort of thinking behaviourally, maybe AEC offices, are there any trends that you think give this another five years and this is going to be even more pronounced than it is now yeah i do

28:47Mike Wiseman: well-being i'm going to use that term and i know it's well worn maybe at this point but i think there is a bit of lag time for that to catch up to understand what does that really mean and what can the the physical setting the the environment uh how can that contribute there um and i think again to sort of look at generational shift i think ever more ever increasing just not accepting um an environment that is not that is going to uh you know increase your overwhelm increase your stress just by being there whether that's acoustics or wayfinding or you know there's a whole battery of different um criteria that feed that how the the spatial settings can feed into well-being or the opposite things like access to outdoor space so around all of these things and people really looking for jobs and so of course people are always going to have multiple reasons for why they take a job but we do see that sense of purpose belonging somewhere that supports their well-being becoming more important and and certainly the architecture sharing the interiors can play a big role.

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31:09Susan Carruth: Yeah, I would add personally as well. I think a lot of organizations see themselves projected into their space. It represents sort of a physical embodiment of what they aspire their organization to be. And so, you know, to having something that makes you feel proud is an important part of trying to have that sort of tangible aspect of their organisation to me.

31:30Mike Wiseman: Yeah, it is an embodiment of their values and their purpose. And so it matters in that sense, as well as the experience.

31:37Susan Carruth: Mike, we talked very briefly along the way there that, look, Friday's probably not going to get bigger than it is. And maybe Monday's not really going to get bigger than it is. Broadly, we might look at this return to work office mandates, but they're not really having a material impact. So the demand for space is broadly, I suspect, going forward, going to be how much organisations want to economise or expand and have space to do their work properly. Based on that, do you think the demand for space is going to go up, going to go down? Is it going to be segmented in different segments? So demand for space is higher than it has basically ever been, certainly ever been since I've been doing this job.

32:20Susan Carruth: and you know I think the next few years are going to see probably people taking less better quality space if if they can get their hands on that because there's not not a huge amount of that around at the moment you know I think the more like you're actually right you picked up on the you know the sort of the mandates and and how those work I suspect we kind of move away from that to really thinking about you know which roles should be in the office which don't necessarily need to be there and they'll be you know we'll return to sort of a you know I know that new normal phrase we've all moved past but we'll return to something which looks more like it used to Friday probably as he says out probably I'm not with you on a Monday I think that more and more businesses are seeing more people come in and recognize that you know getting people together at the start of the week setting the tone for how you want to approach the week will become more and more we hear a lot more about that but you know I see I see pretty good demand over the medium term and as more and more businesses get comfortable with, you know, how they want to work, what that role of the office is, you know, you've talked about it, brand, culture, those sort of things, that should be generally supportive to, you know, more people being in the office and more people working.

33:25Susan Carruth: I've always heard the phrase that a building that learns is like an important part of building structure. So it strikes me that that's just even more now than it was before. It's not just learning holistically about an organisation, but learning about the people who make up that organisation.

33:40Mike Wiseman: I think, and I clearly am biased due to my line of work, but I think there's so much untapped knowledge from other fields outside of design that we can use in design. Whether that's neuroscience, environmental, psychology, anthropology, there's all sorts of areas there that really do look and give data and specifics to how that mind-body-environment triangle works. and I think it's just been under looked at for so long.

34:13Susan Carruth: Thank you to Susan and Mike. You'll find their LinkedIn's and links to everything they discussed in the show notes. Just intriguing to check in on that. I don't buy for a minute the idea that we're going to be back in the office collectively and routinely on Mondays. Although, you know, it's happening in finance. There are sectors that are doing that, but I think that should be sold personally. I've been Bruce Taisley always welcome the lovely messages I get from people on LinkedIn or if you want to get a hold of me you can also reply to the newsletter if you're a subscriber to that I've been Bruce Taisley thank you for listening see you next time

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