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Human-centered design is the secret sauce for open-plan success

Michael J. Berens

Wednesday, June 05, 2019

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Human-centered design is the secret sauce for open-plan success

Open-plan workspaces have been given quite a thrashing in recent years. The more ubiquitous they become, the more employees and critics complain about how awful they are to work in. Pull back the curtain on the controversy, though, and what you find is that some open-plan spaces do function better than others.

What makes the difference? Designers will not be surprised to learn that, according to recent research, the major factor is the quality of the interior design.

Drawing on what is now an extensive body of research, most workspaces now are designed to promote certain kinds of employee behaviors found to be linked to important business goals, such as more rapid innovation and increased productivity.

Yet, some studies have shown that even with this evidence-based approach these environments do not always produce the intended results. In some cases, post-occupancy evaluations have found performance actually declined after employees were moved from more traditional to so-called high-performance open-plan spaces.

As reported in the most recent issue of the journal Buildings, a team of Australian researchers, led by Christhina Candido of the Sydney School of Architecture, Design and Planning at the University of Sydney, reviewed a database of research studies on employee dissatisfaction in open-plan environments and noticed they tended to treat them all as the same without giving attention to the individual physical configuration and conditions of each space. They wondered whether differences in the interior design features of the space would affect the level of employee dissatisfaction differently.

To dig deeper, the researchers conducted post-occupancy surveys of employees in 61 offices in Australia, resulting in a dataset of 8,827 responses. The survey questionnaire was designed to gather employee perceptions of their work environment as it pertained to productivity, health and comfort. In addition to the survey data, which included in-depth analysis of 18 high-performance work environments, the researchers also conducted site visits of each office and collected floor plans and fit-out specific information.

What the researchers found was that across all three areas of inquiry interior design elements ranked among the top factors affecting whether employees were satisfied or not with their working conditions. Work area aesthetics, comfort of furnishings, and the degree of freedom to adapt and personalize one’s usual work area were key drivers of worker satisfaction in both regular and high-performance open-plan environments.

Spatial comfort was another key consideration. Employees in work environments that provided various zones for different types of activities — collaboration, individual work, socialization — had overall higher levels of satisfaction.

This finding correlates with the results of investigations presented in a recent Steelcase report, “New Work. New Rules.” The authors contend that most offices are still designed for linear work and don’t enable the workflow, activities and behaviors required for today’s “hyper-collaborative” work environment. The best workplaces, they find, support the activities of the team while nurturing the needs of individuals.

As with the Australian study, the Steelcase researchers found that employees feel a lack of control over their environment and want more freedom to adapt their work area to fit various types of activities they engage in throughout their day.

Similarly, a review of research on both individual and group perceptions of their office design experience, conducted by Christina Bodin Danielsson of the School of Architecture at the Royal Institute of Technology in Stockholm, Sweden, concludes that personal control is a key factor for high employee satisfaction and can be addressed through a number of design solutions. Danielsson argues that office design needs to be more holistic, taking into account the combined contextual effect of the physical characteristics of the environment and the functional feature of office work.

What all three studies share is a decided emphasis on the critical component of human-centered design. For open-plan and high-performance spaces to succeed, these studies indicate, they must support the kinds and varieties of activities that today’s workers are engaged in.

Moreover, they must respond to employee’s basic needs for comfort, control and wellness. When employees feel good about their work environment, then they deliver the results businesses are expecting. That places proper interior design at the top of the priority list as a “must-have” not just a “nice-to-have.”

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Michael J. Berens

Michael J. Berens is a freelance researcher and writer with more than 30 years of experience in association communication and management. He can be reached at mjberensresearch@gmail.com.

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More sellers than buyers for luxury homes

Michael J. Berens

Monday, May 13, 2019

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More sellers than buyers for luxury homes

Sales of luxury homes have been falling since the beginning of the year. In most areas of the country, the number of luxury homes for sale has increased while selling prices have declined. Among higher-end properties, demand has especially dropped off as tax changes and fluctuations in the stock market have made luxury home purchases less desirable.

Many luxury homes were put up for sale following the tax reform changes that took effect as of Jan. 1 this year. Although the wealthiest households receive substantial tax breaks under the new law, those living in states with high state and local income, property, sales, and other taxes ended up paying more taxes this year because of new limits to state and local tax (SALT) deductions.

Interviews conducted by wealth investment advisors the Spectrum Group found households with incomes between $500,000 and $749,000 and those between $750,000 and $1,000,000 felt the greatest impact on their personal financial situation.

Among those hardest hit were residents of California, Connecticut, Illinois, New Jersey and New York — states with a substantial number of high-end luxury homes. Spectrum says there is now a wave of investors moving from high-tax states such as New York, New Jersey and Illinois to low or no-tax states, such as Florida, Washington and Nevada.

That exodus is reflected in the changes in the luxury home market in recent months. Web-based real estate brokerage Redfin reports that luxury home sales declined for the second quarter in a row during the first quarter of this year.

The average sales price for luxury homes nationwide fell by 1.6%, compared to the same time last year — the first annual decline in three years. Moreover, sales of homes priced at $2 million or more plummeted by 16% to their lowest point in nearly a decade.

In its Luxury Market Report for April 2019, the Institute for Luxury Home Marketing states that it is a buyer’s market for luxury homes at present. The number of listings between February and March was up by more than 2,000.

On average, homes are selling for below list price. However, the report indicates there are signs the market may be beginning to normalize. The median sales price was up $25,000 in March compared to February, at $1,425,000. Some 1,800 more luxury homes sold in March than in February, and homes were on the market 16 days less than in the previous month.

Part of the reason for the uptick in sales is the high demand for housing in some highly affluent metropolitan areas.

Even though California is one of the SALT states, it is still very much a seller’s market for homes priced at $1 million or more in tech-intensive centers like San Francisco, Silicon Valley and Sacramento. Other high-demand metro areas include Seattle; Arlington-Alexandria in Virginia; Los Angeles and nearby San Fernando Valley cities; and Denver and Boulder.

Those states with no state income tax that attract wealthy relocated households also have experienced higher-than-average sales of luxury homes. In Florida, for example, homes priced at $2 million or more have sold briskly in cities such as Coral Gables, Fort Lauderdale and Boca Raton, according to local real estate website The Real Deal. Luxury homes sales in Miami have jumped 161% since a year ago. Other areas experiencing higher sales include Charleston, Boise, and Nashville.

All this shifting about will impact interior designers differently in different areas. Taking the longer view, with the luxury prices beginning to stabilize and the economy barreling along with no signs of slowing down any time soon, the market is likely to perform much better in the second quarter, leading to demand for designer services in the second half of the year.

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Michael J. Berens

Michael J. Berens is a freelance researcher and writer with more than 30 years of experience in association communication and management. He can be reached at mjberensresearch@gmail.com.

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Pace of remodeling activity expected to pick up after slow start to 2019

Michael J. Berens

Thursday, April 11, 2019

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Pace of remodeling activity expected to pick up after slow start to 2019

Coming off a strong period of sustained growth, demand for remodeling services softened somewhat in the first quarter of the year. Although growth remained positive, industry professionals reported lower levels of business activity and shortened periods of project backlogs compared with the previous quarter. Nonetheless, remodelers are optimistic that better business conditions in the second quarter will revive demand.

Early forecasts had predicted that industry growth in 2019 would remain positive but at a more modest pace than in the past several years.

The most recent Leading Indicator of Remodeling Activity (LIRA) release, for example, projected that gains in renovation and repair spending to owner-occupied homes in the U.S. will shrink from 7.5% in 2018 to 5.1% in 2019. MetroStudy anticipates that remodeling growth will stabilize and ease slightly, dropping from a 4.8% increase in 2018 to 3.0% this year.

Signs of a slowdown can be seen in some recent industry reports. The just-released Q2 2019 Houzz Renovation Barometer finds activity in the first quarter dropped across most sectors compared to the fourth quarter of last year. The Recent Business Activity Indicator for architects and design services fell two points. The Project Backlog Indicator remained steady at 4.7 weeks but was down 1.4 weeks from the same period a year ago.

Overall, the construction sector experienced flat growth compared to the previous quarter, which had declined from earlier in the year. The backlog of projects remained steady but were 4.8 weeks below that of a year ago.

Similarly, the American Institute of Architects, in releasing the results of its first quarter 2019 Home Design Trends Survey, reports business conditions were positive but softened in the fourth quarter of 2018 for architects working on home remodeling projects. Billings in the fourth quarter slid 7.7 points from the previous quarter, and new project inquiries were down 6.1 points. Year-over-year, demand for remodeling additions or alterations plunged from 61% in the fourth quarter of 2017 to 41% in the same period of 2018, and kitchen and bath remodel projects slipped from 57% to 43%.

According to Nino Sitchinava, principal economist at Houzz, professionals participating in the Barometer survey attributed the slowdown to “unusually cold and wet weather conditions, in addition to consumer apprehension caused by the government shutdown, tax refund uncertainty, and the high costs of products and materials.” They expect that, with business conditions and weather improving, activity will revive in the coming months.

The Expected Business Activity Indicator for architects and designer services professionals rose five points from the previous quarter, and for the construction sector was up two points. Professionals anticipate that both the number of new committed projects and project inquiries will increase over the next quarter. Recent indications that the housing market also is picking up should give remodelers an additional boost.

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About the Author

Michael J. Berens

Michael J. Berens is a freelance researcher and writer with more than 30 years of experience in association communication and management. He can be reached at mjberensresearch@gmail.com.

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Signs point to improving business conditions for designers

Michael J. BerensThursday, May 10, 2018

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Signs point to improving business conditions for designers

After several months of declining growth, the interior design industry showed signs of regaining momentum in the latter part of the first quarter.

Both residential and commercial sectors have experienced increased activity in recent months. The upward trend has boosted designers’ expectations that demand will continue to grow in the months ahead.

Presently, the outlook for design firms remains very positive, according to the American Society of Interior Designers. Its latest Interior Design Billings Index (IDBI), for March 2018, rose 2 points for the month, to 58.5, its highest level since June of last year.

Even though the business inquiries index dropped somewhat from February, designers expressed increased optimism about their prospects in the months to come. The six-month outlook index in March climbed more than 6 points month-over-month, to 62.7.

That optimism is reflected as well in the findings of the just-released 2018 U.S. Houzz State of the Industry report. Interior designers who participated in the survey anticipate substantially higher revenue growth for the year as compared to 2017.

More than three-fourths of residential designers believe revenues will be higher this year, by as much as 11.1 percent on average, resulting in higher profitability. In addition, more than two-thirds expect demand for services will increase as well.

In last year’s Houzz State of the Industry study, nearly one-third of designers had voiced concern about the difficulty of finding prospective customers.

As an indication perhaps of how the market has shifted in recent months, this year nearly the same proportion expressed concern about the shortage of contractors instead. Again this year, managing client’s expectations, particularly in regard to costs, remain the primary concerns of a majority of designers.

Most of the demand for residential design services (about 70 percent) comes from renovation and remodeling projects of existing homes. About 20 percent comes from design of newly built custom homes or new homes for sale.

However, designers in this year’s Houzz study reported a notable increase in commercial design projects as well — 13 percent in 2017 versus 7 percent in 2016. This may be an indication that firms are diversifying more to expand their markets, given the relatively static market growth for interior design services within residential remodeling and design industry overall. It may also be a reflection of the growing crossover between residential and commercial design in sectors like office, hospitality and health care.

Adding support to designers’ optimism are recent encouraging indicators of continued strong demand for remodeling services for the foreseeable future.

In its most recent Leading Indicator of Remodeling Activity (LIRA) forecast, the Joint Center for Housing Studies of Harvard University projects continuing robust homeowner remodeling activity, with overall growth remaining above 7 percent for the remainder of this year and into the first quarter of 2019.

MetroStudy’s National Residential Economic Report for the first quarter of 2018 contains a similar projection. The National Association of Home Builders reports that its Remodeling Market Index (RMI) for the first quarter of 2018 shows the remodeling industry is on “solid footing” and projected to achieve revenue growth this year.

On the commercial side, the American Institute of Architects’ Architecture Billings Index (ABI) for March shows an upward trend and increased activity in the commercial sector month-over-month.

The Dodge Momentum Index also was up for the second month in a row in April, jumping 6.1 percent over March, led by “aggressive growth” of 6.3 percent in the commercial sector. The institutional sector experienced a healthy but more modest growth of 5.8 percent.

As with remodelers, architects and builders, interior designers are facing challenges of rising labor and materials costs along with shortages of qualified labor that may cause delays or project backlogs. In the main, however, current indicators suggest that designers can expect continued demand for their services and positive growth overall this year.

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Multifamily steps up to fill the housing gap

Michael J. Berens Wednesday, April 25, 2018

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Multifamily steps up to fill the housing gap

With little relief in sight, sales and starts of single-family homes tumbled in March. Would-be homebuyers faced with fewer choices, along with rising prices and interest rates, are opting to continue renting for the time being or to purchase more plentiful and often more affordable townhouses, condominiums and co-ops. That has given a boost to the multifamily sector, which rebounded strongly in the first quarter of this year.

Overall, sales of existing homes increased for the second month in a row in March, but at a slower pace than in February, 1.1 percent vs. 3.0 percent, respectively. Single-family home sales, however, remained relatively flat (up just 0.6 percent, and down 1.0 percent compared to last March), constrained by bad weather and continued shortages of available and affordable inventory.

The median sales price of a single-family home ($252,100) is now nearly 6 percent higher than it was a year ago. Condo and co-op sales, although also lagging behind last year’s figure, rose 5.2 percent for the month, following a 6.5 percent decline in February. Condo prices have risen more slowly and often are more affordable for first-time buyers. The median sales price for an existing condo in March was $236,100.

Scarcity of existing homes for sale helped push sales of new homes in March up 4 percent to their highest level since last November. The U.S. Commerce Department also revised figures for February upward, thus improving the first-quarter performance numbers. New home sales ended the month 8.8 percent higher than they were a year ago.

The median price of a new home reached $337,200 (up 4.8 percent from last March). However, the average sales price was $369,900, well above the affordability level of many prospective homebuyers.

Wintry weather may also be partly responsible for the weakening in single-family building activity in March. While residential construction rose by nearly 2 percent for the month, new single-family construction starts (in units) fell by 3.7 percent, following a near 3 percent increase in February.

In addition, single-family permit requests experienced their biggest monthly decline in seven years, down 5.5 percent, and completions dropped 4.7 percent. Multifamily starts, on the other hand, soared 14.4 percent, lifting industry activity for the year to nearly 11 percent above the same period last year.

Noting the volatility in construction figures from month-to-month due to the influence (or lack) of large projects, Dodge Data & Analytics reported a 2 percent decline in the value of residential construction in March, largely due to a 7 percent drop in the value of new multifamily projects. However, that came on the heels of a 6 percent gain in January and a whopping 36 percent hike in February. The value of single-family construction remained unchanged, holding more or less the same pace for the past several months.

Despite the rather tepid start to the year, builders remain optimistic about business conditions going forward. The National Association of Home Builders measure of builder confidence, the Housing Market Index, which had been at or above 70 for the previous five months, dipped just one point in April.

“As we head into the spring home buying season, we can expect the market to continue to make gains at a gradual pace,” observed NAHB Chief Economist Robert Dietz, citing the bad weather in parts of country as a dampening factor in March.

On the consumer side, demand for buying a home remains strong, with both Fannie Mae and the National Association of Realtors reporting prospective buyers were feeling positive in March about current home market conditions. However, many of those potential buyers may have to wait.

The long-range trend, according to MetroStudy’s most recent five-year residential economic forecast, is for a continued environment of undersupply and increasing costs that may not level out for several more years.

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