Getting creative with unused office space

Building owners find inspiration while workers are away

Friday, August 7, 2020, Vol. 44, No. 32
By Hollie Deese

In a COVID-19 world, employees are working from home en masse, and it’s having rippling effects on commercial office space throughout Middle Tennessee. From Nashville’s downtown buildings to smaller, coworking spaces, landlords are pivoting to attract renters in new ways and reworking their spaces to accommodate new guidelines hoping people will return.

That’s the case at the 100 Taylor Creative Arts Building, an artistic coworking space in Germantown that has affordable offices for fashion designers, fine artists, ceramicists, nonprofits and other nontraditional workers. As COVID caused many tenants to leave, two existing tenants teamed on a new concept to help boost their suddenly struggling events businesses.

Angie Ruiz is an experienced event planner and owner of Velour Premium Events, the event design and planning company. She has been a tenant in the building for three years. Another tenant, Go West Creative, is a marketing and events company run by David Fischette serving largely the 500-1,000-plus attendee category.

Both businesses have suffered during the pandemic.

Together with building owner Ron Runyeon, Ruiz and Fischette have launched The Space at 100 Taylor as a hybrid commercial model with coworking memberships for gig workers during the day and availability for private events on evenings and weekends.

Go West is handling the marketing and public relations of The Space, while Ruiz takes care of coworking memberships, event space rentals and logistics, in addition to creating new micro-wedding package options for the fall and beyond.

“Pretty much 80% of our business is upscale weddings,’’ Ruiz says. “But a lot of those have been scaled back to 50 people – some of them 25. So this is great because if the bottom falls out in the fall, I’ve got a Plan B for the majority of my clients.”

The Space also will host songwriter nights and happy hours, and has partnered with Taylor Street Coffee, located in the same building, for coffee memberships.

“There’s definitely a risk involved,” Ruiz says of opening an event and coworking space right now. “But any time that you go after any type of new opportunity, there’s always a risk involved. So it is sink or swim.”

David Fischette, left, of Go West Creatives, Kelley Willcox and Angie Ruiz of Velour Premier Events and Ron Runyeon, owner of The Space at 100 Taylor.

-- Photo By Michelle Morrow |The Ledger

Ruiz was definitely nervous hosting an opening party July 31 to showcase The Space, but she knew if done well it could serve as a proof of concept for hosting more small gatherings moving forward.

There was a COVID screening station upon entry, and Ruiz set up a contact management program, as well, with all guests going through a full screening and leaving their information in case someone should test positive. Other attendees would then be notified.

The evening was a leap of faith into a new world of working and celebrating during a pandemic, and the extra precautions seemed to put guests at ease.

“I think the biggest challenges with everything, even with weddings, is the fear of gathering,” Ruiz acknowledges. “People are just scared to come around other people in public.”

While Nashville is in Phase 2 of its reopening plan, guests at events will be kept at 30 people or less. When companies are able to operate at full capacity, The Space will be able to accommodate up to 125 people.

“We can’t solve the problem, but what we can do is try to be proactive and try to be smart about the way that we do these gatherings,” Ruiz adds. “So we’re trying to market it in that way – ‘Come to the space at 100 Taylor. They’re taking all precautions.’”

Evolving through crisis

It wasn’t that long ago when office spaces were being reworked and renovated into wide-open floor plans with little to no privacy for workers. The jury is still out about whether that layout ever actually accomplished what it was designed to do in the first place – foster creativity – but it doesn’t matter these days as those spaces will have to be redesigned yet again to give people more room to breathe.

“I love the open office and I love the mobility that technology gives us now,” says Debra Viol of The Stanton Group. “But most employers, I think, want their people back at work. There is a consensus that it’s difficult to manage people, at least the entire company, remotely.”

Viol founded The Stanton Group in 1986, which merged with NAI Nashville last year to form a full-service commercial real estate firm. She has seen decades of ups and downs in the industry, but what is happening now is unprecedented. And it is the uncertainty that comes with not having a playbook that is scary.

“Everybody is still in shock because they’re juggling right now – what is the next phase going to look like,” Viol says. “I think everybody is realizing it isn’t ever going to be like it was again. Not in our immediate future. So what do they with 35,000 feet on one floor?”

The Space at 100 Taylor in Germantown celebrates its grand opening. The venue can be used for office work, weddings, dinner parties and more.

-- Photo By Michelle Morrow |The Ledger

Viol predicts a huge spike in subleasing as companies cannot walk from their leases and don’t want to downsize. Clients also are rethinking what they are producing and what they are selling to stay relevant.

“I’m a firm believer in American ingenuity, and we will figure this out, but I think it’s certainly going to impact occupancy,” Viol adds. “If you’re going to run a business you got to be able to punt and maneuver. I mean this is just like a military situation. It is fluid. It never stays the same. If they’re set in their ways and they don’t embrace the change and they don’t embrace the technology, then they get left at the buggy factory.”

Closures expected

David Wilk is the director of the real estate program at Temple University, as well as a management consultant, working with companies on how to optimize their real estate portfolio as currency for economic development.

He has worked through the 1991 recession, seen the effects of 9/11 and the Great Recession in 2008, and is now watching the coronavirus pandemic.

Wilk says not everyone is going to make it through this, and a wave of closures will come as properties whose revenues were compromised by COVID can’t pay their mortgages. Then, larger institutions will come in and buy up those loans, similar to what happened in 2008.

“It’s going to be an opportune time for distressed real estate, which again, creates opportunity for people in that business,” Wilk adds. “But you have to be able to pivot from what you’re used to doing and figure out where those opportunities are going to be.”

Wilk quotes Ben Franklin – “Out of adversity comes opportunity” – and points to the nation’s history of coming into catastrophic events and usually innovating a way out of it. But there’s going to be a lot of damage along the way.

“There’s so many people who had great businesses that were doing nothing wrong and really deserve to succeed going forward, that just got their legs cut out from under them without any warning or fault on their own. And it’s so heartbreaking to see that,” Wilk adds.

A failure like that can be heartbreaking for a business owner – and an opportunity for investors.

Small, intimate weddings have become part of the pandemic culture as fewer guests are allowed. The Space is geared for such events.

-- Photo By Michelle Morrow |The Ledger

“People are certainly looking for deals already,” Viol says. “There’s still a lot of cash in this economy to be invested, and Nashville is still a sweet spot for investors. So I think you’re going to see some properties change hands as this drags on.”

Wilk explains the hardest part is no one knows whether it’s going to be worse or better, if we are in the third inning or the eighth inning. And that makes it hard to make decisions in real estate deals.

“Whenever there’s this much uncertainty, there’s a lot of hesitation on the part of capital players and that’s never good, because they either move in one of two directions,” Wilk says. “They decide to sit on the sidelines and watch what happens, which in itself causes huge disruption in the market. And then when they’re ready, they are going to prey on those who have been injured.”

Safety is key

Making employees feel safe is exactly what is needed to ensure they return to offices, says Anthony Harris, chief innovation officer and associate medical director of Workcare, an occupational environmental medicine company that specializes in helping employers create a safe work environment for their workers.

Lately, that has included becoming an expert in returning to work during COVID, providing preventative services to protect workers and patrons. Harris says they break the plan into slices:

Screening workers to ensure they are not bringing the virus into the workplace

Deciding what to do if someone becomes symptomatic after returning, and getting them home safely

Testing to be able to clear employees to return to work

“It feels good to be able to contribute at this level, at this scale, and to help so many people,” Harris notes. “It really is about taking care of the workforce. If you’re a thriving business, that means you depend on people most likely to execute the business model. And what we’ve clearly seen over time is a close tie between health and productivity. The healthier the workforce, the more productive they are.”

“I think the biggest challenges with everything, even with weddings, is the fear of gathering,” says Angie Ruiz of Velour Premier Events. “People are just scared to come around other people in public.”

-- Photo By Michelle Morrow |The Ledger

And consumers - in this case workers and employees - will choose employers who have the best processes in place to deal with COVID.

“How the COVID pandemic is being handled by a business in terms of protecting the workforce and patrons will become that competitive advantage recognized by the consumer,” Harris points out. “COVID is going to be here until mid or end of next year, even with the vaccine in play. And so that’s going to be important for those businesses to recognize.”

It can mean everything from changing ventilation and lighting systems to implementing staggered work times. And all of it is evolving as more is known about the virus.

“I’m gearing up now for a vaccine launch,” Harris says. “If the phase three clinical trials that are going on right now are successful, we may have a vaccine by the end of the year or by the beginning of next year. And so we have to be ready logistically to roll out as we gain access and start to help first those critical infrastructure operations.”

Employees have a say

One of the biggest shifts of all, is that for the first time since the 1920s when people began to work in offices en masse, employees actually have some agency in whether or not they will return to the office, based on the safety of the space.

“The burden is on employers to keep employees happy and paid, which means you’ve got to produce,” Viol says. “You have to work harder if you manage a company.”

But it is also a benefit for employees to see their co-workers, if only occasionally for some inspiration, says Derrick Mashore, senior vice president for advisory and transaction services at CBRE Research.

Over the course of his 30-year career, Mashore has consulted and advised on hundreds of transactions for nonprofit, institutional, and Fortune 500 clients that involve mixed-use and public/private projects, hospitality, education, embassies, M&A, performing and distressed assets and office buildings.

“We are not built to be individual,” Mashore says. “Ancient tribes punished their worst offenders, not by death, but rather by exclusion from the tribe.”

Mashore adds now is the time to change the space employers need to create a rich, diverse workforce – and that can include adding nursing rooms and prayer spaces and installing diverse art collections that go beyond black-and-white stock art. This will allow employees to feel they can give 100% of themselves at work.

“If you’re not a white male and you’re in the workforce in corporate America, you cover yourself with a mask a little bit or a lot,” Mashore says. “We already know that. If you have a strategy, your strategy is going to be executed by your talent, and the talent is going to be in a space that is either going to enable your strategy or it’s going to undermine your strategy.

“And so space has a seat at the table now. If space has a seat at the table, when you’re the CEO, you’re not going to be thinking about it as a commodity that you amortize. You’re going to be thinking about it as a strategic tool, as a communications tool.”