February, 2018 - Sachse Construction

Middle Market Digest-The Midwest

By the Numbers

CHICAGO—Morguard’s buy of the Coast at Lakeshore East Apartments in Chicago was the fourth largest single-building sale of 2017, going for $222 million, according to COMMERCIALCaféin its new report on the top 50 apartment community sales to close in 2017. LivCor’s $429 million cross-market portfolio buy from TA Associates and Harbor Group Int.’s bulk $1.8 billion portfolio purchase from Lone Star Funds both contained IL properties, the latter sale topping the ranking for 2017. During the month of sale rent per unit at the Coast at Lakeshore East was significantly higher than the yearly average for Chicago in 2017 – $1,796.

CHICAGO—In 2017, the net lease sector notched $47.2 billion in transactions valued at above $2.5 million, according to Chicago-based JLL. “This represents a decrease of 9.8% compared to 2016 levels, driven in part by primary markets seeing a decrease in large transactions,” the firm says in a new study. “Net lease transaction volumes in 2017 paralleled broader commercial real estate transaction trends and represented more normalized activity. Investor selectivity and buyers’ changing market investment strategies are two significant factors impacting transactions.”

News & Notables

DETROIT—Sachse Construction, a Detroit-based construction management firm, has named Louis Goldhaber as its first ever chief of staff. “In just five short years, Louis has grown from our special projects leader into his newly created position as chief of staff,” says Todd Sachse, the company’s founder and chief executive officer. “His commitment to stepping up to raise the bar for our company and clients is second to none, and we are looking forward to leveraging his creativity, project management and leadership skills to drive the company forward in 2018 and beyond.” In his new role, Goldhaber serves Sachse Construction, as well as Sachse’s sister company Broder & Sachse Real Estate, as an in-house advisor to help ideate, develop, create, and execute key initiatives and projects. During his time with Sachse Construction and Broder & Sachse, he has led the construction and owner’s representation of various high-profile projects, including The Scott at Brush Park and The Albert – Capitol Park.

Dealtracker

MILWAUKEE—Triad Real Estate Partners has just sold a 61-unit, 173-bed student housing property at The University of Wisconsin-Milwaukee in Milwaukee, WI. The Park at 1824 was developed in 2009 about five blocks from campus. It is the only purpose-built student housing asset in the market for UWM, which has a total enrollment of 26,011. The property sold for a total price of $8,272,000 which translates to $135,606 a unit and $47,815 per bed. The seller was Wangard, a Milwaukee-based real estate development firm which built and operated the property. The buyer was Eenhorn, a private real estate investment firm based in Grand Rapids, MI, which acquired the asset to expand their existing student housing portfolio in the state. The University of Wisconsin-Milwaukee is a public urban research university on the north side of Milwaukee. It is a part of the University of Wisconsin System, and is the state’s second largest university.

SKOKIE, IL—Officials from Chicago-based American Landmark Properties say one year after its acquisition, Illinois Science + Technology Park is fully leased. The firm just completed two lease extensions and expansions by long-time tenants Vetter Pharma International USA and Charles River Laboratories International and a new lease with Northwestern University. The research park, a 24-acre research, lab and office campus designed to accommodate life science and technology users at various stages of the business life cycle, was 86% leased when acquired in 2017. In addition to the fully leased three laboratory and office buildings, additional space is available immediately for re-development of an existing three-story building shell at 8030 Lamon Ave. “We are now focused on phase two development opportunities,” says John Roeser, executive vice president. “We have engaged Canon Design to kick off the redevelopment of 8030 Lamon Ave. This 130,000-square-foot facility is an ideal customized redevelopment project for the right tenant.” Scott Brandwein and David Saad of CBRE represented American Landmark Properties in the leases.

CHICAGO—Starboard Properties, an out of state investor, has awarded Peak Properties, a Chicago-based management and investment company specializing in multi-family properties, the leasing and management for a 36-unit property at 6815 Sheridan Rd. in Rogers Park near the Red Line. With this new assignment, Peak has added 150 apartment units and 15 retail spaces to its growing portfolio in the last 60 days. “We closed out the year with significant amount of activity and I’m pleased to say that momentum has continued into the New Year,” says owner Mike Zucker. 6815 Sheridan was built in the 1950’s and features studio and one-bedroom apartments. It is conveniently located in the Rogers Park neighborhood near the Red Line. “Multi-family investment is still on fire despite rising interest rates and rising supply,” adds Zucker.  “The ‘old school’ walk-ups seem to be doing well while offering no concessions. Multi-family is still considered a safe harbor for many investors who are happy with a 4-5% return on capital.”

CHICAGO—Geoffrey Kasselman, the Chicago-based executive managing director of Newmark Knight Frank, recently completed several industrial transactions around the US totaling in excess of $37 million in aggregate value and involving over 615,000 square feet. Most notably, Kasselman represented Hydrofarm, a leading manufacturer of hydroponics equipment, in two transactions. In the first, he partnered with Geoff Hill, executive managing director in NKF’s Detroit office, to arrange a long-term, 126,194-square-foot warehouse lease at 30104 Research Dr. in Lyon Township, MI. The landlord was represented by Jon Savoy, of Lee & Associates. In the second transaction, Kasselman and Jason Addlesperger, executive managing director of the firm’s Denver office, along with executive managing directors Riki Hashimoto, Dan Grooters and David Lee, and associate directors Billy Woodward and Keith Bell, arranged the successful sale-leaseback of 4200 East 50th Ave. in Denver. A CA-based private investor group acquired the 86,788-square-foot industrial property, built in 1997 with 24’ ceilings, based on the long-term leaseback to Hydrofarm, who will continue to occupy the property.

CHICAGO—Colliers International I Chicago recently represented Value Industrial Partners, LLC in the sale of a 161,591-square-foot warehouse located at 5300 Dansher in Countryside, IL to Combined Warehouse. Not only was it the largest building sold in Countryside since 2007, but it also commanded the highest sale price – $6.3 million – for an industrial building in the town in the last decade. During the marketing process, Colliers also secured a long-term, 50,000-square-foot lease with Veepak – thus the property was sold with a sizeable tenant in place. “This was a case of the right buyer at the right time,” says Colliers principal Fred Regnery. “Everything fell into place and we were able to exceed our client’s expectations.” With an infill location near I-55 in the heart of the East-West Corridor, the well-maintained warehouse features 19 docks, two drive-in doors, T8 lighting and 8,200 square feet of office space. Regnery, along with principal Jack Rosenberg, represented VIP in the transaction.

New Preschools Open in Novi and Rochester Hills

Goddard Systems, Inc., announced the opening of two new preschools in Oakland County. The Goddard School franchise locations have opened in Novi and Rochester Hills, according to a statement by Goddard Systems.

Both preschools are newly constructed, featuring a collaborative learning space, state-of-the-art library, multipurpose gym and outdoor play space.

Sandeep Chada opened The Goddard School of Rochester Hills at 820 E. Auburn Road, and hosted a ribbon cutting, Feb. 22. Chada taught biology and chemistry to high school students and neuroscience to college students, and is now focusing on younger learners.

“The first five years of a child’s life are crucial. It’s the best time to help them develop lifelong habits and establish foundations for educational success,” Chada said in a statement.

Derrick Doe opened The Goddard School of Novi, at 48600 Grand River Ave. and hosted a grand opening, Feb. 17.

Doe previously worked in corporate finance. After becoming a father, he traded in his corporate lunches for a preschool franchise.

“My son’s birth changed my family’s life, and it inspired me to do something more meaningful,” Doe said in a statement.

After his son attended a Goddard School preschool, Doe decided to open his own franchise.

“I was so impressed by The Goddard School’s play-based learning program and its professional faculty that I wanted to offer a similar opportunity and experience for other families in the greater Novi community,” Doe said.

Sachse Construction served as the construction manager for the 10,000 square-foot school in Novi, and Hobbs + Black was the architect of record.

How Technology is Streamlining the Preconstruction Process

Contractors used to have to swim through a sea of paperwork to perform any number of preconstruction tasks, including quantity takeoffs, collecting bids from subcontractors, checking vendor qualifications, communicating with the owner, and clarifying design issues with the architect and engineer.

The digital age alleviated the burden of paper but resulted in still siloed functions that chop up the preconstruction process. In addition, the use of multiple, not-integrated software programs, which can be frustrating to use as well as time-wasting, leaves the door open for potential data entry mistakes that could mean the difference between winning and losing a project.

Perhaps the most cumbersome task that comes with using various programs for preconstruction tasks is that teams often must rebuild a project’s database of information into a separate management system when awarded the job.

Michael Boren, chief technology officer at Beck Technology, a software and services company for the architecture, engineering and construction industries, said the best digital tools lessen the chance of mistakes during preconstruction, thereby reducing risk during the construction phase; communicate pricing and scheduling in a way that owners can easily understand; improve the accuracy of estimates; and be able to communicate the impact of large-scale changes to the plans and specifications to all parties.

A new generation of digital tools is helping deliver those preconstruction benefits. For example, Beck’s DESTINI Estimator construction estimating software and JBKnowledge’s SmartBid bid management software enhance communication within the project team, said Andy Leek, director of virtual design and construction at general contractor PARIC Corp.

During the preconstruction phase, Leek said, digital tools like these allow PARIC to get through the iterative process more quickly and in a more transparent way, which encourages collaboration. “[The functionality] is helping to remove barriers,” he said.

“If we can throw it on the screen using tools like that, we can filter it down to pertinent pieces of the conversation,” Leek added, “which [results in] a stronger understanding on the client’s part.”

Such open access to project information, the contractor said, also allows for a variety of opinions. When the team, which includes the owner, architect and PARIC representatives, is reviewing the latest subcontractor proposals or some other element of the construction process, everyone sees something different. “It’s interesting to get cross feedback from across the room,” Leek said. “The discussion ends up going in a direction you don’t expect. Everyone is bringing value.”

Faster completion, more collaboration

In addition, the more effective the digital tool, the faster contractors can complete traditional processes, such as the subcontractor buyout process. “Leveraging the systems, we’re able to do it a little quicker and share information faster,” Leek said.

There are also collaborative relationships among digital tool firms. For example, Trent Miskelly, senior vice president of products at JBKnowledge, said his company has partnerships with firms like Stack, which offers estimating software, drone service companies and blueprint provider Plans4Less to make the preconstruction process as seamless as possible for customers.

Assemble Systems, another firm in the preconstruction services space, provides cloud-based building information model (BIM) and data management services and has a partnership with construction services software company iSqFt. Assemble Systems also works with DotProduct, which validates 3D models.

“Change has come through the power of the cloud,” said Donald Henrich, Assemble Systems president and CEO.

One central platform

Some of the most exciting stuff, however, happens when tools tie all preconstruction information together in a central platform, like those offered by companies like Procore and Autodesk.

John Adams, senior industry strategy manager of construction at Autodesk, said companies like Beck and Assemble Systems began creating links into Autodesk BIM tools like Revit and Navisworks so that contractors can pull quantities from modeled elements of projects and load them into their estimating solutions. There wasn’t a direct benefit for Autodesk in allowing third-party vendors to do that, he said, but the indirect benefit was that it added value to the company’s BIM solutions and allowed more than one use of the data generated into those BIM programs.

“Now those same users,” he said, “are tapping into Autodesk’s BIM 360 construction management platform and are able to share information the way they did in the preconstruction process.”

These shared platforms, Adams said, benefit all parties on a project. Contractors, he noted, can load and then find information from all of their preconstruction tools in one place, and vendors are not siloed in their solutions, all of which means that the customer can leverage a connected workflow and customizable solution.

This opens the door for continuous cost modeling, a more thorough design process through the course of the project, and the ability to make and share changes on the fly when. In the past, project teams were limited to one or two iterations.

Leek said PARIC uses BIM 360, and gives controlled access to that information, after a brief training, so that owners, architects, subcontractors and other members of the project team see only the information relevant to them.

“[BIM 360] is extremely helpful,” he said. “When you’re going through the iterative process, there’s this trail of bread crumbs that happens — design changes, etc.”

Leek said the revisions and modeling that impact the schedule and estimate all contribute to that trail and can be tracked to find out exactly how the project evolved the way it did.

“If someone can jump into the model and start doing overlays, you can physically see what changed,” he said. “You don’t have to believe me or take my word for it. Get into the model itself and take a look. You can see for yourself.

“That’s where the transparency comes in,” he said.

WeWork, With $900 Million in Sales, Finds Cheaper Ways to Expand

As WeWork Cos. has grown to 200 buildings across the globe, the company said its increased size is helping cut costs for everyday needs like glass, wood flooring, aluminum and light fixtures. Early signs of financial improvement are encouraging for a co-working business that critics say is overvalued and spends with abandon.

Last year, the New York-based startup generated about $900 million in revenue, mostly from its main business of renting out desks and offices to small and large companies, said Artie Minson, WeWork’s president and chief financial officer. The company also reduced recurring costs on constructing and running offices, in part because it gets discounts for buying in bulk. “This is a business where scale matters,” Minson said. “We’re building global supply chain capabilities, which allows you, frankly, to build cheaper than anyone else out there—materially cheaper.”

WeWork isn’t required to report financial information to the public but agreed to provide select numbers in an interview with Bloomberg.

WeWork, which just turned eight years old, is one of the richest private technology companies, with $4.75 billion in total funding for the business and its subsidiaries. But Adam Neumann, the chief executive officer and co-founder, has spent the last couple years trying to change attitudes toward money inside headquarters. He chastised employees in 2016 for a “spending culture” around the time that the company cut revenue and profit forecasts.

Being a private company, WeWork is rewarded for revenue growth and ambition. IWG Plc, a publicly traded co-working company that will report its annual financial performance next month, is expected to post 2017 revenue of £2.36 billion ($3.2 billion), which is more than three times that of WeWork. Yet, IWG’s $2.97 billion market value pales in comparison to WeWork’s $20 billion. Investors have said WeWork can outmaneuver competitors by exporting a lifestyle brand popular with young professionals around the world and finding ways to keep people on its properties for longer. In addition to office space, WeWork is experimenting with dorm-style living arrangements, community meet-ups, gyms, and education, including a private elementary school.

Minson said that starting about two years ago, WeWork went “literally, line by line” through its list of needed expenses such as desks, chairs and internet connections to make sure they were getting the best deals. In the last year, WeWork reduced gross capital expenditure per desk—including expenses like building renovations—to $9,504 from $14,144, the company said. WeWork declined to say how much it lost last year, though the company said it would be profitable if it didn’t count “growth investments,” such as entering new markets and developing new products.

WeWork reduced operating expenses per desk associated with running its locations, including the cost for staff to manage and clean them. One expense not included in these calculations is the cost of acquiring new customers through promotions such as free rent or discounts. As the company’s office buildings have become bigger—some have more than 3,000 members—WeWork can utilize the same number of staff to service more customers, Minson said.

Even as WeWork manages costs, it has high expectations for the future: The company currently has 200,000 members but plans to double that by the end of this year. It expects to start next year on pace to generate at least $2.3 billion in revenue. It also plans to double the number of locations to 400 this year.

Around a quarter of the company’s revenue now comes from large companies such as Microsoft Corp., Facebook Inc. and General Electric Co., which often make large, long-term commitments compared with the typical startup customer. WeWork is also aggressively pushing into Asia and made three subsidiaries last year for Japan, China and Southeast Asia. In a fundraising round over the summer, Japan’s SoftBank Group Corp. invested $3 billion in WeWork and committed $1.4 billion to the Asia subsidiaries.

Minson said despite all the growth, the company has no immediate plans for an initial public offering. “We are running the company with all the practices that a public company would run with, but no timing has been set,” he said. At least one source of IPO pressure has dissipated: As part of SoftBank’s funding, the company closed a “meaningful secondary” sale, Minson said. That allowed all shareholders and employees who had worked there for at least a year to sell some stock.

Is Detroit the Future of Shopping? This Man Thinks So.

In all the years retail-design executive Ken Nisch attended the most influential shopping trade-show, he never imagined giving the presentation he did at this year’s National Retail Federation’s Big Show in Manhattan.

“I explained why Detroit can be the future of retail,” said Nisch, who is chairman of Southfield-based retail-design company JGA Inc.

Nisch told to this to several hundred conference attendees last month during his panel presentation. The crowd included major Japanese investors, the head of a major chocolate retailer in Brazil, and tech executives trying to figure out how to integrate online shopping with brick-and-mortar stores. Also in the crowd were “thought leaders” for the kind of international chains “you haven’t seen in Detroit in decades, and in some cases, never,” Nisch said.

“For years, I never thought I will tell a room full of retail leaders such a thing.”

Detroit — a city without a single Target store, one cinema multiplex and a measly pair of 7-Eleven’s — just may provide answers in an era when shopping malls are dying by the hundreds and an estimated 7,000 stores, including dozens of national chains, went out of business across the nation last year.

The city that shopping malls and national chains ignored contains valuable clues on how to survive this reality, Nisch contends.

“Detroit was once the center of shopping, but that began to die 40 years ago,” he said. “We fell hard and for a long time. Now, of course, we are seeing a scene emerge that’s beyond the shopping mall.”

Nisch gave his presentation along with a Whole Foods Market executive, the then-president of Shinola Detroit and the founder of Detroit Denim. Nisch helped design the Whole Foods Midtown store, its sole Detroit location, which has many local references from Motown and the inclusion of local suppliers such as Avalon International Breads.

Nisch, who has a background in architecture, has shaped retail spaces for Walt Disney Co., H&M and the Smithsonian Institution. He has extensive experience with European and Asian retailers.

There’s a buzz phrase in the retail industry: creating unique “customer experiences.” That basically means motivating someone to shop at a store instead of shopping online.

Detroit’s emerging scene of DIY retailers is full of unique customer experiences, Nisch contends. The include Detroit is the New Black, an apparel and accessories shop focusing on local designers; and the Peacock Room, a women’s apparel and accessories store with a vintage bent. And it’s attracting more unique retailers such as City Bakery, a New York cafe and bakery with locations in Manhattan, Tokyo and now, the Fisher Building in New Center.

Detroit has great under-served buildings like the Fisher Buidling, an Art Deco dazzler, that are seeing billions in investment. That includes the major renovations of dozens of downtown buildings done by Dan Gilbert’s Bedrock , which controls major holdings on Woodward Avenue, and plans by the Ilitch family’s Olympia Development of Michigan to revive 50 blocks of the city.

“We are having such a great moment. I want to do everything I can to help share the story,” Nisch said.

Nisch isn’t the only one who thinks Detroit is having a moment.

“For the last 40 years, the words ‘major retail’ and ‘Detroit’ — you didn’t hear those two things in the same sentence,’” said Todd Sachse, vice president of Broder & Sachse Real Estate in Birmingham. He’s also CEO of Sachse Construction.

In the downtown area, an estimated $5.2 billion in development projects is planned from 2017 through 2022. “We now have the kind of investment that can attract a lot more investment,” he said.

He praised Nisch’s presentation at the retailers expo. “Having someone of Ken’s stature say that to an influential group, it goes a long way in planting the seed of making things happen,” Sachse said.

It’s not the only opportunity for Detroiters to hype the city to influential developers and retailers. For the first time in 40 years, the Urban Land Institute’s spring meeting will be held in Detroit. The May 1-3 gathering is expected to bring more than 3,000 real estate professionals from across the world to the Motor City.

In September, an estimated 200 professionals who design stores for such chains as Walmart to Louis Vuitton to Apple will gather in Detroit for the design:retail Forum. It’s the first time the annual conference will meet in Detroit.

Does this mean Detroit may get a Target soon?

“I think we will eventually get the new form of Target,” Nisch said. Not the 70,000-square-foot store that you find in the suburbs, but a smaller Target aimed at urban areas and one that has enough features to lure customers to a brick-and-mortar store instead of online, he said. The retail world is still trying to figure out that kind of store.

“I think Detroit can help the industry figure out what that kind of store should be.”

People: New Appointments and Promotions

Construction

• Louis Goldhaber to chief of staff, Sachse Construction and Development Co. LLC, Detroit, from head of strategic initiatives.

Consulting

• Dan Felstow to managing director/partner, UHY Advisors Inc., Sterling Heights, from principal. Also, Tom Bowen to managing director/partner, UHY Advisors Inc., Farmington Hills, from principal.

Education

• Alison Davis-Blake, Ph.D., current University of Michigan business professor and former Ross School of Business dean, has been appointed the eighth president of Bentley University, Waltham, Mass.

• Michael Westfall to vice president for university advancement, Oakland University, Rochester, from vice president for advancement and executive director of the Foundation, Eastern Washington University, Cheney, Wash.

Finance

• Thomas Rutherford to president, Crestmark Equipment Finance (CEF) division, Crestmark Bank, Bloomfield Hills, from chief operating officer. Also, James Recker to chief operating officer and general counsel, CEF division, from senior vice president and general counsel.

 Food

• Tabitha Mason to managing partner, Zingerman’s Cornman Farms, Dexter, from venue manager.

Law

• Christopher M. Trebilcock to member, Labor & Employment Practice Group, Clark Hill PLC, Detroit, from principal and deputy practice group leader, Employment and Labor Group, Miller Canfield Paddock and Stone PLC, Detroit.

• Devon P. Allard to partner, The Miller Law Firm PC, Rochester, from associate.

Nonprofits

• Karen Monday to vice president, senior living, Samaritas, Detroit, from executive director, Evangelical Homes of Michigan, Sterling Heights. Also, Lena Wilson to vice president, Child & Family, from executive director, Lutheran Adoption Service Inc., Detroit.

Real Estate

• Christopher Maharg to director, BBG Inc., Detroit, from senior appraiser, CBRE Group Inc., Southfield.

Services

• Damian Zikakis to partner, executive search consultant, The Hunter Group LLC, Bloomfield Hills, from director of career development, University of Michigan Ross School of Business, Ann Arbor.

• Jim Naughton to senior consultant, Innovative Learning Group Inc., Troy, from independent consultant, 1World4Learning LLC, Troy. Also, Lauralei Pariseau to project coordinator from training and development intern, Rock Connections LLC, Detroit.

• Jeff Williams to cybersecurity program manager, Michigan Manufacturing Technology Center, Plymouth, from development team manager/senior systems developer, Crestwood Associates LLC, Farmington Hills.

• Julie Timmer to vice president and general counsel, NSF International Inc., Ann Arbor, from senior counsel, Maxion Wheels, Novi.

Technology

• Alex Southern to executive director, Vectorform LLC, Royal Oak, from director of marketing, Midcoast Studio, Troy.

Retail’s New Dawn: The End Of The So-Called Retail Apocalypse

Retailers across the world face an unprecedented pace of change. From how they acquire customers to how they structure a supply chain to how they think about the in-store experience – retail is quickly evolving to meet rapidly shifting customer expectations.

Some analysts and even leaders in the retail industry find these changes threatening, hunkering down for the “retail apocalypse.” No, this is not an apocalypse; rather, retail is experiencing evolution.

Change is good – it inspires betterment and fuels market growth. Retailers today have the opportunity to pioneer a new landscape: a highly personal, customer-centric retail world deeply rooted in technology. Powered by customer data and aided by machine learning, brands will discover new models and create new retail experiences that are deeply personal and distinctively human. This is not the end of days for retail; it is a new dawn.

 To get there, retailers are evolving and adapting their approach to challenges new and old. Solutions will be a mix of technology, AI and human touch across the industry, in unique ways. PwC recently analyzed tech-driven approaches to retail, and in our findings, there are particular opportunities that will revolutionize retail.
  • Soon, retailers will really know customers as individuals. Retail was an early adopter of data analytics, and brands often ask customers about preferences, many times using back-end data to learn more about interests and behaviors. Collect, analyze and apply insights gleaned. But that model is too slow for today’s consumer. Savvy retailers are tracking in real-time what customers are interested in and when and how they are buying goods. Soon, data paired with artificial intelligence can help retailers start anticipating needs well before the consumer’s own needs have fully emerged. By really knowing them, brands can forge real connections and an authentic relationship. If the notion of AI once made you squirm, it might now make you stand up and cheer. Artificial intelligence means less manpower on menial practices and more freedom for retailers to incorporate empathy, purpose and creativity in their business strategies. Humans get to be the difference makers.
  • Stores are no longer just places, but experiences. The feelings retailers try to evoke from customers through marketing and products is now coming to life in stores. Stores are not warehouses; they are environments to entertain, educate and discover. Stores are soon to be home to dynamic experiences that build loyalty and affinity. The store of the future doesn’t have walls – virtual reality breaks them down and can help companies continually evolve and create a new experience over and over again. Stores can be open spaces to convene, to build community. And consumers will come – only 10 percent of core retail sales are online. Consumers aged 18-24 are more inclined to socialize at malls and shopping centers (44 percent) at almost double the rate of consumers overall (22 percent). People go to retail locations, and that will not change. The in-store experience of tomorrow will be shaped by data, improved by AI and made personal by humans.
  • Retailers get to dramatically improve the single worst facet of the customer experience – or eliminate it entirely. The check out line has seen little improvement over the last 100 years. Our recent analysis further highlights consumer frustrations with waiting in the check out line. If everyone from healthcare clinics to taxi cab companies can eliminate wait times, so can retail. Google just rolled out its Google Pay app for Android, creating a frictionless pay experience for its users. Mobile pay will likely be a mainstay for the retail store of the future – our research shows that 42 percent of U.S. consumers and 95 percent of Chinese consumers use mobile payment. Retail leaders like Apple and Wal-Mart are broadly experimenting with different self-scan and pay technologies. Amazon is piloting its revolutionary concept of removing the check out process entirely through intelligence embedded in the store, checking you out while you shop. These are all changes that retailers can really get behind because no one wants the last impression to be a bad one.
 Retailers have more change, knowledge and tools to get the job done. Soon the industry will have the ability to focus more on the good, and weed out the disjointed, bulky and disappointing. As humans, focus can turn to the things that make a retail brand great – the purpose, the people and the customers.

Three Trends Shaping Labs of the Future

Shorter research and development (R&D) timelines, ongoing cost pressures and sudden shifts in research priorities are driving new trends in lab design and location. Flexible space and access to talent are the keys to agile R&D, according to a new report from JLL, Journey to the next gen lab.

The average return on R&D investments among large biopharmaceutical firms has declined dramatically from 10.1% in 2010 to a paltry 3.2% in 2017. In the race for breakthrough innovations, companies are seeking collaboration and more flexible facilities.

“As a result of organizational cost pressures and a stronger focus on shortening the product lifecycle, R&D real estate is becoming multiuse,” says Roger Humphrey, Executive Managing Director and leader of JLL’s Life Sciences group. “The result is a drive toward highly flexible and attractive workplaces that appeal to not only scientific, but technical talent.”

Through interviews with executives at 15 leading biopharmaceutical and medical device companies, JLL has uncovered three trends pointing toward the future laboratory space.

1. Designing for flexibility and collaboration

Amidst rapidly shifting research priorities, scientists need space that can be easily reconfigured to accommodate different kinds of research and facilitate interaction with colleagues. Mobile benches and unassigned workspaces, for example, allow for fast changes in personnel and the type of work being performed. As one executive said, “Scientists want to have the flexibility that allows them to get their studies done as quickly as possible.”

“Behind the scenes, flexibility begins with infrastructure,” Humphrey said. “For example, you can hang retractable electrical cords from the ceiling so you’re not limited to placing equipment against a wall. You can build thick floor slabs into the laboratory corridors and hide technical infrastructure behind a façade so you can easily move people and equipment.”

2. Less wet lab, more computational science space

As R&D undergoes digital transformation, the science has become increasingly integrated with data and analytics. Once the dominant space for life sciences research, wet labs are shrinking while flex space and office space for computational science are growing as scientists spend more time analyzing data.

“A traditional R&D facility would consist of mostly lab space and a small proportion of office,” Humphrey said. “In a few years, those proportions will likely shift to equal parts web labs, flex space and office space for the data scientists.”

3. A focus on talent recruitment and retention

As illustrated in JLL’s annual Life Sciences Outlook report, biopharmaceutical companies have intensified their drive to be near leading academic research centers and the supportive R&D ecosystems that surround them. Despite high rents, cities like San Francisco, San Diego and Boston continue to attract leading companies that want access to resources and talent—including both laboratory scientists and the data scientists needed to work with today’s voluminous data.

The need for talent is also driving a growing focus on amenities, aesthetic appeal, state-of-the-art equipment and attention to sustainable design. Rather than hiding R&D space deep inside a facility, some biopharmaceutical companies are creating lab spaces on the perimeters of their facilities to showcase their cutting-edge technologies and abundance of natural light.

“We’re seeing a growing trend toward creating engaging, attractive labs and office workplaces,” Humphrey said. “The goal is to inspire creativity and foster well-being, with natural light, rich amenities and comfortable places for formal or informal collaboration.”

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