By Michael Beer ’23 and Christine Yang '23

Diane Hoskins, Co-CEO and Chairperson of Gensler joins the 2021 Annual Real Estate Symposium as keynote speaker sharing trends in the design profession. The conversation was moderated by Ross Smotrich ’83 Principal at RE Strategic Advisors. 

Diane and Ross opened with a discussion on how COVID acted as an accelerator of changes in consumer preferences, demographic, lifestyle and technology, all of which have dramatic impact on how people utilize real estate. The design profession is a leading indicator for these transformations and Diane shares thematic directional shifts that the industry has observed in the last year. 

Conversion of Vacant or Stranded Assets
Diane indicated growing interest in conversion projects for office buildings and malls across the US. The future of office continues to be uncertain, and more and more clients are evaluating what it takes to reposition vacant office buildings to residential or mixed-use assets. A similar trend of repositioning is occurring in malls, especially those in suburban areas that have been over-retailed and have seen significantly diminished demand as a result of e-commerce. Diane stated that malls have a huge opportunity to convert to town centers or places of employment, such as call centers or even life sciences. 

20-minute city/neighborhood
In light of the global lockdown, the concept of smaller cities has taken off. Diane stated that the idea first launched in Paris in 2019 and was coined the 20-minute city plan. The goal is to create a more livable city with integrated experiences where live, work and play are all within 20-minute reach. The notion extends beyond city planning and gets at the core of lifestyle as well as thoughtful consideration to the community’s ability to deliver health, equity and diversity. Diane indicated that the theme of repositioning vacant assets could be a driver towards 20-minute cities. In established metropolitans, the distance between live, work and play could shrink dramatically, as offices convert to residential and/or mixed-use. In suburban areas, converting malls to town centers and workplaces allows residents in neighboring communities to cut down on commute time and increase the accessibility of the different parts of life. 

Tenants Shaping Commercial Real Estate
Gensler has seen its clients become increasingly clear about their objectives and priorities for office space. Tech companies are one of the larger tenant groups that is shaping commercial real estate in this manner. Relative to companies in other industries, tech firms tend to be more self-aware of why they need office space. The group recognizes the need for the office to attract talent and simultaneously inspire collaboration and innovation so that employees perform well and generate value for the firm. Diane described this phenomenon as the science of optimizing workspace for best performance. The impact on design and real estate is a push for customization and scalability over time. Landlords will increasingly need to track the performance of their spaces after occupancy and work with the tenant to shape the space for the future. 

Sustainability
Diane is a big proponent of sustainability initiatives. Gensler is committed to implementing net 0 carbon footprint across all their projects by 2030 and are in the process of defining measurable milestones for 2025. Regulation on sustainability and climate change will have profound impact on the built environment and Diane urged the broader real estate, design and construction community to have a stronger voice in this conversation. As the impact of climate change becomes increasingly visible globally in the form of massive floods, excessive heat and more, the long-term value solution is to renovate and develop for net 0. The industry is seeing a convergence of capital and workforce demand on sustainability topics that is pushing developers to contemplate these issues going forward.

Michael Beer ’23 is a first-year MBA student focused on real estate and private equity. Prior to the MBA, Michael worked as an associate at The Boston Consulting Group and later pivoted to private equity. Michael graduated from The University of Pennsylvania in 2019 where he studied philosophy, politics, and economics.

Christine Yang ’23 is a first-year MBA student focused on real estate development. Prior to the MBA, Christine worked for 5 years at JPMorgan as a product manager leading a mutual funds trading platform. There she was responsible for overseeing $260 billion in assets across over 200 client relationships. Christine graduated from Carnegie Mellon University with a degree in Business Administration concentrating in Finance in 2016.