Redesigning Reality with Diane Hoskins & Andy Cohen, Global co-chairs of Gensler and co-authors of Design for a Radically Changing World
Willy Walker: Good afternoon, and welcome to another Walker Webcast. I am really excited to have the two co-chairs and former co-CEOs of Gensler, Andy Cohen, and Diane Hoskins, with me today. I'm going to do a quick bio on both of you. And given that your bios overlap one another, I'm going to try not to repeat as I do my bio of the two of you as an incredible dynamic duo. And then, we'll dive into a lot of different issues that I'm super excited to talk to both of you about as they relate to the future of the built world, climate change, autonomous vehicles, and the 20-minute city. All the great projects your team is working on around the globe, the various design aspects that you all have in those buildings, and many other things. And I think one of the things Andy and Diane that I also want to spend a bunch of time on, as much as there's so much to talk about the Built World, is how the two of you have built and led Gensler. I think as it relates to your firm and the focus that you have on your people. When I went to your website before I introduced the two of you, I was expecting to see lots of pictures of your buildings, but you actually have to work to find pictures of your buildings. There are plenty of them once you've peeled through a couple of layers. But it's not the buildings, it's the people. And you all have over 6,000 employees around the globe who make Gensler what it is. But I find it to be so admirable that the focus is not on this beautiful building that we built or some great design feature that we've done. But these are the people of Gensler who make those great buildings happen, and that great design happens. I want to dive into that because I want to hear how you all have done that, and it's quite something. Let me pull in here quickly and do a quick intro.
Andy Cohen is global co-chair of Gensler, the world's most influential architecture and design firm. He spent his entire 43-year career at Gensler. Since 2005, he and global co-chair Diane Hoskins have exemplified collaborative leadership, overseeing both the long-term strategy and day-to-day operations of the global practice known for its award-winning design, innovation, and research. Under their strategic guidance, Gensler has organically grown to become the most admired firm in the field, with some 6,000 people networked across 56 offices around the world, serving more than 3,500 clients in over 100 countries. Andy and Diane were included on Forbes's inaugural Future of Work 50 Recognizing Leaders Shaping the Office of Tomorrow, and I want to talk about that. In 2021, they were named to Business Insider's list of 100 People Transforming Business, which honors business leaders in ten sectors who are innovating, sparking trends, and tackling global challenges. Andy's a fellow of the American Institute of Architects and a graduate of the Pratt Institute.
Diane Hoskins, global co-chair, oversees Gensler's global platform and its day-to-day operations. Diane is also focused on Gensler global talent strategies, performance, and organizational development to ensure that they serve their clients with the world's top talent. She is the catalyst for the Gensler Research program for which Diane is committed to delivering value to clients through strategies and innovations like Gensler Workplace Performance Index. Diane graduated from MIT and holds an MBA from UCLA. She received the Outstanding Impact Award from the Council of Real Estate Women and is both a regent of the American Architectural Foundation and a fellow of the American Institute of Architects. Diane sits on the Board of Directors of Boston Properties, an incredible company run by my friend Owen Thomas, and is a trustee of the MIT Corporation.
So, let me dive in here. I wonder how the two of you have been so successful in building Gensler in a partnership. There are not many firms that have been able not only to thrive but survive with co-CEOs. And I know now the two of you have moved to co-chair roles. And I want to talk about the fact that you replaced yourselves with co-CEOs. But talk for a moment about the hallmarks of your collaborative leadership over the last 20-plus years because it's really quite something.
Diane Hoskins: Wow. Maybe I'll kick off. I know Andy will have a lot to share on this, too. So, to get started, first of all, Willy, we're so excited to be here. Thank you so much for having us. We feel like we have so much in common with you and the great company you built. You started as a family-run firm, now one of the country's largest commercial real estate finance companies. We started as a small family-run firm, and Andy and I had the honor of building our firm into a global organization. And again, we are so thrilled to be able to work with you on some really important and terrific projects that really allowed our teams to be super creative and do some really special things. Hopefully, we can talk about it.
Willy Walker: We can dive down that for a second while, and then you're going to talk to me because I think one of the things that's so interesting is doing this conversation with the two of you. Having two guests on is always a little challenging for me because I feel like I have to give everyone equal airtime if you will. And I know the two of you to the extent that I hope I don't have to go back and say, “Hey, Diane, do you have anything to add to what he said because the two of you are so good at both completing one another sentences and also having incredible trust and respect for one another.” But we did before we jumped on live. We were talking about the incredible work that your team has done for Walker & Dunlop as it relates to creating these brilliant office spaces that Walker & Dunlop's employees get such an incredible honor to work in. And this office that I'm in, in Denver, is our newest collaboration with Gensler. And it is, I have to say, it's transformed everything in the sense of how… we were in an old, not an old. It was a relatively Class-A space, but it was just a typical office tower downtown. And we moved here to Cherry Creek, and we had you all design this new space, and every single person who walks into it says, “This is the nicest office space I've ever been in.” And that's all thanks to your team and your collaboration with our team in creating this space that many people feel they're going home. They're walking into a living room, and they can work anywhere, and they can bring clients in here. We have a client event tomorrow. We were doing an afternoon ice cream social for our team here, and I was like, I'm inviting clients, and we've got a whole bunch of clients coming over here to hang out in this wonderful common space with our people. And how great a business development opportunity is that for a bunch of clients to come over here and hang out and have an afternoon social with our team. But that is what I find to be so interesting: where you all are in defining the office of the future.
Andy Cohen: Absolutely. By the way, your office is a perfect example of the workplace of the future because it truly is about your leadership and collaboration. We'll talk more about why collaboration spaces and performance spaces really matter for our clients right now, especially after COVID-19.
Willy Walker: But Andy, run on that for a second because you've talked a bunch in the past about making an office somewhere where you want to go, not somewhere where you have to go. You've been branding the office of the future a little bit by trying to get people to imagine what that actually is. What are you all doing specifically to make the office of the future?
Andy Cohen: You're absolutely right. I know this is the biggest transformation that's happening in the workplace and work since the Industrial Revolution, and it truly is about making the office a destination, not an obligation. Your office is a place people want to be, not that they have to be. And what we're finding through our research, and we have what's called the Gensler Research Institute. We do a ton of research on the workplace, and the workplace for the future is about creating that sense of choice for people. Coming from their homes and coming back to work. It's about that sense of choice of where you can perform the best in the office. So what we're doing is we're going into offices and taking out the rows of desks, and we're replacing them with living room settings you were describing in your office, collaboration spaces. We found during COVID there was a drop off of 37% of collaboration that was occurring on these damn Zoom calls. And the reality is that mentoring and coaching next-generation leaders in your organization really comes from being together and collaborating together. And that's been the incredible stress that we're seeing in the marketplace because only 30% of offices today like yours have been renovated. So the big, bold three-quarters of space people are coming back to our old antiquated and don't reflect the workplace of the future, the new way of working.
Willy Walker: And, Diane, has your team learned from the work you're doing in the sense of, how is your office participation rate at Gensler?
Diane Hoskins: Absolutely. I'll tell you, first of all, it's just music to our ears to hear your experience with the space that we designed for you right here in Bethesda in my backyard and also Denver, now Atlanta. The word that really keeps coming back is this sense of community and very literally family that we were able to achieve. We are so proud of the spaces that we're designing for ourselves as well because, of course, people come to our space and say, “This should be an example of what's going on out there.” So, I'll speak to our San Francisco office, which is one of our newest spaces that has come online in the last few months, a tremendous example of everything we're talking about. Everything from it's an electrified building to the fact that it's designed with a real sense of how people work today and the kind of spaces that are going to bring people back to the office. But as Andy said, “People are looking when they come back to the office for something very different than circa 2019.” And what is that kind of space and what are those important parts of how I can do my best? People started to really get in touch with what was missing from the workplace and why they preferred certain settings at home. It wasn't necessarily about the geography of downtown versus my hometown. It was much more about the ability to get more focused work done, or the ability to collaborate, or the ability to really connect with my community as an organization. And so that's what we really have done in our San Francisco office. It is an incredible example of this love to take you through it if you get out there one day. But we literally have clients going through that space weekly, if not daily, to see because I think it is probably one of the best examples in San Francisco, which was having such a tough time as a city, getting people reengaged with coming back into the office space. Here is an incredible green chute, if you will, of where things are going and what are those changes. And so it actually is a pretty amazing set of ideas, everything from a quiet zone. One of the things we've seen, and frankly, it was part of our workplace research that we were finding year after year, probably from about 2013 to 2019. We do surveys of workers, not people working in Gensler spaces, but literally workers across the US and in every country that we are working in to really understand what's going on with the workplaces out there. One of the things we saw as a huge outcry from 2013 was where we saw it spike, and it stayed up. There was a real sense that people couldn't get work done in the office and that they were having a problem focusing. The fundamental piece of work is the work you need to do to get your work done, not the stuff you're doing with other people. And the fact that lack of space and consideration of focus really started to create a dysfunctional sensibility in the office. So one of the things that is a massive pivot, I believe, and what we're seeing in the spaces we are designing is real intentionality around focus that plays out in our San Francisco office as a whole zone. A third of the office is really a quiet zone. People are in there getting work done, and it's designed as this amazing club right where you go in, and it's very quiet. Everyone's getting work done. Then there's a much more activated space, which is a mixture of things working individually, meetings, and spaces dedicated to groups and teams. Then, it plays out with a more community-type space. But these are the components; it's going to look and feel differently for different clients because it is also about not applying the one-size-fits-all approach, where you walk into any office, you see the same stuff. It's got to be authentic. It's got to have that sense of it's for us, and we're going as a firm, but also recognizing that people need something different today, and their expectations are at a much higher level than what they were five years ago.
Willy Walker: Andy, double click on that for what Diane just said for a moment as it relates to, does it matter industry by industry? You all did the Google headquarters in New York. And Diane, talking about your new headquarters or your new building because you both are actually on different sides. One's in LA, and one's in Bethesda, and so are your successors, interestingly, and I want to get to that at some point. But my question is, does it matter that you're working for Google, or for an airline or for Google or for Coca-Cola? In other words, does industry matter in the type of design that Diane laid out as it relates to the focus area and common area?
One of the things that I noticed in our Atlanta design was that one area where we had a number of people had no real separation between the workstations. And I said, in a Zoom world, people don't want to be listening to the person on the Zoom next to them. We need something there. And what I learned in that process is that most of my colleagues who were on Zoom calls all day and don't have the beautiful space that I have, they're doing it with their AirPods, and so they're actually listening to the call and also contributing. But you don't want to listen to the person next to you. And so I actually asked it to be up a little bit. But just for a second, does it matter the sector that the company is in?
Andy Cohen: It absolutely does. We're seeing and we do design trends and research across all the different sectors. And generally speaking, we're seeing more ‘we’ space than ‘me’ space. But like you said, we're zooming into meetings because many of the people that are in a meeting aren't in the office space. There are definitely other enclosed spaces, two and three-person conference rooms. So there's definitely a differentiation that we see across sectors.
For example, some spaces like Google are 95% open, meaning they have very few offices except for conference rooms, and other spaces like a law firm, for example, or an accounting firm, would have much more closed-in spaces. I'll say one of the things that's really important, because to dovetail with what Diane said, we're also seeing is because we keep on hearing that the workplace is being significantly impacted. We're really busy right now because 70% of the spaces haven't been improved. But what we are seeing is this flight to quality, this idea that tenants and major Fortune 500 companies that we're working with are looking for fully amenitized buildings and newer buildings. And what that's causing for you and your investors is this issue of you have A building that is completely filled, but the B and C class quality buildings are really empty right now. And that's a major issue that's occurring where our clients want to be in safe, fully amenitized buildings. Yet it's leaving this unbelievable stock of really challenged B and C buildings, especially in suburban areas.
Willy Walker: I wanted to get to this later on, but that's a really good segue to talking about retrofitting and the adaptive reuse of buildings. You all have 8,000 projects going on around the world. So, the fact that either one of you knows about Pearl House at 160 Water Street in New York, you may or may not, but I pulled that out as one of your adaptive reuse projects where you took an office building in New York in 2020. It delivers this year, and it's converting that office building into a big building. I think it's got 500 units or something to it. Talk for a moment. You all have gone out and used your own database to identify over 1,000 buildings in the United States that are ripe for adaptive reuse. Talk about what you've done on your research, Diane, and whether you're actually reaching out to people and saying, “Hey, owner of building X, you actually are set to do an actual adaptive reuse for this reason.” Or are you waiting for them to call you up? And then, if you would talk about Pearl House for a second because I found it to be such an interesting example that it's taken, by the way, four years to convert it, but it looks like a stunning residential building.
Diane Hoskins: This is such an important topic for us on so many levels. But I'll dive straight into research, take it to application, and then finish building. We love Pearl House. Andy and I were in there a few months ago when it opened. It is such a great story, and it really brings to life something that started as a research project at Gensler about six years ago where one of our team members, literally here in Washington, DC, had done some bespoke research for a particular client on the idea of this office to resi on a particular project. And it was a great research effort. It was published as a paper. About two years later, a similar topic came up, and one of our leaders in Toronto pulled up that paper and built on it. They not only took the concept but also turned it into an algorithm and used it to look at an entire portfolio. And it really began to grow as a conversation because this was happening at the same time that we had been seeing this tsunami of vacancies since Covid. And this entire last two or three years in the real estate industry.
In Calgary, there was a 30% vacancy rate and a massive housing shortage. The government of Calgary hired us to look at a significant number of buildings in the Calgary area to see if there was potential to convert these buildings from office to residential. So what this tool does that we created is to basically use an algorithm to quickly, literally within a matter of less than a half hour, score a building based on key physical dimensions from lease spans to various heights to where is the loading dock to a whole set of things and be able to give the building a score from 0 to 100. Basically, we say if it gets above 80, it definitely is plausible as a physical transformation. If it's probably 70 to 80, it could still work in New York because they don't mind really thin units, depending on the market. But, again, because of that, the city now offers substantial subsidies in Calgary for those transformations.
Fast forward, that tool began to get the attention of developers in the U.S., and we started presenting in one-on-ones with developers, as well as in various platforms and webcast, podcasts. It even made it to the White House. We have had meetings with HUD and the White House, and they're coming out with financing to incentivize the transformation of excess office space into much-needed housing. Frankly, this is probably one of the most important trends that's happening. I'm not going to say Gensler started the trend, but I will say that we have been part of helping to accelerate with a tool that can quickly help a developer understand the plausibility and feasibility without having to go into weeks and weeks of study, but literally within the matter of a half hour and some key dimensions that we're able to come to that determination, the Pearl House, which again was happening simultaneously with all of this. It's a building of close to 600,000ft². There are 588 units of different sizes in the building. It is remarkable. I encourage anyone who's watching the webcast, if you're in New York, to take a tour because there are some really smart things that have been done in the building with amazing amenities.
But also, from a real estate standpoint, there's really some smart stuff that we did to add FAR to be able to build a couple of layers and floors on the top that were very premium. But at the same time taking FAR out of the building being able to add it back at the top. But again, also put in various features that allowed us to make the building much more energy efficient. And again, meeting many of these important New York standards for energy efficiency that are coming online. By the way, it's a giant project. There's one twice that size that we're doing in New York now as well. I don't want to name drop some of the developers there, but a number of projects are kicking off across New York, Washington, and cities across the U.S.
Willy Walker: I want to make one comment there, which is that you all do 8,000 projects a year. Pearl House was started in 2020. We've got 20,000 plus buildings you all have worked on. I randomly picked one building, and you knew exactly how many apartment units were in it. Because I got a note here, that says 588 units. So that to me is unbelievable because you didn't know I was going to talk about Pearl House, and of all the things that you and Andy have to look at, you remembered how many units it actually has.
Andy, one of the other things out of Pearl House, it's interesting is that your calculation is that it is by doing the conversion rather than building new on that building, which is 588 units, to build a new 588-unit building. And as Diane said, you also added to the top of it. So there is some new construction there, but it saved 20. It's got a huge amount of carbon, 20,000 metric tons of embodied carbon.
So, there are two things there. One, talk about energy savings. And then let's segue into conservation, global warming, and building for the future of a world that is hotter and more challenging from an environmental standpoint than any of us would really like.
Andy Cohen: Absolutely. And the Pearl House is a great example of adaptive reuse. And the idea that you're saving all this energy because you don't have to build it from scratch. So think of all the concrete that's poured and the steel that's put into a building. Concrete and steel are the biggest emitters of CO2. And the fact that we didn't have to do that. So, we saved all of those CO2 emissions by using adaptive reuse. By the way, I should mention that based on what Diane said about our studies, our algorithm is that only around 15 to 20% of buildings have actually passed the test to be renovated. So it's specific requirements that make these buildings really work.
As far as climate change is concerned, Diane and I have been big evangelists for this both within and outside our firm. We spoke at the COP28 in Dubai. And we both feel very strongly that climate change is the moral and business imperative of our lifetime. What most people don't realize, and the people on your call may not realize, is that 40% of all CO2 created is buildings, more than industry and more than cars. So, we consider as the most impactful and largest firm in the world. We worked in over 100 countries last year. We're taking that on as an organization to say that our work, what we've targeted, is by 2030 all of our buildings, or most of our buildings, will be net zero, and that's really important. We've created the standard in our work, and we know we're moving all our work towards net zero, and that's essential. There are lots of examples of what we're doing within the industry that help the industry along. For example, we created the Gensler product standards. So we've created green standards. Think of all the millions of square feet that we designed of studs, carpeting, and ceiling tiles. We created a standard spec that anyone can use on our website and use for green strategies for buildings of the future. But this is a really important subject for us, and it's embedded in all of our work.
Willy Walker: It's interesting. I heard you give a speech, Andy, and you talked about the fact that cement is 10% of total CO2 emissions. And I was sitting there in my mind thinking about the fact that people like Ed Bastian of Delta Airlines are constantly, if you will, under the gun to make sure that Delta is emitting less out of their planes. And I was like, “Why doesn't Carlos Slim, who I think owns the largest cement manufacturer in the world, come under the same type of heat if his cement manufacturer in Mexico, which I do believe is the largest, maybe there's a Chinese one that has jumped over it.” But why isn't he under a similar type of pressure as someone like the CEO of Delta Airlines or some of the other industries that we view to be such big emitters of carbon where actually the numbers that would tell you that the focus needs to be somewhere else. And I have to take my hat off to you and Diane for making this such a priority.
How do you get to the 300 million metric ton savings of CO2? Is that just 8,000 projects a year? We're going to do this and that. Do you kind of back into that number of just saying, if we can continue to work on net zero building, we can save that much in that period of time?
Diane Hoskins: Yeah, absolutely. Again, you have to quantify everything. That's probably a low estimate because that's really talking about emissions on an operational level versus what you guys were just talking about, which is the emissions that are saved from the standpoint of the materials that we're using. That number easily doubles. Certainly, when we start to look at the new builds for each one of these projects, I really want to commend you for mentioning CMax, which is one of the largest cement companies in the world, headquartered in Monterrey, Mexico. And the fact that they're it's interesting. I always think that now that we are all in real estate, there are so many players. There are so many finance companies, architecture firms, and developers. How could we ever coordinate to lower emissions in a collective way? Look at the car industry, a sector. There aren't that many players. So if they each make these commitments, we're going to be able to get there because we all can't make our cars. There's only a certain number of these companies. The fact is we all go back to about ten concrete and cement companies in the world. And the fact is, to your point, if those ten go toward zero carbon concrete, then actually, it will impact all of us. So we can all have our strategies. We need to have those strategies, but we need to look all the way deep down in our supply chains because, actually, there are only a few players in some of these areas. And with the right encouragement, we are your customer, and we will specify that. And as we know, with greater demand, there's also going to be pricing that will be advantageous eventually as we all move in this direction. But I also agree with the fact CMax, Heidelberg, Holcim, and all of the top cement companies. They're hearing us. They're moving pretty quickly, but probably not as quickly as we need them to move.
Willy Walker: Andy, Diane were just talking about embodied carbon, what's actually in the building, which is a big focus of yours. Talk for a moment so people understand the difference between operating carbon and embodied carbon, the split as it relates to CO2 emissions, and where you can help both on the build side and then also on the operating side.
Andy Cohen: Embodied carbon is what it takes to make the products that go in our buildings, make, ship, and construct the products that go in a building. Using the example of cement that you were just talking about, the embodied carbon cement, like Diane was saying, is extremely high. So, we're constantly researching materials that have lower embodied carbon. For example, we're working on many buildings now that have been built out of wood and not out of steel -- coal timber buildings. And it's been very successful.
Willy Walker: How high can you build? How high can you go with timber? In the apartment industry, we talk about stick built. And we sit there and look at stick-built buildings. But if you were to think about it in other applications, how high can you go?
Andy Cohen: It's innovating all the time. We're working on a 12-story building right now in Greeley. They're talking right now about some new innovations that are occurring up to 20 stories and maybe even 25 stories within a few years. So it's really changing and modifying right now. But the big difference is you have the embodied carbon, and then the operational carbon is just as important because after you and I finish designing and investing in buildings, the building operates. And so we're measuring the operating carbon that's created by the buildings we create, ensuring that.
For example, a lot of the buildings we are designing today have indoor-outdoor spaces with much more outside air coming into the building so that they're not hermetically sealed buildings anymore. Things like that. So, this operating carbon and embodied carbon together. That's what we're focused on right now as an industry to really make sure that our buildings in the future, again, by 2030, are net zero. And we're seeing the codes changing, especially across the United States right now. And here in California, where I am, the codes are radically changing that in the next few years, most buildings will be mandated net zero.
Willy Walker: On that, Andy, are people like Carrier who are building HVAC systems trying to… So operating carbon, I think is 72% of emissions, and the embedded is 28%. So, really, it's the ongoing operating cost of the buildings that is the big emitter. I'm trying to think about if a Carrier does something to become more efficient, to cut down on that 72%, are they getting promoted by or selected by Gensler to say this building works with a Carrier HVAC system, which is going to cut down on ongoing emissions going forward, or is that really up to the developer of the building to sit there and say, “Yeah, I like the new Carrier product, but I'm going to go with X.”
Andy Cohen: Again, we're in 56 offices and literally 17 countries around the world worked in over 100 countries last year. So our impact on the global footprint we're impacting millions upon millions of people's lives is really important to us. We're focused on the manufacturers big time right now. In fact, we sent out letters that we want to see their specifications to all the different manufacturers that are out there right now. And they're responding back to us, showing us that in order for Gensler to spec their products, they have to meet certain standards. Absolutely, for our firm and our industry, the manufacturers are a big part of the supply chain for operational and embodied carbon.
Willy Walker: And at the end of the day, you're seeing your clients ask for this. So how many clients are you all going to where they say build us a new headquarters, and there's no environmental concern. I think it was Paul Tudor Jones who I was listening to, and he was saying, “ESG is super important, but it's become way too politicized.” And he was like, you got to remove the environment on the E and move it. It should be SEG or SGE, but it shouldn't be ESG because everyone hears the environment at the beginning, and they say it's a bunch of tree huggers. And they get turned off by it. However, it's super important to the future of not only business but also our world. Do you all have any clients who show up and say, “I'm not going to pick on any industry,” but just say, “You know what, that's not even a concern of ours. Just go build it however you're going to build it.”
Diane Hoskins: Yeah. Look, there's a whole spectrum. And so you've got all the way in one end and all the way on the other end. Our job is to work with all of our clients to help them understand how their building can help them achieve their goals. What is interesting is that you have all these goals that people have, saying that their company is going to use clean water by 2040 and not do this or do that. But at the same time, when they are going to build that headquarters, they don't see how all these things connect up. They look at their real estate as something over here, but all of their goals and environmental strategies or things they want to do for the future. How does the building play a part? So we really help them unpack that and to realize that they also have these goals. They're trying to recruit the next generation who really is looking for this kind of company and these kind of spaces and places that they want to work in. How do you bring that all together in this new headquarters?
And so again, what we find mostly is if there are going to be financial barriers to doing any of these things and time constraints. Are there going to be supply chain issues? And this comes back to what you were asking about: can we just single spec one product, let's say Carrier? Well, no, we need to have competitive bids on everything. So at the end of the day, that's why we, as Andy was saying, are working with manufacturers across the board because we don't want a single source of products, so that we're not going to give our client the advantage of the best pricing. We need to have multiple choices in terms of how the performance gets achieved. So now, look, that's something Gensler is doing. That's something we have the opportunity to do because of our scale. We're in an industry where 99% of firms are five people or less. And there are only a few firms that are of our size. And we are clearly out there by ourselves at the scale that we're at. But we see that as an opportunity to lead and to really help our industry and our partners across the ecosystem to do what we can do. Because we do have the scale, we have the relationships. We are working with every manufacturer, I guarantee you. And we're able to share where we're headed. And these are our goals. And we're not trying to pull the rug out from anyone and say, “We're not going to use you on our jobs.” We're like, “Look, in about a year, we're going to be coming out with a standard,” and this is where we're seeing it. How do you think you can get there? We work with them and help them get there. I think Andy mentioned we put out the Gensler product standards, which have reverberated across the industry. Other architects are now using it. Suppliers are coming back to us and saying, “We can't meet it this year, but we're going to have something coming out next year that's going to meet the Gensler standard.” Again, being a firm that recognizes that we can have that influence to help our clients be able to have the projects they want at the price that they can afford.
Andy Cohen: I would add one thing really quickly. We're talking about bricks and mortar. But at the end of the day, when CEOs come to Diane, and I and our people, and me, it's about people and attracting talent. Today, Gen X is looking for the purpose of their organization to be around sustainability and the environment, and the spaces we're creating represent those companies in their push in their pursuit of green strategies. So we're seeing it more like you mentioned. We're seeing our clients come to us saying, “Hey, we want to design a building of the future. We want to design a building that is sustainable and responsible.” And it's part of their ethos as much as it is saying bricks and mortar matter.
Willy Walker: I wanted to ask the question about modular and why modular hasn't gained traction, if you will. And I think about Katerra and the quite sizable failure the Katerra was. But before I jump to that, because I'm not going to get to this point unless I ask it now.
Diane was talking about the scale that Gensler has, and it made me think about it. And she said most of our competitor firms are like five people. It is the era of the Star Architect, the Saarinen, the Gehry, and the Johnson. Is that a thing of the past? And is the future, more firms like Gensler, where you've got thousands of wildly talented architects, but that the design has to come together with other components of the build, and that it's not just an I'm going to hire some star architect. And I guess I think about it in the legal profession. There used to be a number of lawyers who could have boutique firms that would get hired, and they would say, “I want that lawyer.” Today, it seems like if you go and hire one of the big firms, you just know that there's going to be a standard of capability there that you're good with almost anyone in the firm. Is the same thing happening in architecture? Do you think that we will still have an era of star architects in our future?
Andy Cohen: I think it's both. I think there are star architects still out there, but I think we're the antithesis of that. Our firm was started by creating a flat global platform around the world. An entrepreneurial global platform, where we believe that innovation comes from a diversity of thinking, not from one individual but a diversity of thinking people that come from different cultures, different backgrounds, and different geographies. From that, we're able to provide our clients with ideas from around the world for their projects individually. So, regarding any one project, I was on a call this morning about a project in Australia that's being designed in L.A. and London. So we're getting the best ideas from around the world for that particular client. We believe that also being local is important, not just designing generically where all the work goes back to one location. Again, we're in 17 countries. Last year, we worked in 100 countries, and we believe that being local and understanding the local design and what goes into those designs is really important. But that's where innovation comes from. Innovation comes from the diversity of ideas, not just one person's idea. And that's what we're coalescing every day from around the world.
Willy Walker: And how challenging is it to, if you will, manage client engagement? So let's just say hypothetically, you all have a great relationship with Walker & Dunlop and our team here. Let's say that I woke up tomorrow morning and said, instead of coming into office space and building out the type of office space you built for us here in Denver as well as in Bethesda, I said, “I want to go build a building, and I want it to be really innovative and really wild and whatever else.” How does my request for a build-to-suit get staffed at Gensler, where I don't call up and say, “I want Judy Johnson or Joe Jones to design it for me, I don't know that, I want Gensler.” But it's coming in, and someone has the ability to create something basically from scratch. How does that get assigned? How do you work that, unlike some other firms where someone says, “I want Frank Gehry to design my...” And by the way, Frank Gehry, you both know much better than I do, isn't the one who's going to be working on most of the work on that design. But let's park that for a second. How does that work at Gensler?
Diane Hoskins: Yeah. Look, we really believe in relationships. And every great project really starts with a great client relationship. We've got a great relationship with you. Evan and the team here started it. And then that grew and grew as it went to the other offices. The ethos of our culture is one firm that is really thinking about, and this idea that we're one firm with 6,000 people is all about the different capabilities of the firm. It's in our studios, in our offices, in our regions. And it's up to our teams to really frankly bring together the Dream Team for that project. That's what our leaders are looking at. How do we make sure that we are bringing together the right capabilities? Let's say it's a headquarters. People who understand what a headquarters is all about, not yesterday's headquarters, but the future. This idea of community and culture, as we were talking about, but also how we do it in a way that's about tomorrow and not just about today. And it might be in a particular location, as Andy said, “We did a job for you here in Bethesda. And then we're also with you in Denver, and we're also with you in Atlanta.” It's really important to have people on those project teams who know those locations as well because we want to get through the city and make sure that there's local nuance as it relates to the design of those projects. We see it as really about practice and expertise. We see it's about relationships. We see it's about design innovation and it is about being local.
Andy Cohen: I'll add to that, Willy, really quick. Four key sectors were involved. So, if you want to build a suit in a specific industry, we have a practice area that's focused on that. So we have four sectors. The four sectors are work, which we talked about a lot in the workplace, lifestyle, which is sports, hospitality, and retail, and all the practices around lifestyle. And then we have what's called a city's practice market sector, which is life sciences and airports and great projects like that. And finally, our health sector. So we're not only geographically based, but we're market sector based, based on expertise and providing that direct expertise. So, if you had a project in a specific area, we'd immediately make sure that practice area with all its market expertise and research is assigned to your project.
Willy Walker: And on that, Andy, of the four sectors, what's innovating the quickest? In other words, as I looked at all the projects you're working on, I saw that you do a lot in athletics. You've built stadiums, you're building training facilities, you're building sports arenas on university campuses. You designed the new Under Armor headquarters in Baltimore. You really seem to have a niche there as it relates to sports-related build. And then I think about life sciences and the amount of money that's going into life sciences and hospitals and research centers and all that. What industry from a physical space standpoint, we've talked a lot about the office here, which is innovating the most where there's something that's very specific that Gensler needs to have or know, that says, “For us to build that research facility, you need to have this depth of knowledge about what's specific to that research facility to do it. Or, to build that stadium, you need to have a team that can work with the city planning people because to build a stadium like BMO Stadium, which you all designed, you have to have X, Y, Z.” Which one is the most innovative right now?
Andy Cohen: I think the answer to that question is, coming out of the Covid, people looking for our clients are looking for experience. Everyone's yearning for those visceral experiences. So, if it's a sports stadium, we're innovating the fan experience. If it's a hotel, we're reinventing hotels for the guest experience. Over and over again, we're seeing in every single industry we're working in, it's really innovating and changing radically. We talked about work and the workplace and how that's changing. If I would say what are our busiest areas right now with the most innovation, I'd say, “We have a huge aviation practice.” We're designing literally 30 or 40 airports around the world. And you know how much airport travel has changed over the last several years. But in every single sector, our clients demand because of the experience, because of creating experience multiplier for every potential industry. That's what we're seeing as the master change.
Again, I would add one last area that we're massively changing again, and we talked about it at the beginning is work, and work is massively changing. Think about the millions of square feet around the world that were built and antiquated and how that's totally being reconfigured.
Diane Hoskins: And if I could, add on to that for a moment. Cities are where it all kind of comes together. I would say if there's any place, we all need to really watch in terms of changes that are happening. It's happening because every topic we've talked about relates to cities. And what's happening even with office is right at the core. It is hitting at the core, at the heart of our cities. This reinvention and rethinking of cities is happening because of this vacancy issue with office and valuation issues and value loss issues. But there's also an opportunity there. And whether it's residential, educational, teardown, or something entirely different. But add to that the changes in transportation that are happening and mobility, the fact that five years ago, six years ago, probably none of us heard of a scooter. There are scooters on our streets. There are e-bikes on our streets. There are, again, bicycles, then there are cars, then there's the autonomous vehicle as well. All of these modes of transportation need a place. In many ways, they need something different from what we have today. So we really believe strongly that cities are going to undergo massive transformation over the next five to 10 years. But cities are really important. Our firm is very focused on cities. It's where our projects are, but it's where people live. Over half the world now lives in cities, and certainly in the U.S., that number is probably close to 70% are in cities large and small. We're not just talking about large cities but also suburban areas. These are rural areas, places that people call home and their community. And how they're changing is something that we're all going to be part of in the real estate ecosystem.
Willy Walker: Andy, I heard you talk about AI and AVs transforming our world. I will get to AI in two seconds in the time we have left. But on AVs, I'm taking the over on when we're going to have autonomous vehicles running people around. First of all, I'll remind you of what Elon Musk said in 2015, which was that we'd have autonomous vehicles in the United States by 2020. We're now in 2024, and we're still doing Waymo. Waymo tests in San Francisco and almost got Waymo taken out of business because of a car running into wet cement. Interesting how these conversations all loop back together.
Anyway, you say by 2030, we're gonna have autonomous vehicles changing the landscape of cities in the United States. What do you know about what's going on? It's actually not Detroit. Uber, Google, and Waymo are the ones making this happen. What do you know that I don't know that says that we're going to get fully functioning autonomous vehicles in the next six years?
Andy Cohen: Whether it's 2030, 2035, or 2040, it's coming our way. And the idea that with AI combined with autonomous vehicles, we're going to have this massive change that's going to occur. And as Diane said, “Change the face of our cities.” Think about it. For an architect and urban planners, the ability to take our city streets back for people because when we do have autonomous vehicles, we won't need all the parking spaces that occur in our cities. Think about taking all those side parking spaces and creating green spaces, amenity spaces, or dining spaces on our streets to what we saw during COVID. The ability to use AVs is going to really change our world and how we utilize our cities. We are able to go back to creating walkable cities, amenity-rich cities that aren't based on CO2-filled cars. From everyone that I'm talking about the industry and a lot of people working this, as you said, whether it's six years or ten years or 15 years, it's coming, and it's going to change the way we think about cities, and it's going to think about a city like Copenhagen, where it's mostly about people and walkable versus the cars dominating our city streets—one last point. Think about the United States, there are 175,000 gas stations. Think about that prime real estate. There will no longer be a gas station. It might be battery-changing stations, or it might be a community center or a green space. But it's not going to be a gas station. So, literally it's going to transform the face of our cities of the future. And we're at the cusp, and we're at the beginning of looking at what that means for cities of the future.
Willy Walker: It's fascinating to think about how it will. You all talk about the 20-minute city of being able to access everything within 20 minutes of where you live. I was with Phil Washington, who runs the Denver Airport Authority, yesterday. And by the way, I don't know whether you all are working with DIA, but you ought to be because there's a lot going on. It's the fastest-growing airport in the United States.
Andy Cohen: The Army designed their hotel.
Willy Walker: I love that hotel. Although I never stayed there, it's fun to look at as I drive into the airport on an all too frequent basis.
But one of the things he was talking about was that they're going to get rid of all the rental car lots, and they're going to build a big rental car facility that's got some unbelievable number of vehicles. And literally, I think if I say 80,000 vehicles, I'm not sure that I'm overstating the number. It's unbelievable. Maybe it's not quite that many, but it is a mind-blowing number. Then we'll have all this vacant land that today is filled up by all the rental car lots. And what we do with that, we're trying to think about whether we do hotels or whether we do that. My mind went to it. I don't know what kind of electricity feed DIA has, but something would tell me that it's got a lot of electricity going to the airport. If they've got cheap electricity that is dedicated to the airport, they ought to put a data center there, but that's a whole different conversation.
Diane, I want to get back to the thing that I started on with the two of you because I find it to be so interesting, on how you built the firm. I said at the beginning that when you go to your website, you don't see all the incredible buildings that you have built. You see the people. The two of you have set up this great partnership for over 20 years, which has allowed you to guide and grow this firm exceedingly successfully. And you've now turned it over to Elizabeth and Jordan, who are tasked with stepping into your shoes. I guess the hard question I think I have for you is, what makes you think that the two of them can operate in a partnership mode as successfully as the two of you did?
I'll only use one example: The partners of Carlyle, David Rubenstein and his partners. They created Carlyle as a partnership. And these three very talented individuals grew Carlyle to be this great firm. And they said when it was time to pass the reins, they said we were a partnership. Let's create co-CEOs and have them manage it the same way we did. And I don't know whether you know the history of Carlyle, but that co-CEO role didn't really work. And actually, one of the co-CEOs is now the governor of the state of Virginia. But I guess my question to you is, is it that there's something unique about Gensler that should make Elizabeth and Jordan successful? Is it male/female? Or is it just wishful thinking that they can have a partnership like the two of you have created?
Diane Hoskins: Wow. You could have sent us that ahead of time.
Willy Walker: And by the way, obviously, there's a real reason why you've done this, but I looked at it, and I said, wow, they've had a partnership that defied odds.” Honestly, it did. And now you're doing it again.
Diane Hoskins: Look, let me share a bit. Andy can jump in as well. I think that it is the firm. I think we would say this is our culture. It's about collaboration. And it's not like, “Oh, let's try this here.” And then that was unique in the firm. Every role in our firm is a co, as we call it. We have co-office leaders, co-regional leaders, and co-practice area leaders. It is the lifeblood of our firm, collaborative leadership. Again, it is for our firm, and we talk about our culture being the secret sauce. And one of the ways that comes to life is in this leadership model. It's a recognition that one plus one equals five. Andy, I think, did a great job talking about how we think about teams. And it's the same way that we think about leadership teams. You don't want two of the same people because then it's one plus one equals one. And I don't know what Carlyle did, but my guess is they tried to get two people who were similar rather than really optimizing on the fact that having two very different people means that you get many more ideas. You have the opportunity to build on a multiplicity of strengths. Again, I always like to say, “We have 48 hours in a day versus 24,” the increase in bandwidth if you really trust each other and that each of you is a decision maker, rather than having to come back and loop back on everything. So again, it really is what the firm is all about. And, as you said, Andy and I started together in 2005 as co-CEOs, but we had worked together as part of the firm's management committee for ten years prior to that. So we were already really good friends. We even had a couple of moments of projects. We'll tell you about our white House project one day. But it's what brought me and Andy together.
But when we started as co-CEOs, the firm might have been a $200 million-a-year enterprise. Now, we're a $2-billion-a-year enterprise. We've grown to over 6,000 people in over 50 offices. And really, there's so much in terms of Andy and I and our team because there's a much larger team beyond the two of us that you see that has these incredible shared values, a shared vision, and then an array of skills and capabilities that are again, world-class, extraordinary individuals. So I think the strength of what it means to be diverse, Art Gensler, our founder, had a group of people around him who were very different from him. We believe in the idea of a model of people who are strong and different, and committed to the same values, and standing as a unified team. It's powerful. We strongly believe that Elizabeth and Jordan are going to be extraordinarily successful as well.
Andy Cohen: And I'll add that based on a philosophy that we talk a lot about, Willy, about people, everyone has aces in spaces things are great at and not so great at. And what we do is we focus on people's aces. So Diane's aces are very different. Once you get to know, is very different from my aces. But you put the two of us together where there are different aces. As Diane said, one plus one equals five, and the sparks fly because it's an incredible amount of trust, respect, and integrity that we've developed over the last 20 years. We've been working with Elizabeth and Jordan for that amount of time, also on the next generation. So it's this idea that we talk about all the time, diversity of thinking that I brought up before, the idea that half a board, are woman. We focus on the diversity because it's really important because we want to scale in order to create and solve some of the big challenges of the world, like climate change, like the future of cities, like the future of work. You can't have it based on one individual. It has to be a flat organization, and that's what we've tried to build. Like Diane said, when we first came in, we were about a $200 million company, now a $2 billion company. But it's not about us. It's about the we. It's about the collective. It's about all of us together. We sink or swim together. At the end of the day, as Diane said, “We're one firm, one integrated practice around the world.”
Willy Walker: And it shows. We're out of time. I’ve loved this. I'm so appreciative of the partnership that our firms have with one another. Diving into these issues, it was fascinating for me to do some real research on Gensler and see what you all have done and how you've gone about doing it. I've also learned a lot about what we might think about doing here at W&D on a number of different things.
Thank you both for your time. Have a great time in your co-chair roles. Good luck to Elizabeth and Jordan in their new co-CEO roles. It doesn't sound like they need a lot of luck, but it'll be great. And, after we do Atlanta, we gotta figure out what the next project is going to be. So, thank you both.
Thank you, everyone, for joining us today. And we'll see you again next week on the Walker Webcast. Thank you both.
Diane Hoskins: Thank you, Willy.
Willy Walker: Bye.
