The last time Network of Space talked to Ron Zappile (See "Lean, Mean Reality"), http://www.agilquest.com/newsevents/newsletters/51-fall-2007/159-lean-mean-realty he was director, global real estate operations for United Technologies Corporation, in charge of managing assets that housed 215,000 employees in 62 countries. He retired from UTC in February, he tells us, to start his own consulting group, take on an advisory role for a start-up company and "spend more time with my grandkids." Then CoreNet Global came calling, looking for someone to step in as interim CEO. Now Zappile is traveling back and forth weekly between his home in Hartford, Conn., and CoreNet Global headquarters in Atlanta, Ga.

NoS: What do you see as the major challenges facing the corporate real estate community?

RZ: A majority of our members are focusing on cost reduction. Nine out of ten think the recession will last until 2010 or longer. There's really a mood of battening down the hatches and looking at every item to make sure they're getting the most cost-efficient output. Cost reduction is on the mind of all of our members, whether they are end users, service providers or economic developers.

(Editor's note: CoreNet Global supplied the following chart ranking the criteria members would use in making strategic real estate decisions in the next 12 months.)

RZ: Restructuring leases is at the top of the list. Before I left UTC, we began a program to stratify leases in categories A, B, C and D -- critical, core, non-core, and so on. We went to each of those landlords and began discussing the restructuring of our leases. In the case of core properties, if they cut their rates or gave us some free rent, we'd agree to an extended term. Also, when landlords had UTC contracts in multiple locations, we might say, "I need less space in Atlanta, more in Chicago. What can you do for me?"

A number of CoreNet members are restricting capital expenditures. That retains cash. Some companies are moving to lower cost facilities. Then you've got tele-work and the alternate workspace solutions. They go with the redesign of office space. That's moved up to second place in portfolio strategies.

NoS: Redesigning the office? I take it that CEOs aren't installing gold-plated faucets in the executive bathroom any more. What kind of redesign are you referring to?

RZ: Some organizations are moving to fewer cubicles, more collaborative work areas. Other companies are coming up with space standards and design standards -- a space for this type of worker is this many square feet, the space for an engineer is that many square feet. Where you have a corner of the office with a plant, you might put in a phone with a chair, making it a place where business can be done. Companies are looking to make more efficient use of the space.

A second thing is what you put in the space. Some of the furniture manufacturers are coming out with products that go into smaller and smaller spaces with integral capabilities, like digital light boards. Technology is part of the cost-reduction portfolio.

NoS: Is there sufficient payback from retrofitting office space to justify the cost right now?

RZ: If you just look at the redesign in isolation, the payback may not hit the capital investment hurdle. You might not get a 6-month payback. You have to look at it in the context of a larger project. It's more likely to be attractive when you're renegotiating a contract, co-locating or moving. What is the landlord willing to give you? How much would you have to spend on office design in the new facility anyway?

NoS: There was a lot of discussion about Alternative Workplace Solutions at the last CoreNet Global Summit. Are those solutions still "alternative" or are they becoming the "new normal"?

RZ: It may be the new normal for certain industries like financial institutions and technology companies. It's increasing in insurance, claims processing and call centers. Instead of a centralized call center, people stay home and work in their pajamas. How far AWS is being accepted really depends on the industry, though. When you get into more staid, non technology-based industries like service centers and industrial manufacturing, AWS isn't readily applicable.

(Editor's note: Following the interview, CoreNet Globalprovided the following figures for rates of AWS adoption in key industries.)

Financial services - 24%

Telecom - 16%

Technology - 14%

Manufacturing - 12%

NoS: Some of the technologies that gave rise to Alternative Workplace Solutions -- inexpensive cell phones, laptops and broadband connections -- are pretty mature now. Are there any new collaborative technologies that are impacting how people organize the workspace?

RZ: The big one is telepresence technology that brings you face-to-face with people without the inherent delays and choppiness of the older technology. I remember talking about video conferencing ten, fifteen years ago at UTC. It was pretty clunky. It didn't take off. The technology is getting much, much better, and that's impacting the design of collaborative space within the office. It's a little more expensive. You have to have a dedicated room and equipment. But there is tremendous corporate pressure to reduce travel costs. Telepresence is a pretty cost-effective response.

Digital white boards is another. They make for easy transcription of notes. There's less question about what was discussed, what decisions were reached. I don't know if the whiteboards are becoming "standard" equipment, but they are becoming more common. There are other technologies in the future, like intelligent hand devices. But they're beyond the bleeding edge right now.

NoS: When people build new offices towers today, is it assumed that they will utilize Alternative Workplace Solutions -- or is there still a demand for Dilbert-style cubicles and corner offices?

RZ: That depends on what part of the world you're in. In Asia they're building skyscrapers well beyond the ones we have here. The owners are almost dictating what the fit-out will be. They want a certain look to their facility: a modern look, a sleek design. It's dictated by the developer and executed by architects and interior designers. In Europe, the market has been moving away from individual offices. They haven't gone to full open offices yet, but you might have two or three people sharing a work space. They're increasing the density ratio, but they haven't gone to taking all the walls down.

In the U.S., many managers just can't get comfortable with managing people they can't see in the flesh. Is there something intrinsic to human nature that requires that face-to-face contact, or is a generational thing?

RZ: I think it's largely generational. If you're a Baby Boomer, you may have reinvented yourself in your 40s and 50s to learn some technical abilities. The younger generations just grew up with the technology. It's a different ballgame. I don't know if they're wired differently, but they're definitely thinking differently about what they expect from a workplace. Compounding that, it takes a certain type of person to be a teleworker, and it takes a certain type of manager to manage a teleworker. Without that face time every day in the office -- "how are you doing, how's the project going?" -- you have to manage by objective, by schedule. You need a different way to measure success and achievement.

It also depends upon the industry. A 30-year-old in a manufacturing company is very different from a 30-year-old working at Google or Ebay or Yahoo. He's worried about getting widgets out the door, not how much code he wrote. There's less need for creativity. You can't generalize or stereotype in this environment. Each industry is different.

NoS: Thanks for your time today.