Is Nike's Splashy New Building a Sign of a Top for Corporate HQs?

In this video from "The 5" on Motley Fool Live, recorded on Oct. 4, Fool.com contributors Brian Withers, Rachel Warren and Demitri Kalogeropoulos share their perspective on Nike's (NKE -0.19%) new corporate building, and whether these types of expensive headquarters investments make as much sense as they used to.

Brian Withers: This news item was really interesting to me, not that Nike is opening a research lab in Beaverton, I mean, that's their headquarters. That's what they're doing but the building [laughs] is not just a little building.

This is a 750,000 square foot research lab named after Lebron James and oh my gosh, it's got the world's largest motion capture installation with 400 cameras, body mapping equipment, a full-sized basketball court, a 200 meter endurance track, artificial turf to help Nike capture Nike athletes in motion.

There's even advanced climate chambers that can mimic a variety of conditions. [laughs] This almost sounds like EPCOT when you're going through the test track ride in which [laughs] with suppose on the end, you get wet, you speed up and you slowdown. But this got me thinking, if Nike is building, and this is only one of the multiple buildings that they have plans for their campus. We're going to talk about fancy and large corporate campus headquarters. Buy-seller-hold this idea.

Basically buy if you believe that companies are going to continue to build corporate headquarter campus sellers, if you believe the opposite. Rachel, since it's your [laughs] first day, I'll get through in the deep end again. What do you think buy-seller-hold, the future of fancy large corporate headquarter campuses.

Rachel Warren: Yeah. I hate to say this, but I have to go with sell. But like first-off, I should clarify, I think this is a super fun idea. I feel like it's a really cool thing to have [laughs] based on your work campus. I think it makes for a very interesting workday if that's where you are. But more in the day-to-day fear.

I don't know that I see your average corporate company, even a really large one, adding this honest standard fare to their campus. I also think when you look at the workplace and you think about the things that employees really care about. I don't know that this is something that's going to be at the top of their list. I think we're seeing more and more hybrid work environment and there's more companies are delving into this. You wonder if the utility of fancy large corporate campuses is going to, not so much be a thing of the past, but how much are people really going to need or want these things? I think employees, generally speaking, what they want from their employer.

Sometimes when you're hearing OK. What are areas where you want improvement? It's working conditions, its benefits, it's maybe better pay or or work flexibility, the ability to be home part-time.

I think those are the things that your average employee curious about. I know historically back in my corporate days costs versus [inaudible 04:35:39] I really cared about. Look, I think it sounds like a really cool idea, but do think it's the icing on top, I don't think is what your average person who's working hard is really going to maybe be impacted by so much in their day-to-day lives or even so much what would be on their top five list of wants. But that's just my take. [laughs]

Demitri Kalogeropoulos: Yeah. I got to agree with Rachel again her. With the caveat being I totally understand why Nike is doing this, it makes sense to them in a lot of ways with our product is very experiential anyway.

They've got a huge budget for marketing. It makes sense for them to go those flashy in this regard. I don't know if you mentioned, but yeah, I was looking at that press release too. They had this huge, I guess, an end clients that you can practice pushing yourself above hills in a more flat areas and I could use that. I live in Northern Florida here and it's just flat. I never use one gear on my bike, Brian, you'll [laughs] understand that situation.

Withers: I'm sorry. [laughs]

Kalogeropoulos: Yeah. Exactly. Whereas I grew up in Virginia and it was totally different biking experience over there. But anyway, I would sell this idea too. I agree with what Rachel said. I think employees right now are prioritizing that short commute idea, the flexibility and maybe cheaper housing away from these metropolitan areas where you might build a big HQ center.

One example, I was thinking about this in the pandemic that popped in the mind when I was thinking about this question is Activision Blizzard, video game company, I follow them pretty closely. They obviously had to change a lot during the pandemic but they basically just snapped their fingers and just decentralized all of their content production during that first phase of the pandemic. They've got all these big brands, they have teams working together at every step of the process and, I'm not saying it was easy, but they didn't miss a beat in closing down their corporate locations and decentralizing that to other places, mostly in people's houses.

You multiply that over a thousand times, so many other companies did that same thing and were able to completely do 100 percent in most cases of their work without having any in-person situation, so I don't think that's a bell you can really unring.

At the same time, Apple's got that huge campus there. I understand why Apple did that too and there will always be a place for that in-person collaboration situation. I know companies that value innovation are really big on that too. There's going to be a place for that, I think, but I think there's just over time going to be less of these big splashy HQ openings.

Withers: Yes. I'm not totally a sell. I can't completely get on board [laughs] with you guys and so I'm going to play a little bit of devil's advocate here. I absolutely see. You're unringing the bell, Demitri, phrase is really ringing true with me, and I totally get that.

But I think the idea of what headquarters is going to be is really going to change definition. In the past, you think about the Apple headquarters. It's where most of the employees work, they commute everyday to a central office. The return on that investment, at least in my mind, was lukewarm at best.

Let me paint a different picture of what the future of a centralized corporate office could be. Let's picture a small number of key staff in the office permanently, and these aren't necessarily the executives. These are people like customer support or meeting facilitators or schedulers to make use of the facility. Think of the headquarters as a gathering place for all of these in-person things to happen. Whether it's meeting with customers, meeting with suppliers, annual or quarterly, or even monthly get togethers, management training.

There's a bunch of things that need to happen on a regular basis and can happen anywhere but why not happen at the, I don't want to call it corporate headquarters anymore because that's not really what this is, it's really a collaborating campus.

The rooms would change, the offices would mainly disappear, and there would be co-working spaces, events spaces, there would be a great cafeteria, there would be a big potentially theater sized rooms to have meetings in, down to small rooms with 5,10 people, whatever.

But it's very different than we think of today and the people who show up to that location on any given day could be completely different. But I think there'll be almost a staff coordinated in this new corporate hybrid environment that would be responsible for getting people together on a regular basis across the company.

I think having it be in a place where you can control the environment, control the food, make sure the people are the right people coming in and going and have the corporate security and all that stuff I think there's benefit there.

Certainly, it's going to take a while for this to transition and it will be interesting to me over the next 18 months as companies come back and try to figure out what their corporate headquarters needs to be. It's like you left your home and all of a sudden now the kids are grown up and things are changed and you don't have pets or you do have pets and your house needs some renovation, so it'll be interesting to see what happens there.