{"id":1004133151,"date":"2015-12-04T14:10:47","date_gmt":"2015-12-04T22:10:47","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004133151"},"modified":"2020-04-21T02:53:34","modified_gmt":"2020-04-21T10:53:34","slug":"december-issue-people-pleasers","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/december-issue-people-pleasers\/","title":{"rendered":"What Do Office Tenants Want?"},"content":{"rendered":"<p>By Nancy Crotti<\/p>\n<p><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Trip-Advisor_stadium-seating_1.jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004133152\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/december-issue-people-pleasers\/trip-advisor_stadium-seating_1\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Trip-Advisor_stadium-seating_1.jpg\" data-orig-size=\"918,526\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"Trip Advisor_stadium seating_1\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Trip-Advisor_stadium-seating_1.jpg?w=918\" class=\"alignright size-medium wp-image-1004133152\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Trip-Advisor_stadium-seating_1.jpg\" alt=\"Trip Advisor_stadium seating_1\" width=\"300\" height=\"172\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Trip-Advisor_stadium-seating_1.jpg 918w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Trip-Advisor_stadium-seating_1.jpg?resize=300,172 300w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Trip-Advisor_stadium-seating_1.jpg?resize=768,440 768w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>One day not long ago, a young adult showed up for an interview at a prospective workplace: a dark brick, 1980s-era building with an imposing lobby. The job candidate took one look, turned around and left without having the interview.<\/p>\n<p>Other potential employees\u2014all Millennials\u2014did the same. Finally, the human resources warned the real estate department that the company would lose more talented recruits unless it upgraded the property, recalled Bernice Boucher, managing director of workplace strategy at JLL.<\/p>\n<p>The company invested millions to make the lobby more welcoming and renovate a basement cafeteria. It did not, however, jettison cubicles in favor of a more open work environment. The company ended up moving.<br \/>\nBoucher\u2019s anecdote gets to the heart of a vital and complex question: What do office tenants want?<\/p>\n<p><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/745-Atlantic-Ave_2.jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004133153\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/december-issue-people-pleasers\/745-atlantic-ave_2\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/745-Atlantic-Ave_2.jpg\" data-orig-size=\"1024,768\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"745 Atlantic Ave_2\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/745-Atlantic-Ave_2.jpg?w=1024\" class=\"alignleft size-medium wp-image-1004133153\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/745-Atlantic-Ave_2.jpg\" alt=\"745 Atlantic Ave_2\" width=\"300\" height=\"225\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/745-Atlantic-Ave_2.jpg 1024w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/745-Atlantic-Ave_2.jpg?resize=300,225 300w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/745-Atlantic-Ave_2.jpg?resize=768,576 768w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>In some respects, the answers are becoming clearer. Today\u2019s standards call for large open spaces with a side-core layout and plenty of natural light. Preferred amenities include a rooftop park or patio, a fitness center, car-charging stations, bicycle lockers and showers. On the high-tech wish list: Smart elevators, HVAC designed for flexibility, and data systems suited to a mobile workforce.<\/p>\n<p>One example that may embody the future is The Edge, a 430,000-square-foot Class A building developed by OVG Real Estate in its hometown of Amsterdam. Dubbed \u201cThe Smartest Building in the World\u201d by Bloomberg News, The Edge \u201cknows\u201d each worker\u2019s schedule, and uses a smartphone app to locate a desk for everyone daily.<\/p>\n<p>\u201cThe building can know who you are by your license plate on your car, and welcome you and direct you to a parking space,\u201d Boucher explained. \u201cI know there\u2019s a creepy aspect to it, but if you want the ultimate tenant experience, there\u2019s an app on your phone.\u201d<\/p>\n<p>Yet buildings need not be as high-tech as The Edge to compete. According to Kingsley Associates\u2019 <a href=\"https:\/\/www.us.jll.com\/united-states\/en-us\/research\/capital-markets\/commercial-real-estate-investment-trends\" target=\"_blank\" rel=\"nofollow\">second-quarter survey<\/a>, more than 88 percent of office occupants reported being generally happy with their space, a higher share than in 2013, noted John Falco, a Kingsley principal. Nearly 70 percent said they received value for the money.<\/p>\n<p>\u201cThis indicates that landlords are realizing the importance of keeping their tenants happy, and that is giving landlords the power in most major markets,\u201d Falco explained. \u201cIf a landlord focuses on delivering high levels of customer service, they tilt the balance of power in their direction due to the cost and time associated with a tenant moving.\u201d<\/p>\n<p>For office tenants who described themselves as likely to renew their leases, location was overwhelmingly the most important factor, cited by 81 percent of respondents. Rounding out the top five factors were building quality (cited by 51 percent), the company\u2019s space requirements (44 percent), property management (42 percent) and price (37 percent). Even if their rent goes up, these tenants recognize that moving is usually more costly and painful than renewing, Falco noted.<\/p>\n<p>It doesn\u2019t always have to be, however, as many smaller companies have discovered, observed Steve Purpura, managing partner &amp; Northeast market leader for Transwestern. For example, tech startups that spent their infancies in co-working spaces, such as WeWork, want prebuilt suites that they can occupy awhile, then move on, Purpura said.<\/p>\n<p>These tenants also want shorter, more flexible leases. If landlords can get tenants to agree to a termination option, tenants must pay for unamortized expenses if they leave early. \u201cIt\u2019s a penalty, but not a huge penalty,\u201d said Phil Utigard, executive vice president of Transwestern in Chicago.<\/p>\n<p>Most companies, however, want more than a cookie-cutter setting. They value lobbies that double as common spaces for work and socialization. Toward that end, winning lobbies feature soft seating, blond wood, white stone and contemporary art, plus a retail or food component, Purpura said.<\/p>\n<p>Also desirable are locations near mass transit and elements that evoke a feeling of wellness, such as abundant natural light and high-quality indoor air. \u201cIt\u2019s the new sustainability,\u201d Utigard explained.<\/p>\n<p><strong>Price Pacesetters<\/strong><\/p>\n<p><a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004133154\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/december-issue-people-pleasers\/lone-star-college_dallas_from-jll\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg\" data-orig-size=\"864,1296\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;6.3&quot;,&quot;credit&quot;:&quot;george craig&quot;,&quot;camera&quot;:&quot;Canon EOS 7D&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;1348017900&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;17&quot;,&quot;iso&quot;:&quot;250&quot;,&quot;shutter_speed&quot;:&quot;0.005&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;1&quot;}\" data-image-title=\"Lone Star College_Dallas_from JLL\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg?w=683\" class=\"alignright size-medium wp-image-1004133154\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg\" alt=\"Lone Star College_Dallas_from JLL\" width=\"200\" height=\"300\" srcset=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg 864w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg?resize=200,300 200w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg?resize=768,1152 768w, https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/12\/Lone-Star-College_Dallas_from-JLL.jpg?resize=683,1024 683w\" sizes=\"auto, (max-width: 200px) 100vw, 200px\" \/><\/a>Landlords who provide this type of environment in new construction or in renovated space are setting the pace. Rents for Midtown Manhattan trophy towers have reached $140 per square foot, Purpura noted. Elsewhere, trophy space under construction commands $55 per square foot on average, JLL notes in a third-quarter report. Class A space in the pipeline can fetch nearly $43 per square foot.<\/p>\n<p>\u201cThose are very, very strong rents,\u201d Purpura said. \u201cI think in the short term, they\u2019re probably pretty stable.\u201d<br \/>\nIt\u2019s easier to attract tenants to an older building that\u2019s been remodeled to suit their tastes. \u201cWhat\u2019s great about those buildings is they often have operable windows, so you not only get the natural light but also the fresh air,\u201d Boucher said, adding, \u201cThey have a much more creative vibe to them when they\u2019re renovated and done well.\u201d<\/p>\n<p>In cities like Chicago, Seattle, San Francisco and Dallas, many tenants are gravitating toward warehouse and manufacturing districts. The Dallas Arts District, to name one, is \u201cthe hip, new, live-work-play place (with) lots of residential development where Millennials are living,\u201d Utigard said. \u201cIt\u2019s perceived as being the place to be to attract talent.\u201d<\/p>\n<p>In the aftermath of the Great Recession, a dearth of construction financing led to ramped-up renovation of older buildings. Renewed tenant demand is now yielding a solid return that investment, Boucher said.<\/p>\n<p>What about the future? Tenants who signed leases at bargain rates during the recession likely face rent hikes, Boucher said. Some may shift from Class A properties to Class B buildings as more space in the latter opens up. Those feeling the pinch of low vacancy will likely benefit as new product comes on line next year, she added.<\/p>\n<p>And Utigard urged tenants in strong markets to start talking to their landlords when lease expiration is three years out.<\/p>\n<p>\u201cGet on it,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>New strategies for winning &#038; keeping office tenants.<\/p>\n","protected":false},"author":1200,"featured_media":1004133152,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21780,21781,21782,22251,21747,21785],"tags":[],"class_list":["post-1004133151","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-specialties","category-corporate-real-estate","category-development","category-in-focus","category-office","category-property-management"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What Do Office Tenants Want? 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