Ready for an office space deep dive?

August 28, 2019

Sometimes I geek out over office space.  Today’s narrative is one of those just for the interested.  Here is a link to a survey conducted by the National Association of Industrial and Office Professionals (NAIOP). This 50-page deep dive into the topic asks real estate owners and professionals their thoughts on Co-working vs. Building Collaborative areas and what is needed to stay competitive. This is a very interesting read but lengthy, so as I so often do, below I have provided the condensed takeaways: 

  • Tenants pay for “free” common area amenities. Owners bake in the expense of these amenities by increasing CAM’s and Load Factors.  This change has been a below-the-radar increase of 10-15% increase in rents without tenants really knowing.
  • “Communal & Programming Amenities” are the new “Traditional Amenities” (see chart below).
  • Given the full employment, tenants now are requiring all these new amenities to attract and maintain talent.

Owners are now starting to create and manage their own co-working operations in their buildings to compete with the WeWorks of the world (See my narrative on this here).
 

A perfect case study for this can be found at a project my team does the leasing for — Renaissance Square in downtown Phoenix. This 1 million SF project recently completed a $50 million remodel that includes the following:

  • 2 renovated lobbies that include expansive common area seating with charging capability at almost every seat.
  • 10,000+ SF gym remodel that includes Basketball court, Racquetball court, all new gym equipment, training classes, and a locker room with sauna.
  • 10,000+ SF Tenant Lounge with 3 common area conference rooms, free coffee and tea, kitchen, arcade games, ping pong, Foosball and common area WIFI.
  • Programmed Amenities – Weekly programs offered by management that include Bingo, Arts and Crafts Classes, Massages etc.
  • 40,000 SF of co-working space operated by Spaces.
  • 100,000 SF of move-in-ready spec suites.

 
The competition for employees is fierce.  The competition for office tenants is just as fierce.  The market is changing. Give me a call if you want to discuss further. 

Craig
602.954.3762
ccoppola@leearizona.com

Activating Office Building Common Spaces for Competitive Advantage

By Richard B. Peiser, Ph.D. and Raymond G. Torto, Ph.D.

November 2017

Click here to read the full article. 

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