In my work at NAI Hanson, I frequently come across office building owners who are at a loss for how to attract and retain tenants. Although it is vital to work with a commercial real estate broker with experience in properly marketing these spaces and negotiating leases, that is only half of the equation to ensure that an office space maintains high occupancy.
The other half of this equation is a bit more complicated. The demands of today’s office tenant often are mirrored and driven by the demands of their employees. Over recent years, the demands of today’s workforce have drastically shifted as millennials have entered the workforce in larger and larger numbers and have gone from low entry-level employees to highly skilled assets that companies are looking to attract and, more importantly, retain. These employees often factor in the type of office and culture they most desire to work in when they are considering next steps in their career. For most of them, the 1980s style cubicle farm with barely edible cafeteria food, stale design and minimal sunlight is more of a deterrent than a recruitment tool.
I was recently invited by CAPRE to speak on a panel at their New Jersey Gold Coast North & Bergen County CRE Summit surrounding the office market and specifically what owners can do to attract quality tenants. I told the audience, what I tell every property owner – millennials want to be somewhere cool and an office needs to reflect that desire in order to attract tenants. But how can owners make their spaces “cool” to attract quality tenants?
- Amenities – Everything starts with amenities. It is difficult to stand out from other office spaces without unique amenity offerings. These can range from outdoor gathering areas or patios to shuttle services from nearby transit stations to state-of-the-art fitness centers and everything in between. At the very least, think about your office’s cafeteria, does it offer a unique and exciting menu on a daily basis? A cafeteria upgrade can make a big difference in attracting tenants. A property owner does not need to break the bank adding these amenities but it’s important to remember; each investment in amenities will be reflected in the level of rent that can be charged and the quality of tenants that will be attracted.
- Resimercial design – Although it can’t be found in the dictionary, resimercial is now the buzzword in office design. Resimercial means making an office feel more like a home rather than an office. By bringing in features like lounge areas with comfortable seating, designer furniture and other items usually found in living rooms and not in break rooms, an owner can provide the welcoming and warm office environment that so many office workers crave. Tenants today want natural light not windowless offices with fluorescent lighting overhead. You wouldn’t build a house with windowless rooms and the same should apply to office spaces.
- Flexibility and Integrated Technology – Companies want to be able to fit as many employees as possible into an office. The days of the dedicated cubicle are behind us and with that change comes smaller, more collaborative workstations which provides the connectivity millennials crave. Where each employee previously utilized about 225 square feet of space in 2009, today’s tenants are only looking for 100 square feet per employee. Many times, employees don’t even have an assigned workspace and are free to work around the office where they feel most comfortable. Employees want the flexibility to work anywhere in the office and, on nice days, outside of the office and it is vital that electric plug-ins are included in furniture and that your building’s wi-fi offerings are up-to-date, reliable and able to reach every part of your building, including outdoor areas.
- Nontraditional lease terms – Although no landlord wants to offer a three-month lease or flexible terms, that is precisely what many tenants want. The speed of today’s economy means that many startups and emerging companies’ space needs may turn on a dime and a multi-year lease is impractical for them. Being willing to offer flexible lease terms enables owners to attract tenants that are looking for office space but unwilling to commit to the longer length typical of a traditional office lease.
Today’s office market is perhaps one of the most challenging office markets that the commercial real estate industry has ever seen. Challenging however does not necessarily mean things are bad. In fact, my team and I are generally optimistic about the office market as long as owners are proactive and forward-looking. Our team at NAI Hanson takes great pride in constantly educating ourselves on what today’s tenants want and how we can apply that knowledge to better serve our clients in this sector and each sector that we work in. Reach out to me at firstname.lastname@example.org to learn how I can apply my experience to help you navigate the competitive office leasing market.