Office buildings have been changing. One only has to walk through a recently completed building to see it. It has not happened over night – architects and developers have long been students of the needs of the changing workforce.
It used to be that an office is where you went to work and then promptly left once you were done with your work tasks. No longer. With amenities such as upscale food courts, wellness facilities, and business services being the norm, office common areas and office space are now designed to attract tenants and make sure that stay put. Office spaces especially have been transformed over the last decade – they have become extensions of tenants’ homes and of their lifestyles as well.
The transformation was anticipated: as the workforce was changing, so were tenants’ requirements. Consider the latest innovations in office-space design: they are not only meant to help tenants be healthy and comfortable, but also productive and creative as well. The best functioning offices are a careful balance between open areas to facilitate communications and decision-making and private, quiet spaces where conversations don’t disturb coworkers. Generally, the space becomes a reflection of the business culture and brand of the tenant: from the floor configuration to the finishes.
A little context: for many years after the Great Recession, the office inventory was constrained even as employment rose. While landlords still dominate most markets in 2017, there’s a wind shift happening in some cities as new buildings come on line: landlords are now finding themselves competing to attract the most desirable credit-worthy clients. Unless they are leasing to companies that are relocating, landlords are marketing to the tenants of their fellow landlords. This requires them to stay on top of the right amenity mix that will allow them to woo tenants away. Added amenities bring higher development and operating costs, which landlords hope will translate into higher net rents and occupancy. Tenants, on the other hand, want to maintain a right-sized footprint for their businesses: trying to accommodate for headcount growth but also not adding under-utilized square footage.
The dynamic hasn’t changed that much – landlords want to maximize profits and tenants don’t want to help them. But, the physical characteristics and services provided by landlords and driven by tenant demand are forever changed.
*Image from Shutterstock, Inc.