Office Midwest

Forecast panelists: Office owners who don't offer experiences will struggle

Real Estate Forecast panelists: Office owners need to offer experiences,ph01
Office spaces today must be comfortable and appealing, said the panelists at the 17th annual Comercial Real Estate Forecast Conference held Jan. 8 by REjournals.com.

Want to attract tenants to your office space? You’ll need to follow the path of the most successful retailers today and offer your tenants not just cubicles and a sprawling front lobby but an experience.

That was one of the takeaways from the office market breakout session held during REjournals’ 17th annual Commercial Forecast Conference held Jan. 8 at the Hyatt Regency Chicago in downtown Chicago.

During the session – one of several panels during Forecast Conference attended by more than 900 – office professionals said that office owners can no longer expect to attract tenants with boring buildings lacking in amenities.

Scott Delano, design director and associate principal with Wright Heerema Architects in Chicago, said that employees today are choosier about their office space. They want an experience from the moment they enter their office buildings.

“Right now it’s a flight to quality in the office market,” Delano said. “Employees expect more of their offices. Basically, they want a good experience from the front door all the way to where they sit.”

This trend is nothing new in the retail space. Those retailers who are thriving today are focusing not just on the merchandise they sell but on the experiences they offer. Think of home goods retailers who offer onsite cooking classes or electronics companies that allow customers to spend hours in their shops trying out their latest high-tech gadgets.

Increasingly, office owners must offer their own experiences if they want to attract the best tenants. Why? The unemployment rate is low today, making it more difficult for companies to recruit talent. Companies, then, want to offer potential employees office space that features everything from onsite restaurants and fitness centers to prime locations among walking trails and pedestrian-friendly retail areas.

Those office buildings that lack these features? They’ll struggle to attract a steady stream of tenants.

“What employees really fear is an office that’s just a sea of cubicles,” Delano said. “Instead, employees want a rich and layered experience.”

So, what can office buildings offer? Onsite restaurants are a big draw as are fitness centers. Conference rooms that aren’t just a table and chairs but rather feature the latest technology are a big draw, too. Lobbies that offer seating areas and lounge areas are a plus.

Rooftop gardens and seating areas? Those are popular, too.

Basically, office owners who can make their buildings a more pleasant space for employees will be more attractive to companies today.

This can be a big challenge for the owners of older office buildings, said David Burden, principal and leader of the Chicago corporate solutions team at Colliers International.

“You have to keep buildings up to date if you want to attract tenants,” Burden said. “The problem is that some office buildings built 30 or 40 years ago can’t always accommodate the needs of companies today. Those buildings need updates to accommodate the higher densities that companies want in their office space.”

Also important is online connectivity, said Christine Torres, head of Chicago for WiredScore. Those offices that can’t offer the fastest Internet speeds will also struggle to attract tenants, she said.

“Technology and the Internet are the most important tools for any and every building,” Torres said. “If you are not connected, you are not productive. Connectivity is a necessity.”

David Moore, senior vice president and portfolio director for the Chicago market of EQ Office, said that the key is for building owners to always listen to their customers. And who are the customers? It’s not just the companies that lease office space from them. It’s also the employees who work at these companies, Moore said, and anyone who walks into that space during the day.

“What the employees want is what the tenant needs is what the building needs to provide,” Moore said. “Our job as landlords is all about enhancing that experience.”

Elizabeth Gracie, partner with O’Keefe, Lyons & Hynes, LLC, in Chicago, who served as the panel’s moderator, sparked another interesting discussion when she asked panelists whether the office migration from the suburbs to urban centers will continue.

Burden said that it will. Companies that want to attract the younger workforce are being compelled to open offices in downtown areas, he said, even if they also keep locations in the suburbs.

“Some companies opened satellite offices in the city while keeping their main offices in the suburbs. But as more employees go to those satellite offices, those spaces are getting bigger and bigger,” Burden said.

How committed are companies to offering downtown locations? Moore pointed to a client that has office space in the Chicago suburb of Oakbrook Terrace. The company has decided to leave this space and move to the city even though it has five-and-a-half years left on its existing lease, Moore said.

“That is a big decision to uproot their entire team with that much time remaining on the lease,” Moore said. “But that is how important it is for that company to have a downtown office.”