When an item loses differentiation across its supply base, it becomes commoditized. You might not think of an office building as a commodity, but many suburban office buildings that were developed in the 1980s and 1990s have a similar look and feel. For prospective tenants, it’s difficult to differentiate among the buildings they’ve toured. If you own such a building, that’s a big problem because your ability to attract new tenants suffers. But as a tenant, it poses a different threat altogether.
First Impressions Are Everything
If you’re going to commit to a new space for the next five, 10 or 15 years, make sure you are aligning your company and brand with a building that enhances your image. I’m not saying you need some swanky downtown or Cupertino style space, but the building should stand out from the crowd. If your building blends in with the rest, then prospective talent might not be impressed when they walk in. Remember, first impressions are everything. Before your new client or prospective employee walks into your space, they are greeted with a parking lot, lobby, elevator, corridor, and so on. If their experience isn’t a positive one, then you’re playing from a losing proposition before they even walk into your office. It will affect their decision whether or not to work with you.
Amenities Are an Investment
A recent white paper by Colliers International found that in the past, owners allocated 3 percent of portfolio space to amenities like gyms and cafes. Today, that numbers is closer to 10 percent and can increase to 12 percent or more depending on the caliber of tenant you are trying to attract. This might include a cafeteria, fitness center, shared conference space, etc. Make sure your space has its fair share.
Create a Unique Experience
Even if you think you’re destined for a class B building, make sure you consider all options. Throw a couple of Class A buildings into the mix. Weigh the pros and cons of each building. For a moment, forget about the rent. I know it’s important, but if you lease space in a 10-year-old Class “A” building vs a 30-year-old Class “B” building that hasn’t been renovated, then your bottom line can suffer due to lost opportunities to attract young talent or retain top employees. Thomas Vecchione, principal of the international architectural firm Gensler, wrote in Creating Value Through Placemaking “Office spaces that engage employees by creating unique experiences create value and function as a strategic business asset rather than just a workspace.” I believe the same goes for attracting new clientele. Their impression of you starts with your space, and if you can create a unique experience, chances are, they’ll be back again.
I’m not suggesting that you can only find unique features in a Class “A” building. There are also plenty of high quality, recently renovated Class B buildings. Most popular improvements include renovated lobbies, elevator cabs, new HVAC, etc. These are important features of a building, but let’s take a more modern approach. We see owners investing in what’s now known as “micro-communities.” A micro-community might include a tenant lounge, complimentary WiFi, casual seating, gardens, televisions, shared conference facilities, and even healthy eating options and cafes offering coffee or smoothies. These amenities and areas create spaces that allow people to decompress or hold meetings outside of the office environment. Doesn’t this sound like a place where you’d like to work?
If you own real estate, hopefully I’ve convinced you to rethink the next round of improvements you make to your building. Go for a more modern look. Add in services and features that will be attractive to the tech-savvy crowd. If you’re a tenant, hopefully you understand why you need to pay close attention to your real estate. Your building and your space say more about you and your company than you realize. Make sure you’re working closely with your broker so you can find a building that best enhances your brand, your culture and your business.
Based in Princeton, N.J., Vinny specializes in tenant and landlord representation for Colliers International, working directly with his clients in the acquisition and disposition of office space. For more commercial real estate insight and trends, follow Vinny on Twitter.