As the industry changes in terms of office space expectations, it is now more important than ever to have a full-service commercial real estate team construct a strategic plan and help the client navigate through these unchartered choppy territories. The full-service team helps the client better understand and address industry shifts, and includes Asset Services, Leasing, Capital Markets, Project & Development Services, and Valuation & Advisory.
One of the major changes in office space is the transition from perimeter offices with hard walls to more modern, open spaces with glass, which allows for more natural lighting. Additionally, office occupiers are opting for more efficient use of square footage by providing fewer square feet per person, as well as more collaborative, open space with communal breakout and meeting space.
However, less square footage does not mean cheaper buildouts. Construction costs per square foot have increased as office spaces are used as a recruiting tool, causing tenants to invest over the tenant improvement allowance in order to achieve this high-end modern look. Even as tenants improve efficiency with their usage, the newest office space trends can lead to increased operating expenses. Energy consumption increases and HVAC and other building systems become strained since many buildings are not engineered for these high-density accommodations. Just as building systems are being strained, tenant parking requirements are higher than ever. Landlords are forced to evaluate overselling parking to sign a tenant, but what effect does this have on parking availability as a building approaches full capacity? Will the self-driving car and car-sharing practices change this trend, or are high parking requirements here to stay?
The full-service CRE team helps the client create a strategic plan by asking the important questions, including:
- How can the building accommodate this user?
- How can the building offer a larger parking requirement?
- How can the strain on the building and the reduction in available parking affect future deals with remaining leasable/vacant space?
- How will tenant improvement costs and higher rents affect exit value?
Having answers to these questions and concerns can help the client win the deal. However, in order to secure this valuable insight, you need an experienced CRE team that can leverage expertise across all service lines and that can provide a comprehensive strategic plan.