In today’s market, often a lot of attention is given to new real estate and all the bells and whistles it will have but there’s a vast pool of existing buildings, which often undergo extensive renovations in order to attract today’s tenants. The tenant of today is picky, demanding quality workspace for their employees and in-house amenities that provide everything employees would need without ever having to leave their own building. But older buildings don’t offer quite the same amenities and conveniences as new construction. Some of that has to do with the fact that there’s been a shift in the workplace and what both tenants and employees are looking to get in return.
During a session at the Urban Land Institute’s Spring Meeting held in Seattle, industry leaders came together for a panel discussion titled Updating Non-Historic Vintage Buildings for 2017’s Office Tenants, which included Kilroy’s Rob Swartz, LMN Architects’ Walt Neihoff, Urban Renaissance Group’s Shawn Jackson and JLL’s Larry Almeleh. Bill Pollard with Talon Private Capital, LLC led the discussion that dived into the ways in which we can take second-generation buildings and make them attractive to the 2017 tenant by focusing primarily on the ground-floor level and providing a visually stimulating and inviting atmosphere.
“People really want authentic buildings,” said Neihoff. He said when working with clients on projects, he often asks himself, “Would our employees want to work in this building?”
Priorities have shifted from what they once were in terms of amenities. In older generation buildings, a gift shop and front desk reception area were staples of nearly every building, but today that isn’t the case. Tenants want to make their buildings more inviting and not have the lobby serve as just a pass-through like it once was. “With this generation of building, it started with lobbies as just a pass-through from point A through the doors to the elevator,” Neihoff said, but he wondered how one starts doing more with that. The answer was simple, “It’s obvious,” he said. “It’s the lighting, graphics,” he continued. There were no kinds of amenity spaces in the building, which have now become crucial to tenants.
While tenants have high expectations and even higher demands, the most common element of updating these buildings, according to the panel, was summed up into one word: amenities. Having the right amenities is key to attracting the right tenants, the panel agreed.
“Seems like today, every building is doing the same seven amenities whether it be a great room, fitness center, bike rack, bike lockers, showers, electric charging stations, etc. Those are sort of the baselines,” said Almeleh. He added that it’s important, however, to recognize and understand the building for what it is. “Don’t try to make it something that it’s not,” he said. “You don’t have to be a real estate expert to know that it was done poorly or wrongly. Tenants are as every bit in tune with that as real estate people are.”
Despite the fact that the Seattle market is very tight, it’s also very competitive, Almeleh said, adding that today’s client is quite picky. While there’s no specific area people look to, the baseline is that the basics are important. “The basics are way different than they were 20 years ago,” Almeleh said. “The basics are now everything.”
With those amenities also comes the need for high-end ground floor retail, and not just any retail, but cool and creative retail. “Employers don’t want employees to leave their buildings anymore,” Almeleh said. “They want to bring amenities into their space and then if they do have to leave the office, they go downstairs to something that’s useful,” he continued. Whereas before a gift shop might have been something tenants looked for, it’s no longer that great of an attribute to an office building. More importantly, Almeleh said a bar or high-end coffee shop or even a great gathering area is much more valuable today and that’s just the type of renovation that happened recently at the 8th + Olive building.
The office building at 8th + Olive, which hosted this ULI session, was renovated in 2015 to include the most common amenities tenants are looking for today. The building boasts a new lobby, new state-of-the-art conference facility, fitness center with showers and lockers, on-site retail, common area upgrades and expanded bike storage areas. The building has exposed concrete walls that were left untouched after the drywall came down during the renovation and a hip bar and coffee shop with new finishes and thoughtful lighting. Earlier generations of buildings had closed off amenity spaces, bound by walls on nearly every side, but tenants today want a more exposed feel for their retail and amenity spaces. It’s more common for these bars and coffee shops to be islands, floating around in the common areas, which makes them more approachable and offers a community and collaborative feel. All in all, the renovation featured 12,000 square feet of capital improvements.
The 8th + Olive renovation was just one example of what tenants can do to improve their building to make it more attractive. The panelists agreed that it’s important to stick to the bones of the building and limit improvement to the ground-floor level since most people will experience the building from that vantage point. After all, each project will be specific to what the tenant is looking for, but after you add all the basic baseline features to spruce up the ground level, what else will make the setting unique is truly the ultimate quest.