Amenities that Give Buildings an Edge
Commercial building owners and managers are being bombarded with news about the explosive “amenities arms race” that has created a constant battle of one-upmanship to win tenants. In recent years, landlords have pumped millions of dollars into new features that include everything from state-of-the-art fitness centers and trendy rooftop lounges to golf simulators, climbing walls and coffee bars.
Tenants that are battling to attract and retain talent are increasingly using the workplace as a recruiting tool. Record low unemployment has been fueling that amenities arms race, which has been a game changer for commercial buildings. Landlords are feeling the pressure to offer the latest, greatest thing in cool features – or get left in the dust. And there's a big gap emerging between older, legacy buildings that offer the basics, and new or newly rehabbed properties that offer modern amenities, services and technologies.
Location, location, location is still critical. But these days, a building’s amenities can tip the scales when tenants are making site selection decisions. Some landlords credit their amenities with speeding lease-up and improving occupancy. But what do today’s tenants really want, and where can landlords get the best ROI?
What’s on a tenant’s amenity wish list?
There is an abundance of lists of “top rated” amenities. The reality is there is no one size fits all. Preferred amenities can vary by the type of business and employee culture. Yet there are some common trends. According to a recent CBRE research study on tenant satisfaction, the top three most-valued aspects of property management are building management, business administration and technology services. In fact, based on a 5-point rating scale, survey respondents rated tech services higher than both general service amenities and physical property amenities with a score of 3.7 compared to 3.2 and 3.0 respectively.
Further illustrating the value of technology, CBRE’s 2018 America’s Occupier Survey also points to the importance technology plays in today’s workplace. Fifty nine percent of respondents plan to introduce mobile apps to enhance the employee experience by helping them to navigate the built environment more efficiently. Also, half of corporate real estate teams plan to secure increased funding to test and implement new technology that is transforming the real estate industry.
PropTech is no longer an amenity that tenants hope to see in a property, it’s a standard component that people expect to see in modern commercial buildings as part of the overall package. People are immersed in technology in their work and personal lives with a variety of apps, smart home tech and virtual assistants such as Alexa that are aimed at making their lives easier. So, it’s no surprise that they have higher expectations for technology in the built environment whether they are going to the office, the mall, doctor or dentist.
PropTech offers more bang for the buck
One of the challenges of competing in the amenities war is that landlords are gambling that a big investment in a shared conference space or a fitness center will deliver ROI. In addition to a hefty up-front investment, those projects often involve carving out space from a building’s existing net leasable area.
But PropTech can be introduced at a fraction of the cost and have little or no impact on the physical footprint. Interactive digital displays, for example, are a relatively easy value-add that don't require an expensive or lengthy renovation or reconfiguring of space to accommodate it. Digital directories, elevator displays and video walls offer everything from wayfinding and traffic updates to contemporary art. And these digital displays can be strategically placed throughout common areas to deliver information, entertainment and convenience.
Regardless of whether a property is brand new, or built decades ago, PropTech helps to elevate a building’s status as a contemporary, tech-savvy competitor.