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- 🏢 Destination Office- 👉 How to Increase Office Occupancy
🏢 Destination Office- 👉 How to Increase Office Occupancy
Ben Apple
May 10, 2023
Hi friends - welcome to the new readers and thank you for your continued support and feedback.
If you have any feedback, comments, or ideas for future trend reports, please drop a reply to this email or click the feedback form at the bottom to help me better meet the needs of this growing community!
Okay, on to this week's trend breakdown.
Here’s what you will learn in today’s email:
What amenities are bringing workers back to the office?
How can office developers boost occupancy?
Which developers and designers are creating the most in-demand destination offices?
What are some project examples?
And more!
👉 Problem
The Covid-19 pandemic accelerated remote work and changed the office landscape. With more employers embracing remote and hybrid work, average office vacancy across the US is at 16.7%.
⚡ Big Idea
To bring workers back, the office must become a destination, a purpose-built space with amenities beyond what's available at home.
📊 Charts and Data
This REBNY analysis of Placer.ai data shows the flight to quality Class A buildings.
This Gensler workplace survey shows the workspace amenity types that are in demand.
🔥 Opportunities
Provide Best-in-Class Amenities
Top Class A offices are delivering amenities to separate from the competition and give employees a reason to come into the office.
Nuveen Real Estate's 730 Third Ave features a 6,000 SF Sky Lounge, terrace with full 360 degree views of Manhattan, green space, and bee hives that produce honey and products for tenants
550 Madison Ave is a LEED Platinum building that features a 20,000 SF garden, open to the public, with full-size trees, a water feature, and food kiosks
Intersection with Hospitality
Offices are now implementing features typically seen in the world of hospitality.
Hyatt created the Hyatt Hub for its workplace, looking to mimic the hotel guest experience in the office by replicating hospitality touch points, such as social spaces, guest rooms, dining and drinking, and meetings and events.
Office buildings are taking a cue from hospitality by adding pleasing scents to lure back workers.
Focus on Wellness
Post pandemic, offices are upgrading to become healthy places to work and offering health and wellness options to employees.
WeWork launched WeWork Wellness inside several workspaces, with yoga, meditation, and fitness classes.
3 World Trade Center features a 5,000 SF outdoor terrace with a cafe to relax while enjoying Manhattan views.
Focus on Sustainability
Class A buildings are focused on sustainability and energy efficiency.
Durst's One Five One is a LEED Gold building that offers green roofs, locally sourced food, waste composting, and green cleaning.
The Under Armour headquarters was built with mass timber (see previous Mass Timber report), geothermal heating and cooling, rainwater harvesting, solar panels, and premium HVAC.
Create Technology to Enhance Employee Experience
Offices are incorporating technology into the building and designing apps for access and experience.
Empire State Realty Trust has its own mobile app for tenants with features like check-ins, meeting room booking, dining options, and networking.
Tishman Speyer has the ZO app, connecting tenants with building information, exclusive discounts, and other perks.
💼 Case Studies
Chicago Aon Center - 34,000 SF of office with a "Cloud Level" on the 70th floor with gym, lounge, on conference center overlooking Chicago.
Old Chicago Post Office - An historic Chicago art deco landmark, 601W Companies worked with JLL Experience Management to design spaces such as a food hall, lounge and bar, library, fitness facility, and rooftop terrace.
Well& by Durst is a sustainable Durst brand concept that contains amenity spaces for tenants to "work, play, live, and thrive".
🤝 Players
Tishman Speyer has launched Studio, a flexible lease brand across their properties, and has launched ZO, a global network of offices and amenities to offer to tenants.
Gensler is a leader in design and research, with experience designing top destination workplaces.
Vornado Realty Trust, developer of Penn1, featuring Worklife Wellbeing- a 35k SF fitness and wellness center, Worklife Meetings - a 20k SF conference facility, and Worklife Office Suites - 80k SF workspace.
Brookfield Properties, developer of over 130M SF of office, introduced Activated, a tenant engagement platform throughout their portfolio.
Durst, created the Well& branded office concept and DurstReady, a flexible, move-in ready office.
RXR, developer of prime offices, such as 230 Park Ave, created an RXO program to elevate the tenant experience, and RXR Lab to create new technologies.
JLL Experience Management has partnered with HQO to deliver a tenant and workplace experience platform to building owners and corporate employers.
✨ Predictions
Offices will have a greater focus on employee well-being and health.
Further use of technology will be used to enhance the workplace experience.
Class A offices will provide hospitality-like experiences.
⚠️ Risks
Destination workplaces are expensive and carry a risk of overspending on amenities with no return on investment.
Tenant preferences for amenity types may shift.
After the pandemic, office demand is still unknown as employers grapple with remote work and hybrid working environments.
✅ Key Takeaways
Making the office a destination is important to give employees a reason to leave their homes and feel engaged and inspired at work.
Costs must be weighed against what tenants and employees value most in order to maximize net income and building value.
As with other real estate asset classes, technology should be incorporated to enhance user experience.
🔗 Additional Resources
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