Seven Trends in Office Real Estate Today
The office commercial real estate market has been transforming greatly over the last five years, putting a greater emphasis on live-work-play amenities, common spaces, location for talent recruitment and retainment, and the like. While all of these are still relevant, what other factors have been changing the sector? Hall Group’s Craig Hall outlines the seven forces shaping the market today. Do you agree with all of them?
- Financing: There has been a “tightening of purse strings,” making it much harder for builders, especially newcomers to a market, to get funding.
- Technology and Information: The industry no longer runs on “gut”; rather, data – widely available to just about anyone – drives office market decisions.
- Space Density: The standard density ratio has increased from around 3 people per 1K square foot to as high as 7+ people. This increase has actually decreased office demand in many markets.
- Parking: As more and more people choose to go car-free and prefer alternate forms of transportation to work, parking demand will continue to fall.
- Co-Working Spaces and Lease Flexibility: We’ve all witnessed the growth in co-working spaces across cities, so office building owners are looking to incorporate these spaces into their new developments. Also, tenants are looking for shorter, more flexible lease terms.
- Live-Work-Play Amenities: Today’s talent is attracted to office developments that are amenity-rich. Amenities really do matter in today’s market.
- Wellness and Sustainability: Companies are purposefully seeking out spaces that are wellness and sustainability conscious – “well buildings.”