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Top 5 Things CRE Tenants Want From Their Office Environment

by Cecilia Amador de San José
October 24, 2019
in Business
Reading Time: 4 mins read
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Top 5 Things CRE Tenants Want From Their Office Environment

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  • Commercial real estate tenants are shopping for more than space; they want a unique experience encompassing amenities, technology, and lease terms.
  • A new report from Future Offices explores the shift towards a service mindset and how the demands of CRE tenants have changed.
  • One of the top priorities for workplace occupiers is a tech-enabled space, but this goes well beyond a good Internet connection.

Future Offices recently published the report “What Tenants Want 2020”. The world of commercial real estate has been officially disrupted, and this has changed the expectations of tenants across the world. 

“The rise of digital technology and evolving customer expectations has transformed commercial landlords from rent collectors to service providers.” 

Commercial real estate tenants today are shopping for more than space; they’re shopping for an experience. Therefore they are demanding more from landlords in terms of amenities, technology, and lease terms. 

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The shift towards a service mindset in the realm of CRE is particularly affecting property owners who specialize in the sub-5,000 sq ft lease market. A recent report found that “the sub-5000 sq ft lease market is being eroded by the flex market” and that there is a “clear correlation between the expansion in flexible space and the increase in both vacancy and availability rates of sub 5,000 sq ft offices.”

So, what are CRE tenants demanding from their office space today?

The Future Offices report found that there are 5 key things office space tenants are increasingly searching for. 

  1. Tech-enabled spaces
  2. Multi-use properties
  3. Flexible leasing
  4. Flexible spaces
  5. Space-as-a-service

Tech-Enabled Spaces

Technology has revolutionized various aspects of work and life. The workplace is no exception. For many tenants, basic connectivity is no longer enough (though it does need to be reliable); instead they are also searching for commercial space that offers modern and emerging technologies like the IoT, automation, machine-learning, blockchain, and robotics. 

Companies are looking for “agile, future-proofed spaces where technological upgrades are simple and easy.” This calls for real estate that offers, as part of its amenities package, access to connectivity and emerging technologies. Rather than simply allowing tenants to transform their tech infrastructure, landlords need to offer a robust, modern tech infrastructure as part of their value proposition. 

It’s also worth noting that it’s not just tenants that are showing increased interest in high-tech enablement in real estate. According to the report, “a record-setting $14 billion was invested in real estate technology companies in Q1 and Q2 of 2019 alone.”

Multi-Use Properties

Multi-use properties provide access to residential, commercial, cultural, institutional, and industrial spaces. These spaces seek to cultivate “holistic live-work-play environments.”

These types of spaces are increasingly becoming popular as the lines between work, life, and entertainment continue to blur and be challenged. These types of properties are creating “unconventional workspaces above restaurants, gyms, and shopping areas.” 

Another reason why these types of properties are becoming increasingly popular is because “they help increase parking and transportation efficiencies, encourage walking, reduce dependency on fuels and additional fuel infrastructures, and even preserve environmental landscapes.”

Multi-use properties have the ability to cater to the varying needs of the modern worker, providing them with a holistic, end-to-end solution that can help them better transition from work to life. 

Flexible Leasing

“In the age of disruptive innovation, longterm, 10-15 year leases simply don’t make sense for most companies.” Not only is it harder than ever for companies to predict their workspace needs in the long-term, but also new lease accounting standards that require lessees to recognize leases longer than 12 months on the balance sheet have also driven many companies to search for shorter-term leases, particularly for offices that aren’t their headquarters. 

Furthermore, to be successful in the future, companies need to be highly resilient and able to adapt to rapidly changing market needs; flexibility is no longer a nice-to-have, but rather a must-have. Companies are, therefore, “increasingly seeking short-term or flexible leases that include options for expansion, contraction, and early termination” in order to boost agility and accommodate uncertainty. 

Flexible Spaces

Companies are not only seeking flexibility in terms of leases, but also in terms of the actual space. “Tenants view their companies as growing organisms, and they don’t want spaces that inhibit growth.” This is why commercial real estate tenants are increasingly leaning towards spaces that can be easily adjusted to fit their changing business needs, with features such as movable walls, light buildouts, modular furniture, etc. 

Flexibility in this sense should also address spaces that can be used for different purposes. Large meeting rooms that can double as event space, small break out areas that can serve as small meeting rooms, small meeting rooms that can double as individual work space, etc. The idea is to provide tenants with more control over the space, and more choice over how they use and interact with it. 

Space-as-a-Service

Since the workplace has become a destination and people are increasingly searching for experiences and not just space, then it follows that tenants demand and expect world-class amenities. Space-as-a-Service is about making real estate more succinct and enjoyable for everyone, particularly for the end-user. 

Space-as-a-service is about the amenities the space offers, but also the entire experience from search to lease. These type of solutions have the potential to optimize the pre-leasing stage and the end-to-end property management experience. 

From 3D modeling tools to mobile apps that enable users to manage billing, submit maintenance tickets, or request a meeting room, space-as-a-service focuses on creating a seamless experience across all touchpoints. 

In the end, “what modern tenants want most of all is value.” This value can be delivered in various shapes and forms, but it should all come together to create a unique workplace experience.

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Tags: CRE
Cecilia Amador de San José

Cecilia Amador de San José

Cecilia Amador de San José, Senior Associate Editor of Allwork.Space, is based from wherever her laptop is. She enjoys traveling and visiting new flexible workspaces. If you'd like Ceci to check out your workspace, feel free to reach out to her at [email protected] (and send a plane ticket).

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