How Landlords Are Responding to New Tenant Needs

The needs of office tenants are rapidly changing, and tenants are becoming much more selective about the office spaces they choose. These new needs include amenities, open spaces and transparency—but the driving reason behind this evolution in tenant needs is the cost of rent, which is rapidly escalating. Tenants want a bigger bang for their buck.

“Tenants are taking a much more of a serious look in how they are currently occupying and paying for their office space,” Jim Travers, founding principal at Travers Cresa, tells GlobeSt.com. “There is a double hit-taking place simultaneously; rents are escalating dramatically, while landlords are increasing their building’s size based upon the new BOMA measurements. For example, a tenant renewing their 10,000 square foot lease, the same space could be 10,500 square feet, with a rent increase of 10% to 15%. This is the driving factor why tenants are becoming more serious about their current occupancy.”

Rent isn’t the only driver of this changes. Tenants are also more concerned with the physical space as a means of attracting and retaining talent. “Besides the double exposure in rent and building size, tenants now are looking to create an environment that will provide transparency, collaboration and colliding,” says Travers. “The office walls are coming down with a much more emphasis of open, creative space.”

Landlords are tuning into these new needs, and as a result, there has been an increase in office conversion and renovation projects. “Landlords are trying to reposition their asset class to be a much more open and business friendly environment,” explains Travers. “By way of example, landlords today are converting unused outdoor common areas, with kiosks, lunch tables, benches, televisions, outdoor fire pits, etc., to attract new tenants and retention of existing tenants.”

Tenant’s needs are going to continue to evolve with new technologies as well—and Travers says that we are not near the end of these changes. “The tech world has created the new working environment,” he says. “In addition, the millennials are now having a major impact in creating the new working environment, crossing over into every industry.”