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Creating Value in Common Spaces
Richard Peiser, Ph.D., Harvard Graduate School of DesignChristopher Kelly, Convene
Richard Peiser, Ph.D.Michael D. Spear Professor of Real Estate DevelopmentHarvard Harvard Graduate School of Design
Christopher KellyCo-Founder, President and Chief Development OfficerConvene
The Evidence
Office space utilization per employee is shrinking. BLS/Costar show 2014 figures at 190 SF per worker, while CoreNet reports shrinkage from 225 SF per worker in 2010 to 150 SF per worker in 2017.
“SUBURBAN OFFICE PARKS ARE A RELIC”
“The suburban office park—generally cut off from public transportation, lacking retail and amenities and employee housing options—is a dying breed.”
“Plentiful free parking is no longer sufficient to attract tenants.”
Locational Choices: Boston Center of Gravity
Boston Center of GravityMarch 5, 1770
Boston Center of Gravity2000s
Trends
•Declining Demand for Office Space −“Work is what you do, not where you do it!”
•Locational shift as to where space is demanded•Relaxed dress codes, plentiful parking and free beer not competitive!
Background to Study
• Office lobbies transforming from “exhibition” spaces to "vibrant" areas
• Office is borrowing from hotel lobbies• Similar is occurring in multi‐family lobbies• Research Committee sought to understand how, why and costs associated with activating common spaces in office buildings
Overview of NAIOP Study
• Methodology• Why Owners are Providing these Extra Amenities• Typical (nee old) and New (communal goals) Amenities• Favored Locations for New Amenities• Favored Activities Carried Out in Common Spaces• Costs Associated with Amenities and Activation• Why Employers Seek More Vibrant Settings• Desire for Active Settings by Industry
Methodology
•Surveys of owners and service providers currently exploring and implementing this concept
• Interviews with survey participants•Literature review
Why Owners are Providing Extra AmenitiesQ. Do you believe that offering these types of amenities has or will increase leasing velocity and/or rates?
89% Yes
8% No
1% Did not answer
Why Owners are Providing Extra Amenities:(Comments by owners)
We need to offer these amenities in order to
remain competitive. Our tenants are willing to pay
a bit more because of them.”
[Unique amenities] differentiate our building, make it memorable after
the tour.
“I believe the amenities have a smaller impact on rates and a bigger impact on velocity.
It is more about leasing up faster. The impact on increasing rent is very small.
The key is not [to] get higher rent, but to lease up quickly. Amenities are very helpful in reducing the leasing time, at least by 25%.
It has moved from being a ‘differentiator’ to a
‘requirement’ in many markets.
Typical Amenities(Ranked by owners from most to least popular)
Cimpress, Waltham, MAPhoto: Warren Patterson Photography
87% Shower rooms and lockers
84% Fitness Facility
79% Bike Storage
77% Cafeteria/Food Vendor
New Amenities(Ranked by owners from most to least popular)
Cafeteria/Food Vendor
84% Access to outdoor spaces
76% Shared meeting/conference rooms
64% Food Trucks
56% Coffee/tea in commons spaces
55% Co-working space
49% Access to games (ping pong, corn hole, etc.
New Amenities: (Comments by owners)
We are seeing a move toward more tenant interaction and community‐building. Lounge areas, game areas, happy hours, fitness centers, conference centers, etc. are all commonplace now.
We've found that the feedback has been very positive and that creative design can limit upkeep and security requirements for these areas.
Our newest office building has a large roof deck complete with a meeting space and large area for outdoor yoga. The lobby has a generous lounge area and three small spaces that will be programmed with rotating activities or exhibits focused on health and wellness.
Adding restaurant with wine bar, self‐playing piano, rotating and permanent art installations
For all of these questions I don't think that access to games and a bar serving alcohol are the key amenities. Having different seating groups, fast Wi‐Fi, coffee bar, connections to retail, views to active sidewalks, etc. are more important.
Favored Locations for AmenitiesRanked by owners from most to least popular*
• Outdoor Areas
• Lobby
• Roof
• Hallways/Circulation areas
• Basement
• OthersJay Suites, New York, NYPhoto: Liquidspace.com
Favored Activities for Activating SpacesRanked by owners from most to least popular*
Google, Cambridge, MAPhoto: Halkin Mason Photography, LLC
43% Happy hour/social events
39% Fitness classes
37% Art Installations in lobby areas
33% Ride share/lifts to public transportation
24% Guest speakers
10% Film screenings
Favored Activities: (Comments by owners)
Shuttle service to public transportation [must be offered] to get leased, though not a lot of people take advantage [of it.] [We are] exploring doing it with Uber.
In our industrial space we sponsor a forklift rodeo. The best operators of forklifts in our 2.5 million sq. ft. foot park compete for prizes.
We provide events 4 times per year. We have a Christmas holiday event, a summer ice cream social, a spring hot dog event and a fall barbeque.
[We offer] crafts [and feature] security speakers.
[This is about] … making amenity space available by reservation for tenants to hold parties, meetings etc. Also building holiday parties, charity drives, etc.”
They are open to the public not just tenants.
Costs Associated with Amenities & Activation of SpacesQ. In general, how are you paying for these amenities? (Check all that apply.)
85% CAM (Common Area Maintenance
65% Increased rental rates
20% Lease/outsource to third party provider
8% Other
How Owners are Paying for Activated Amenities : (Comments by owners)
If you have competitive advantage beyond your
competitors, amenities are a meaningful differentiator. For example, you can boost the
rent from $20 to $35.
$2 per sf per year
3%‐5% premium for good amenities.
Tenants might be willing to pay an extra 50 cents to the dollar extra per sf at most to see some of these benefits. A big, innovative company in need of attracting young people would pay that. Going above an extra $1/sq. ft. seems infeasible.”
We charge about 10 cents/sf/month higher than our competitors.
Why Employers Seek This Type of Environment : (Comments by owners)
The need to have a competitive advantage to
attract and retain employees is paramount, the creative workplace provides a very
visible opportunity.
Tenants will continue to opt for ‘Urban’ and
‘Amenities.’ We are seeing a shift in office design and
amenities most closely resembling hospitality offerings. We feel that
trend will continue.
As the world of work continues to bleed into
personal time, the physical attributes of the spaces (home and office) are bleeding together, too.
People can work from their homes, their cars, their smartphones...
wherever they want. Office space needs to provide an interesting and
energetic environment that is additive...and not just a place to connect to a computer or sit in a
conference room. Commodity office space is dying.
Space is their biggest recruiting tool beyond salary in a very tight
job market.
What types of companies are seeking these vibrant environments? (Comments by owners)
91
77
61
40
33
19
0 10 20 30 40 50 60 70 80 90 100
Very prevalent among technology companies
Very prevalent among information companies
Very prevalent among arts, entertainment, and recreationcompanies
Very prevalent among retail companies
Very prevalent among professional and business servicescompanies
Very prevalent among finance and insurance companies
Percentages
What have we learned?
The C-Suite is engaged and recognizes that workplace design can significantly impact:
• Growth • New Product Development & Launch • Ability to Implement Change• Costs & Uses of Capital • Acquisition of New Talent • Workforce Motivation & Retention • Mentoring & Communications• Reduction of Disruptive Turnover• Security of All Forms• Mergers & Acquisitions
W HY CONVENE
Convene is a “workplace-as-a-service” platform that partners with landlords to create the next generation office building –
one that works and feels more like a full-service, lifestyle hotel.
Convene’s Integrated Platform
R E T A I L O F F E R I N G S
H O S P I T A L I T YS E R V I C E SE L E V A T E
A one-stop solution for landlords looking to differentiate their assets through flexible space, services, & technology.
C O N V E N E E N AB L E D+ + =
80+% Building
Occupancy Rate
75-300 Pop-Up Activation
Attendees (on avg.)
1,500 Opt-In Community
Members