Creativity Is the Key to Keeping Office Spaces Leased
Recently, John Meehan, the new COO of Gemini Rosemont Commercial Real Estate, who is also a former capital markets director, made some comments about the future of office market investments. Meehan spoke about changes in the office real estate market, and he spoke about how those property owners need to be prepared to be creative.
In the not so distant past, the common office configuration was often several cubicles in one location, and perhaps a few private offices and/or conference and meeting rooms scattered on the outside of the room. Although there will probably always be some companies and businesses that want this more traditional building organization, that is certainly not always the case in today’s business world.
One way to tell that businesses need to change with the times is the surge in offices trying to settle in urban and downtown areas. Younger millennial workers like to be close to where they live—which is often downtown and urban settings—and they like to work near the places they are entertained. Urban centers have therefore become the current “hot” office property.
Other changes include amenities in the properties. Meehan discusses how it is not uncommon for smaller companies to incorporate a kitchen into their property so people can cook their own lunch or supper onsite. Different companies have different needs, and some larger companies will have a lounge setting with sofas and chairs, and others will have full workout sites. Most of these amenities were at least rare even one or two decades ago. Now, some sort of lifestyle amenity is a part of many if not most offices.
Ultimately, investors need not give up on finding solid investments if urban properties are appropriate for offices are in short supply. The cities to focus on are coastal gateway cities, with the West Coast focused in Seattle, San Francisco, and Los Angeles, and the East Coast focused on Boston and New York. Then, eventually, Meehan expects the focus to move back to the suburbs because that is where the millennials will be raising their families.
2018 will be another good year with rents increasing and occupancy increasing too. A close eye will need to be kept on interest rates to ensure that trend can continue.
If you would like more information regarding buildings available in the greater Boston office market, contact Jeremy Cyrier at [email protected] or by phone at 617-340-8520.