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News release

CHICAGO, IL

Pre-finished Office Spaces Secure Tenants Faster at Better Rates

Jones Lang LaSalle’s pre-built office suites command higher rent and fill faster by catering to tenants wanting speedy and effortless transitions to a new space.


CHICAGO, Oct. 27, 2011 – Leasing space isn’t always easy in today’s economic environment, which is why landlord representatives must use every resource in their arsenals to win tenants. Pre-finishing office suites is one tactic more and more representatives are using to lease space quickly, and often at a higher rent rate.

“We must continually be creative in order to serve our clients and maximize their buildings’ value,” said Gregory Green, President of Agency Leasing at Jones Lang LaSalle. “Pre-finished spaces and other tenant improvements that align with investor strategies can enhance a building’s appeal and improve leasing capability.”

Pre-finished spaces are built-out suites with finishes already included so tenants can first, get a visual of the space they will be residing in and second, move in quickly without having to go through the design process or wait for construction to be complete.

“Tenants considering a pre-finished suite are focused on quality and efficient design,” said Jeff Eckert, Senior Vice President for Jones Lang LaSalle’s agency leasing team in Dallas. “The pre-finished suite model allows tenants to keep their focus.”

Eckert said Jones Lang LaSalle has had tremendous success leasing up buildings with pre-finished suites in Dallas, particularly at 1700 Pacific, Frisco Square, three KBS building’s and Parkway Center 4. On average, occupancies and achieved effective rates jump with the introduction of pre-finished suites in the buildings, he said.

“Constructing pre-finished suites the right way also portrays a landlord’s commitment to achieving success at their asset,” Eckert said.

The Empire State Building, which was recently retrofitted to reduce energy by 38 percent, achieved success implementing green leasing strategies like showing pre-finished green office spaces. Prospective and existing tenants planning to renovate their spaces are expected to conform to green design guidelines, and offering pre-built spaces to view and lease demonstrates the cost and benefit, as well as the look, of high-performing space. Since the program began in 2008, 1.4 million square feet has been leased, and average rents have nearly doubled from $26 to $48 per square foot in 2011.

“Having pre-built spaces helps prospective tenants feel more comfortable with the concept of an energy efficient office environment and their responsibilities as tenants in a green building,” said Dana Robbins Schneider, the project manager for the retrofit and LEED certification process.

One Market Plaza in San Francisco also benefitted from building out pre-finished suites, said Christopher T. Roeder, Managing Director for Jones Lang LaSalle’s Northern California agency leasing group. A portion of the top floor—10,000 square feet--sat vacant for a year-and-a-half until the team decided to build out the space. It was divided into two high-end pre-finished suites, with flexible floor plans that could be expanded if necessary. Within three months, the pre-finished offices were complete and the space was leased to two high-end tenants that were new to San Francisco and needed space immediately.

“Without the pre-finished suites, I am confident the space would have sat vacant for at least another 9-12 months,” Roeder said. “Instead, we were able to lease more quickly and at a higher rate.”

While pre-finished suites are typically designed with broad appeal to attract a wider tenant base, Roeder said they need to be built out so they are consistent with demand in the market—meaning if the building already caters to a certain tenant base like hedge funds, then the space needs to be designed to the typical preferences of hedge firms in that area.

“Tenants want something that is appealing and already built to their liking,” Roeder said. “Pre-finished suites can accomplish that for a price that is often less than customized tenant improvements.”

Beyond providing finishes like neutral carpeting, a reception area, good lighting, and a small server closet—among other items an ideal office space might offer—creating a pre-finished, stand-out break room or kitchen can actually make a big impression on a potential tenant, said Steve Everbach, Managing Director for Jones Lang LaSalle’s Dallas agency leasing team.

Making break rooms look less institutional through paint color, higher-end flooring and artwork are fast and easy ways to upgrade a space. More involved renovations like offering diversified seating arrangements, contemporary countertops and natural lighting will also make a big difference.

Jones Lang LaSalle’s Dallas leasing group recently partnered with an architecture firm to design upgraded break rooms for six new pre-finished suites on the 22nd floor of Republic Center in Downtown Dallas with many of the above amenities. The feedback from prospective tenants has been tremendous, Everbach said.

“The value of break spaces to employees is paramount,” he said. “As offices become more open and communal, landlords must take a fresh look at these break rooms to identify ways, both large and small, to upgrade them to attract tenants.”
When pre-finished spaces have not been an alternative, Jones Lang LaSalle leasing teams have turned to white-boxing, which is essentially demoing everything in a space, painting it entirely white and creating a clean slate whereby prospective tenants can then build their designs from. White- boxing is particularly effective for spaces with more than 4,000 square feet.

“Having a fresh, clean space helps keep prospective tenants from getting distracted by the former tenant’s design,” Eckert said. “It certainly contributes to the success of leasing a space.”

“At a time when everyone is clamouring to fill vacancies and increase rental income, we are looking for ways to generate interest and close deals at our clients’ properties,” Green said. “Implementing these strategies is sometimes worth considering depending on investor goals and capital availability.”

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $45.3 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.