Upgraded office amenities that are changing the game
Tenants and landlords share their perspectives
Office amenities have been talked about for years: what’s trending, what tenants want and how landlords are responding. JLL Research examined 189 office buildings that received substantial amenity upgrades over the last five years and documented the results and stand-out office buildings across the region in the Midwest Amenity Landscape report. Several trends emerged, and the benefits were evident.
Now more than ever, tenants are putting the pressure on landlords to provide elevated amenities. Companies are willing to pay a higher price for a space that offers a well-rounded experience for their employees because it’s costlier to replace a good worker than pay for premium real estate. Despite the multiple-generation workforce, it’s clear that comfort and convenience are the common thread when examining amenities. For example, Millennials are vocal in their desires to blur the lines between their work and home lives with their desires of gyms, bike storage, locker rooms and green space at the office. They’re especially health conscious, so it’s no surprise gyms and luxurious locker rooms are nearly ubiquitous across the board. Millennials make up most of the workforce and amenity spaces are transforming to accommodate their needs.
Landlords recognize these needs and act—they see positive return on investment when upgrading amenities. Not only are they able to attract and retain strong tenants but rent and occupancy rates also rise. A recent NAIOP study revealed that 91.4 percent of building owners are convinced that offering enhanced amenities will increase leasing velocity and rental rates within a building.
Results to write home about
But, these results don’t happen without proper investment. The median project cost across the Midwest was a whopping $5.3 million, and these efforts were not in vain. Upon completion of the renovations, asking rents increased an average of 10.7 percent and occupancy increased an average of 16.2 percent. The most common amenity upgrades were fitness facilities, conference centers, tenant lounges, restaurants, outdoor social spaces, retail and bike storage.
The 13 Midwestern cities examined in the report saw a variety of upgrades and similar results. Spaces were updated to encourage focus and promote overall wellbeing for employees, and landlords reaped the benefits of increased profits and leasing activity. Each city saw an increase in average asking rents or occupancy rates. In Chicago alone, average occupancy rates increased 63 percent after renovations were complete. Across state lines in Indianapolis, landlords are investing in the tenant experience with the average upgrade package totaling $6.2 million. Several hours east in Columbus, the city sees a 91 percent average occupancy in new speculative, amenity-rich buildings. These are just three of the cities featured in the report that boast impressive results.
Breathtaking views and captivating interiors
Not only are the amenity spaces functional, but their design is impeccable. This duo forges an atmosphere where employees want to stay to work or socialize after hours.
Willis Tower in Chicago is home to an outdoor green space above two stories of retail, and the grass and trees give employees a space outdoors to recharge and admire the skyline.
In Grand Rapids the Waters Center features a rooftop patio and bar with views that overlook the Grand River. A Staybridge Suites hotel, coffee shop and restaurant welcome guests from far and wide.
The IDS Center in Minneapolis is the tallest building in the city and offers sprawling views of downtown and beyond. The building’s architecturally-significant lobby, Crystal Court, is the center of Minneapolis’ skyway system and a retail hub.
The sky is the limit for tenants and landlords—in the future, perhaps we’ll all be enjoying massive, luxe offices with sparkling water and kombucha on tap. Or, perhaps, some of us already do.
Learn more about Midwest amenity upgrades and see what’s happening in your city in the full report from JLL Research.