Written by: Brent Erickson, Cushman & Wakefield NorthMarq
It wasn’t long ago that common areas in office buildings were nothing more than means to an end, a thruway to office space, where employees of tenants could get their work done. Perhaps there was some artwork or plant life to look at in that common area space, but there was really no reason to stop and enjoy it, and there certainly wasn’t much productivity happening there.
As the market recovered in the mid-2000’s, buildings such as Fifth Street Towers and Campbell Mithun Tower lagged the competition as large blocks of space went unleased at each property. In turn, owners took it upon themselves to find new ways to accelerate leasing velocity – notably by investing heavily in new common areas and common amenities. These were places that didn’t belong to any one tenant, but rather could be utilized and enjoyed by all tenants of the building.
Against all expectations, each building quickly turned around with hundreds of thousands of square feet of new leasing. New tenants wanted to be there, rent rolls grew, and vacancies shrunk.
What made the difference? The common areas. While rents, locations, and building qualities remain comparable from one building to the next, unique features and amenities provide an opportunity for a building to stand out.
Why is that? Simply, younger workers are looking for more than just a job or a paycheck. They’re looking for a sense of place, or something to belong to. Research and analysis show increasingly that going above and beyond to create offices that look and feel cool – both inside and outside the tenant suite – go a long way to accomplish that.
In Minneapolis, it’s now more common for buildings to have bike parking, workout facilities, shared conference rooms, and open seating areas than it is to not have those amenities. Some tenants will completely ignore any buildings that don’t have some of those (now) basic amenities. The market continues to move and shift in such a way that some of Minneapolis’ original innovators are even facing a need to renovate and upgrade their common areas into something more exciting.
Market leaders in Minneapolis have flourished thanks to improvements to their public areas in recent years. Top contenders including RBC Plaza, Capella Tower, and Washington Square have invested heavily in the effort to create “places” in their lobbies and other common spaces, and it’s paying off.
These spaces are shaping companies’ real estate pursuits, with many decisions coming down to which building has more to offer a prospective tenant’s employees. Even as landlords continue to innovate and create fun, exciting new common areas that can be enjoyed by all their tenants, it’s unlikely that this trend has reached its apex.
With every other building touting a workout center or bike parking, where can we go from here? One theory: common area design and programming will move closer to becoming de facto co-working spaces.
In many cases, buildings today have programmed their common spaces to have a hotel-esque feel. These spaces are comfortable and not a bad place to pass some time. But how productive are they? That’s where we may see a difference soon. Instead of a Radisson lobby, common areas will become like a CoCo or WeWork, a place to spend an hour or two, take your laptop, plug in some headphones, and get that nagging project done. That may include some infrastructure, such as charging stations, meeting tables, or anything else that could up productivity for workers.
With the future uncertain, it’s incumbent on landlords to stay flexible to the office market’s changing dynamics. As companies continue to pay a premium for real estate that attracts and retains employees, standing out is more important than ever.