WDM connected with four CRE experts who are looking beyond the here and now of tenant and landlord views of how well-designed amenities are a critical component of workplace design.
Much as the changes in how and where people work have made a difference in the work experience, the workplace has evolved over the past few years, and office space has moved beyond the cubicle and the assigned space with a door, a desk and a landline phone. Building owners and property managers have been bringing their building amenities up to speed so that the entire work environment fosters a more interactive, collaborative and exciting place to spend time both in and out of the office. Savvy employers are understanding that “place” is as important as compensation in luring new talent into the fold and landlords are seeing that in order to compete in the marketplace, they need to offer more than a lobby, a deli and functional elevators. Initially, it was the ping pong tables and sofas that found their way from the home to the office. We have seen in-office improvements range from coffee bars with on tap cold brew to game rooms with state-of-the-art video game playing areas.
Looking beyond the here and now of tenant and landlord views of how well-designed building amenities are a critical component of workplace design – we queried a few CRE experts to find out how they are approaching this factor in planning for their new and existing portfolios, including: Anthony Chang, Vice-President Asset Management, Wash*REIT; Tamala Herd, Design Manager, Bridge Commercial Real Estate; Pete Otteni, SVP, Development, Boston Properties; and Charlie Hobey, Managing Director, Product and Operations, EQ Office.
WDM: Thinking about your office building portfolio – how much has the competition for new tenants or to keep existing tenants affected how you view planning for and implementing amenity spaces?
Tamala Herd: The competition for new tenants and the task of retaining existing tenants has tremendous impact on how we plan and implement amenity spaces. The amenity space itself is no longer enough – the space must have amenities embedded within it to be a step above the standard. Having a fitness center is expected by most tenants, and therefore the “amenity” becomes what the gym contains. In other words, we’ve moved beyond tenants asking, “Does this office offer a fitness center?” to asking questions such as, “What does the fitness center offer? Is there Fitness on Demand? Do you have Peloton bikes?” The same can be said for anything traditionally considered an amenity. Prospective tenants are considering multiple buildings with comparable amenity spaces, so the key differentiator becomes how much more your amenity spaces offer, the elevation of the atmosphere and how cohesively the spaces work together to provide a micro-community within the building that allows tenants to live, work and play in their work neighborhood.
Pete Otteni: In a market where tenants have plentiful choices among buildings, their ability to compare amenities and push landlords to “keep up with the Joneses” is inevitably enhanced. We have certainly felt the effects of this amenities arms race and have done our best to be thoughtful about what amenities are possible, which are likely to have more universal appeal, and which may ultimately be impossible, cost prohibitive, or otherwise inadvisable. Our strategy has always revolved around developing and owning buildings in excellent locations and with a strong sense of place – Reston Town Center, Foggy Bottom, etc. In these cases, amenities are provided by the neighborhood in addition to within the building itself. This strategy hasn’t changed, but it also hasn’t fully insulated us from the in-building amenity discussion.
Charlie Hobey: Customer acquisition and retention has radically changed our business. We are laser-focused on creating spaces that provide a positive culture that retains, attracts and inspires the workforce. At EQ, we aim to develop experiences that offer energy, a sense of community and workplace optionality to each market. Our ability to acquire and retain customers is a testament to how effective we have been at creating the specific vision, then educating our customers how to maximize their experience.
What are the potential and existing tenants asking for by way of added building features, conveniences, amenities?
CH: The best workplace amenities offer what our CEO, Lisa Picard likes to call the “four C’s” – concentration, collaboration, community and convenience.
What are the three most important amenities tenants are looking for?
TH: In my experience, the three amenities most important to tenants are the fitness center, lounge space and food amenities, including cafés, food halls and bodegas. These are the most frequently incorporated amenities requested by tenants and are the amenities that make the biggest impact at a top-tier level. The most important amenity often forgotten by tenants is a functional outdoor space. People often work in spaces that lack sunlight, so the ability to unplug, grab a bite to eat on a terrace or sit outside with a book is an amenity that significantly improves the quality of daily work life.
PO: Fitness center, roof deck, shared conferencing, and bike accommodations. That was 4!
CH: The lines between work and home have become increasingly blurred. Today, office buildings must offer the conveniences and comforts that address this shift. In our experience, the three most important experiences tenants seek in their amenities are:
- Lounges with workspaces where people can work individually or collaboratively
- Food and beverage options with multiple offerings throughout the day – from coffee in the morning to beer and wine during an evening happy hour
- Full-service fitness centers that offer a variety of equipment, classes and training options
You can find these themes in practice across our portfolio, namely in places like Willis Tower (Chicago – designed by Gensler and SkB Architects), Playa District (Los Angeles – designed by Rios Clementi Hale) and The Exchange (Seattle – designed by SkB Architects).
What do you think are the most hyped amenities vs. the most effective amenity spaces that you are seeing in the marketplace?
TH: Lounges are by far the most hyped amenity, and at the same time, they are also one of the most effective spaces. A well-designed lounge can fulfill several key functions in a building. The space, at its highest efficacy, functions much the same way as a hotel lobby. It provides a social space for people to gather, which re-enforces a sense of community through comfortable social interaction. With open space to work, grab a cup of coffee and sit comfortably, a well-designed lounge can serve as a place both to take a break and to co-work efficiently.
PO: In no order: space constraints, cost, removal of potentially leasable space, and evaluating which amenities tenants are willing to pay for vs. pure serving as eye candy.
CH: Fitness centers are among the most over-hyped amenities. While they’re necessary, they’re also challenging to differentiate, and unfortunately, most office building fitness centers end up being underutilized. However, I believe the best amenities aren’t spaces, they’re experiences that provide optionality and choice in where you work.
As owners of office buildings, our most important role is to enable our customers to do their jobs better. Research has shown that providing workers with a sense of control, including where and when they work, is critical for improving their morale and productivity. We can’t do much about when, but we can offer a variety of spaces that give our customers a sense of control and choice of where they work. These include open spaces for collaboration, private phone booths for concentration, outdoor work spaces, etc.
What do you think is the most creative amenity that forward-thinking building owners should be considering?
TH: Forward-thinking building owners should be considering outdoor space, first and foremost. Ideally this space would be a rooftop amenity, if the building can accommodate it. Rooftops are a popular trend, and they can provide sunshine, a breath of fresh air and good views, giving the building a more modern, elite feeling. Second, finding a way to improve the user experience through the seamless integration of technology is going to be well received by tenants. As an example, buildings in urban areas could place screens in the lobby that display train and bus schedules and communicate delays or transportation issues. Using technology to simplify a tenant’s experience, such as an app that allows tenants to communicate with their property management team about air conditioning, renting building amenities for events and other management considerations, can aid in retaining tenants. Third, lobbies are too often cold, formal wastelands. In buildings that can accommodate it, a lobby coffee bar with appropriate lounge seating to support it is a top-tier amenity. This modernized lobby conveys energy and activation as soon as tenants enter the building and breaks up the monotony of a traditional lobby space.
CH: I don’t think creativity is the best metric for delivering an effective amenity that enhances the customer experience. At EQ, we strive to innovate, but we focus more on agility and being able to respond to how customers are interacting with our amenity spaces. Our goal is to follow a flexible model typically found in successful technology companies. We deliver an amenity, observe and measure how customers utilize the amenity and then make improvements based on those observations. For example, at Playa District we offer a sport court that we can convert between different sports based on customer preference, and it turns out that basketball is most popular with our customers in that market.
What amenities offer the most “bang for the buck”?
PO: Using thoughtfully placed furniture, a somewhat uninspiring lobby can become a “third space”. This can typically be done economically but still achieve a great result if designed and executed well.
Anthony Chang: Tenants increasingly want authentic experiences that help them feel part of a larger community. Many of these strategies are significantly more cost effective.
What are the biggest challenges to adding or upgrading amenities in your buildings?
AC: Scale and cost are at the top of every owner’s list. We always must ask, “Is the building big enough to justify an expansive amenity package”?
CH: Convenience and choice are what makes an excellent food and beverage offering one of the most important amenities. Many office properties are not large enough or located in close enough proximity to a variety of food options. So one of the biggest challenges is identifying partners who can offer top-notch food and beverage service for our customers.
What amenity have you added that maybe is not performing as you had anticipated and why?
AC: fitness centers are perhaps the least utilized of the options out there. The fitness revolution, with an explosion of retail options has significantly diminished demand for office building fitness centers.
What do you predict will be the next wave of things people will be asking for or is there an amenity offering that doesn’t exist today that you could see disrupting things in the next 5 years?
TH: A set of amenities that does exist today, though are often poorly planned, are the service amenities for larger campuses or buildings. Many buildings have dry cleaners or car washes, but it’s the thoughtful planning of service amenities that save tenants time and stress that really make a mark these days. If there is a good dentist in a building, then that’s one less errand forcing people to leave campus. When owners plan their buildings and campuses with all the amenities of a neighborhood, it engenders the sense of community that helps retain tenants and attract new ones, as well as makes it easier for tenants to manage their work-life balance. I would predict that tenants are going to be looking for these sorts of service amenities more often in the near future.
CH: We see remote work as a huge workplace shift that will tap into a workforce that is not fully utilized (e.g. parents, elder caretakers, retirees, rehires and nomadic/experiential workers). Owners will evolve their assets to offer a connective community with flexible leasing options to provide options for this worker.
AC: The office world often lags the multifamily and hospitality properties. We continue to keep a close eye on the trends and developments in those products and evolve them into our office portfolio.
In conclusion, there are many similarities in our experts’ observations, and some interesting contrasts. As the discussion around the workplace evolution (and revolution) takes place we are always interested in examining the trends that shape our work environment.