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Monday, November 14, 2016

The Arms Race for Office Amenities




Wow! Roof top BBQ pits, bowling lanes, wine bars, and other common area ammenities are springing up in office buildings as landlords compete for tenants.Who pays for all of this? The tenant does. Although landlords are paying up front to add these amenities, it's the tenant who ultimately pays the bill through higher rent, additional access fees and/or tenant's operating expenses.

Most office building owners have caught on to the creative office trend, a savvy building owner is now looking to what is the next trend to differentiate themselves from their competition and best attract and retain tenants


During the Cold War, the U.S. and Russia were constantly attempting to out arm each other, thus coining the phrase “Arms Race.” Thankfully, the massive buildup of weapons has slowed, but a new arms race has emerged in the office building industry: the Arms Race for Amenities.

Now that most office building owners have caught on to the creative office trend, a savvy building owner is now looking to what is the next trend to differentiate themselves from their competition and best attract and retain tenants. That trend is designing and building bigger and better common-area amenities in their buildings.


Outdoor areas, fitness rooms, BBQ pits, and dog runs are the norm, and the craze is catching on in office buildings now too. 

 Apartment developers have been doing this for decades. Outdoor areas, fitness rooms, BBQ pits, and dog runs are the norm, and the craze is catching on in office buildings now too. Why? Because the tenants driving demand are asking the landlord to provide the services and spaces that their employees want at their fingertips. If an employee doesn’t have to leave to get their dry cleaning, buy lunch or work out, the employer gets more productivity out of their employees.

 But like any good arms race, it must get bigger and better.

Small balconies have transformed into bigger decks with fireplaces, grills and shuffleboard. Everyone is trying to figure out how to build a roof deck. Fitness rooms, once relegated to the depths of the basement, are getting bigger, and often have nice window lines, extensive lockers and showers and even towel service. Bike parking is a must, but now, the number of bike parking slots is rivaling the number of car parking spaces. While you’re at it, include a bike repair station as well.
Our furry friends haven’t been left out either. In addition to simply allowing dogs in the building, some owners have gone so far as to designate an indoor covered area for Fido to relieve himself without her or his owner having to stand in the rain.

 Food is everywhere. 

Office lobbies, once renowned for looking and feeling like a library, are filling with coffee shops, food halls, and even food carts. In the suburbs, food truck schedules are set.
Alcohol in an office building is making a comeback as well. In the post-Mad Men era of the 90’s, prohibition returned, in the form of rules against having it in the office. Today, employee break areas are resembling the neighborhood bar, complete with kegs, wine coolers and liquor cabinets.
Want to practice your putting? We’ve got that too, along with bocce, basketball, and even bowling. What better way to use a long narrow basement space than dropping two bowling lanes in?

 Who pays for all of this? 

Well, you do of course. Landlords are paying up front to add these amenities, with the idea that tenants will pay more rent for access to them. In some cases, they are charging fees for access. In other instances, rent for the otherwise underutilized space is included in a tenant’s operating expenses.
Where will it end? Only time will tell, but you might want to start figuring out where the dedicated drop zone for autonomous cars will be at your building.

Karen Schaaf ACP, GRI
COMMERCIAL BROKER
RE/MAX equity group
Lackman Commercial Group
Licensed in Oregon

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