Why Commercial Real Estate Amenities Should Be a Priority for Every Investor
The exponential growth of online ordering has caused a massive shift in the way we experience retail today.
Retailers that refused to adapt to the new age have fallen by the wayside.
Commercial real estate investors and developers are all too aware of how these changes will impact their bottom line, too, and are making moves to keep up.
Amenities are one way that a project can stand apart in a sea of commercial real estate options.
They catch the tenant’s eye, bring benefit to their employees and customers, and help curate a memorable experience – crucial in today’s marketplace.
Here’s why amenity packages should be a priority for every commercial real estate investor.
The Work Environment Is Becoming an Experience, Too
Just as retail has shifted to accommodate a new consumer, other types of commercial real estate will need to adapt to suit the new tenant base.
Times have changed! And so has the modern work environment.
Alongside multifamily, office and industrial buildings are increasing their amenity packages in order to curate an experience and lifestyle for the businesses that they aim to attract.
And the data is there to show that commercial real estate investors benefit heavily from these offerings.
According to a survey by NAIOP, 91% of building owners agreed that thoughtful amenity packages increase the velocity of tenant attraction and assisted with higher tenant retention.
After all, a company’s work environment can become its identity, both to the employees and to the customers, which means that landlords who help create that identity should experience less turnover and vacancy losses.
Amenities Offer Many Benefits to Tenants
Sure, amenities may look cool.
But at the end of the day, they should also offer tangible benefits for tenants, as well.
If you’re looking to craft your amenity pitch to prospective occupants, you’ll need to focus on these benefits, not just the features.
Here’s what these amenities can offer to the businesses:
Varied work environments: changing where and how you work can help you breakthrough those mental blocks whenever you’re working on a project. Having the ability to work in different environments, at varying locations, and more can help re-spark that creativity.
Employee attraction and retention: touching back on that culture and lifestyle that modern companies are looking to give to their employees, strong amenity packages can help businesses attract and retain higher-quality talent.
Idea sharing and collaboration: when you’re in an environment where you enjoy working in common areas, you’ll encounter individuals in other industries with varying backgrounds. You never know what those conversations could lead to!
Higher brand image: higher-quality properties and amenities can bring a better brand image to businesses located within the property. Consider all of the tech startups in Silicon Valley and the (often outlandish) amenity packages they offer.
What Amenities Should You Offer?
Great question.
There are many different types of amenities you could offer – some have been around for decades, while others have more recently caught on in popularity.
And these amenities should be influenced by the type of tenants you’re looking to attract.
A project located within an urban neighborhood where the community enjoys walking and biking to work will need to have a different offering than your more suburban work environment.
Here are the most common amenities being offered today:
Traditional Amenity Packages
Traditional amenity packages may seem a bit “old school,” but there’s a reason they’ve been around for so long – tenants and their employees utilize and appreciate them.
The most common traditional commercial amenities include:
Childcare / daycare services: not only does this amenity ease the calendar-management stress on the professional parent, employers often find increased productivity among their workers since parents don’t have to take days off or leave early to care for their children
Bike storage: more popular in urban areas, bike racks and storage give peace of mind to workers that live nearby and would prefer not to lug bicycles up an elevator to store them in their offices
Lobby reception: a receptionist in the lobby can assist incoming visitors with any questions, as well as provide a layer of security for the tenants
Fitness facilities: want to stand apart from the rest of the crowd? Offer a professional-grade fitness facility for tenants that wish to exercise before and after work. Don’t forget the locker rooms with showers, too.
Covered parking: covered and garage parking has long been seen as quite the amenity in urban developments, especially if it has open access. Business want to be sure that their visiting clients can easily find them and park without frustration.
Building signage: signage is a big deal for companies, no matter how large or small. Tenants that occupy anchor space (i.e. they have the largest footprint in the property) will expect to have the most prominent signage or naming rights to the building.
Modern Amenity Packages
Modern amenity packages typically offer some type of unique experience for the tenants that helps add to their company culture.
Here are some of our favorite modern commercial amenities:
Rock climbing wall: a development in Chattanooga took the front façade of their parking garage and converted it into a rock climbing wall accessible to the public. Not only does this help “hide” the parking garage, but it draws in customers to the surrounding retailers.
Indoor / outdoor games: apartment complexes have been adding in bocce ball and volley ball courts for quite some time and mixed-use developments are beginning to catch on. Who wouldn’t want to have a client meeting over a game of pool or ping pong?
Rideshare optimization: designate a few parking spaces or a lane towards the entrance of your facility for rideshare pickup and drop-off, only. The more transit friendly your property is, the less burden you’ll have on your parking facilities, which could then be repurposed for higher and better uses.
Yoga / meditation rooms: work can be stressful and many entrepreneurs and startups work long, hard hours. Providing a quiet room with mirrors and dimmable lights for a yoga or meditation studio where your tenants can go relax is becoming one of the most popular new amenities.
Dog parks, runs, and washes: let’s face it: millennials love their pets and will bring them to work if they are able. Commercial projects that not only allow pets but also provide locations for occupants to exercise, play with, and care for their pets will have a cutting edge on their competition.
Common WiFi: more and more, tenants are appreciative of having their WiFi included in their common area expenses. Including WiFi helps lower that barrier of entry for a new tenant and gives them one less aspect of running their business to worry about. Some tenants, of course, will still need their own dedicated lines, but common WiFi will serve the majority of tenants.
Common conference rooms: not every tenant needs enough space for a conference room 24/7, but they will need meeting spaces occasionally. Conference rooms that are shared by multiple tenants that can be booked online will help tenants decrease their overall footprint and maximize the efficiency of their space.
Programming Is On The Rise
So you’ve designed the perfect site loaded with amenities.
Now, it’s time to program your facility.
“Programming” is all of the events and activities organized and executed by the landlord or management company in order to further engage your tenant base.
After all – just like in multifamily, the more a business and its employees feel at home where they work, the less likely they will be to relocate their operations when their lease expires and will instead choose to renew.
Here are some popular programs:
Fitness classes: you already have an onsite weight room, yoga studio, rooftop deck, and/or courtyard, so why not take advantage of that by offering group fitness classes? You could choose to operate these in-house or simply hire a 3rd party to oversee the implementation.
Happy hours: business owners and employees enjoy socializing with their counterparts in other industries, especially since these people will likely have a fair amount in common since they decided to locate in your building with the culture you’ve built. Invite a local brewery, vineyard, or distillery for a happy hour tasting to add even more local flair.
Art exhibits: common areas, courtyards, and hallways can be somewhat bland without art to liven them up. Find a local artist or gallery that could program your common spaces with a seasonal or occasionally rotating set of pieces.
Food trucks / communal meals: everyone needs to eat and just about everyone enjoys good food and company. Pick a day of the week or month that you invite a food truck or local restaurant to cater a meal for your tenants in the common areas.
Where Should You Locate The Amenities?
Sure, the lobby is the most common space – it’s easily accessible, visible, and highly trafficked.
But don’t feel like you can’t get creative with it.
Rooftop decks are all the rage in Nashville at the moment. Developers are able to monetize otherwise “dead space.”
Do you have underutilized or completely untapped space within your project? Think creatively as to how you could amenetize that space.
And don’t feel like you need to get too crazy with it, either.
If you have a nice little nook, just add in a set of cabinets with a Keurig and offer a variety of coffee and tea for your tenants or install a beer tap featuring a local brewery – sometimes, the simple touches make the biggest difference.
Other common spaces for amenities will include outdoor space & courtyards, hallways and corridors, and basements.
Are “Over The Top” Amenity Packages Worth The Cost?
Of course they are.
As long as you’re able to quantify the return of the overall amenity package.
The beautiful part about all of these amenities for a landlord is that the tenants will be paying for these add-ons through their common area maintenance fees or on a case-by-case basis.
So, you don’t want to go overboard on the expenses to where tenants can no longer justify the pricing, but there is a balance to be made there.
Especially since strong amenity packages can help you attract tenants faster and retain them for longer periods of time.
Find Your Blue Ocean
Find your fertile hunting grounds.
How can you differentiate yourself from everything else that’s currently in the market?
If you can offer some unique amenity that no other site in your city offers, you’ll set yourself apart from the pack and create demand for tenants.
Don’t be afraid to think outside of the box, either.
Fortunately, most amenity implementations may be easily adapted to something else, if necessary, so you can feel comfortable breaking the mold.
About The Author:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors as a board member for the Real Estate Investors of Nashville.
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