By Kurt Patrick
Director of Business Development, North America | essensys
The shift in the office market continues from commodity space to premium as occupiers “vote with their feet” and flee legacy buildings with outdated workstations, restrooms and collaborative spaces – to buildings that take cues from the hospitality industry and deliver what they need when they need it.
This “flight to quality” has been demonstrated with amenities, tenant engagement programs, and technology offered in Class A buildings which have generated outsized leasing performance and garnered the most attention in the office market. With premium spaces driving demand, owners of Class B assets should be leveraging the learnings of their Class A rivals to elevate their space and deliver competitive offerings at commensurate pricing.
Older buildings with operational challenges are struggling to find their place. Many landlords are looking to potentially convert these buildings to residential, but for a myriad of reasons, only few buildings are fit for conversion. While conventional wisdom says you must undergo an expensive retrofit to breathe life into a Class B building, there is an often-overlooked solution that comes with a much less costly price tag.
Technology to the rescue.
While not a silver bullet, in conjunction with a cohesive strategy to reposition an asset, studies have shown that in-building technology has the capability to transform a building. Secure, building-wide connectivity and a seamless tenant experience led by upskilled property management and digital leasing availability can pave the way. Additionally, landlords are able to consolidate legacy disparate point solutions such as internet service agreements, voice service agreements and managed service provider contracts by investing in a digital backbone. Landlords have found this to be a cost-effective solution to realize the potential of an asset and increase NOI.
How does technology and seamless connectivity help to create a premium space?
A prime example is the ability to immediately move into a space with digital services activated on a tenant’s first turn of the key. Convenience and flexibility – this is what today’s tenants are looking for. From the viewpoint of an occupier, everything “just works” without any fuss. From the moment they walk into the building – their WiFi is connected and shared resources like conference rooms can be booked as needed without any friction. This actually happens with intelligent automation. For this effortless user experience to exist you must have the right platform in place to automate the delivery and management of digital services, in a secure and scalable way.
Moody’s released a study where they found that offices with better digital connectivity have better leasing performance than those without a digital certification (WiredScore rating) — especially Class B and C offices. Additionally, rent is at a premium of about 16% when averaged out across all buildings that were measured with an even sharper increase for older buildings.
Digitally-connected Class B buildings help increase employee productivity.
People often favor the idea of working from home but fail to recognize the many challenges and frustrations that come with it. For example, simple tasks like moving large files or video conferencing become more difficult to accomplish as multiple cloud-native tools being used put a drain on bandwidth.
essensys-conducted research on worker sentiment shows that the crucial driver for the workforce isn’t fancy amenities, but rather they are after the technologies that can improve the way they work and provide them with a seamless, consistent digital experience. 63% of the U.S. office workers surveyed claim that technology and flexible workspaces are the reason they come to the office, while only 1 in 5 office workers admitted that amenities are what bring them back to the office. Another reminder to the Class B owner that it’s not just about yoga class and beer on tap, rather it’s technology that can help create a more desirable offering.
With a digital infrastructure in place, amenity spaces are activated, tenants are fully connected to their space and overall there is a seamless experience from curb to desk. Class B buildings that take advantage of technology are able to level the playing field when walking potential tenants through the space.