CRE Owners Create Personal Incentives in the Workplace

Two years after the COVID-19 pandemic, most employees returned to work in the office at least part-time. However, more than a quarter of employees are still working remotely full-time, raising questions from homeowners about what it will take to encourage tenants to return to their buildings.

Spencer Kallick, partner at Allen Matkins, moderated a panel at Bisnow’s Future of Beverly Hills and West Los Angeles event to discuss how commercial property owners are bringing tenants back to local offices. Panelists included Dennis Cruzan, founding partner of Cruzan; Kent Handleman, senior vice president, Lincoln Property Company; Jonathan Lange, Senior Vice President, Boston Properties; and Matt Perlmutter, first vice president of CBRE. Several trends emerged during the conversation.

MEETING TENANTS’ NEEDS IN A POST-COVID WORLD

Panelists agreed that tourism activity in Beverly Hills and West Los Angeles has increased in the past year, signaling interest in offices. Companies want people back in the office for a variety of reasons and are looking for spaces they can use to entice employees to choose to work in the office rather than at home. However, they also noted that one company’s office space needs may differ from those of another industry. However, they have a common desire to improve quality and an interest in the amenities the building offers.

OFFICE SPACE IS DIFFERENT TODAY THAN BEFORE THE PANDEMIC

The pandemic accelerated some existing trends, namely the interest in open and outdoor concepts. For years, shopkeepers have preferred spaces with natural light and air, and these features have gained greater importance after the pandemic. At the same time, the home office movement has proven that employees can still be productive without all team members working onsite at the same time. This requires technology to support this type of work environment, so team members can still work together whether they’re in the office or working remotely. This may require more robust technology than is currently available.

BUSINESS OWNERS WANT A CREATIVE WORKPLACE

Tenants have accepted that today’s office workspace will not be the same as it was before the pandemic changes. Some companies have called all their employees back to the office, while others don’t see the need to have everyone present at the same time. This is one reason they are showing more interest in offices built for flexibility. Open spaces will make customization more flexible to meet changing needs, including a move to a hybrid workplace. This interest in customization could also be creating new opportunities for functionally challenging spaces in an area where new construction can take years to complete.

THE OFFICE IS MORE THAN A PLACE TO WORK

As tenants recognize that the office is more than a place to work, they are looking for ways to give people a reason to be there. Working from home is both comforting and convenient, and employers are starting to ask why the office can’t have similar appeal, like the ability to get a quick workout between conference calls or join a quick game for a brain break. Owners have been adding entertainment like ping pong tables, fitness equipment and food to give local employees to recharge and connect with co-workers. For homeowners, one of the important questions to ask is how the office can make life easier for the people who work there, some of whom travel long distances to get to work. When choosing amenities, consider the value they add.

THE FUTURE OF THE OFFICE CONTINUES TO EVOLVE

Los Angeles is still one of the top markets in the country because location matters. Despite the number of companies moving to states like Texas and Florida, there is still a lot of interest in LA from people who want to be close to the action. Supply remains a challenge for the local market, but speakers agreed that demand should continue to increase. At the same time, there is growing interest among tenants in building community and connection at work. Tenants are looking at more than the structure and asking questions about how landlords operate their buildings. Forward-thinking homeowners are anticipating and adapting to these evolving needs.

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP Revision of the National Law, Volume XII, Number 95

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