The office sector took one of the biggest hits among the commercial real estate industry during the COVID-19 pandemic. Mandated shutdowns kept employees out of office buildings, but even as the pandemic subsided, a number of companies maintained their remote work policy. CRE office space owners have been doing everything they can to fill their vacancies ever since.
It now appears that making office buildings extremely attractive to workers is what it will take to bring them back, the New York Post reports. Tenants are demanding Class A office spaces that are littered with amenities. Landlords are answering the call.
“If you have a cool location and cool building you will get the tech guys,” Jeff Gural, chairman of GFP Real Estate told the New York Post.
Office amenities CRE owners are adding
Gural created new lobbies in two of his New York properties and converted some elevators to fast destination dispatching. Meanwhile, when an employee swipes their building entry card, they are put into drawings for owner suite tickets at concerts and sporting events.
Tenants in RXR’s nearby properties can access yoga classes, fitness facilities, conference centers, video game rooms, golf simulators and more — all through an app, according to the New York Post.
“They want those moments to leave the office and decompress, or to work with colleagues and have team building,” said William Elder, managing director of RXR’s city portfolio.
One block over, the Terminal Warehouse has been redone with glass penthouses on top of it where Hudson River across the West Side Highway can be seen. Developer L&L Holding partner Robert Lapidus said the property is being made into an experience, “like the Chelsea Market meets Hudson Yards.”
Additionally, the Terminal Warehouse’s 1.2 million square feet is being designed to accommodate an entire building’s worth of tenants in four blocks of approximately 350,000 square feet each. The property can host up to eight different firms if needed. Every block has private elevators, lobbies and outdoor space. Amenities include a public auditorium, shopping, restaurants, childcare, a dog care and gym showers.
“You want to do the best product you can in the best circumstances,” Lapidus said. “Developers who have capability and connectivity especially in construction and leasing will have opportunities going forward.”
The Empire State Building has added a lounge, pickleball and basketball courts, a pair of “Esrtee Virtual Golf” simulators and stadium-like seating that can hold 400 people for a meeting to its list of amenities. The building already had conference areas reserved for tenants, a fitness center and private eateries.
Jamestown President Michael Philips also acknowledged that “quality space” means somewhere that employees want to go and can include various products and building types. “Office environments will have to figure out how to create more welcoming experiences,” he added.
Meanwhile, Jamie Katcher, managing director and head of the New York office for Raise, a real estate technology and brokerage firm added, “The ones that didn’t need to put in amenities because of the demand in the market now need to think about it.”
Rudin Management agrees. The firm, which owns, develops, builds and manages CRE properties, is installing a new lobby and amenity center at its 80 Pine location and building a 285,606-square-foot boutique office building at 415 Madison Ave, the New York Post reports.
“The trends you saw in the residential market with amenitizing and outdoor space, you are now seeing in new office development,” said Mehul J. Patel, senior vice president and head of commercial office at Rudin.