Density's Big Property Management Impact
With office tenants’ density crunch and thirst for top notch amenities, landlords will have to think outside the box to keep buildings operational and profitable, we learned at Bisnow’s Property Management & Office of the Future event, held last week at Trump. Density coupled with a 24-hour workday means longer security hours, food service, and a real strain on parking in the ‘burbs, NAI Hiffman managing director Bob Assoian says. Traditional tenants are digging into their operating expense calculations, and they don’t want to be paying an extra $1/SF if a tech firm moves in next door and has the lights and HVAC on until midnight.
More people per office taxes building management, brings about productivity issues, and stresses HVAC that’s not geared to handle such heavy use, Cushman & Wakefield senior managing director Randy Waites says. You can recoup some of those costs on amenities, but make sure they’re worth the investment. (A pet llama in the lobby? Probably not worth it.) That means senior property managers have to think like sophisticated asset managers, Randy says, and understand NOI, market trends, and lease terms. Like the value of adaptable plug and play spec suites, so turn costs are lower as leases become shorter.
As tenants’ spaces shrink, they’re much more amenable to paying $100/day for a building conference room they might use three times a year (rather than an extra $1.50/SF), SVN Crossroads Property Management COO Kirsten Bowersox says. It’s important to tailor property management pushes to your tenants, she stresses, using medical office as an example. Lease terms are long and build-outs are expensive, but common areas and building amenities are less important. And remember you can’t change a building's framework, she says. Bathrooms will only accommodate a certain amount of stalls with ADA compliance, and life safety measures cannot be stretched too far.
What if you’re starting with a blank canvas, like The John Buck Co’s 34-story 151 N Franklin development? Principal Betsy Traczek tells us property management is involved in building design from day one, pushing for Mercedes-caliber building systems and amenities that will work well for tenants (and retain them, like the stellar Sky Garden). The building’s HVAC is designed to be flexible, she says, so if a tenant wants to work on a Sunday, you can isolate their floor and service it at a low cost billed directly to them. Other things to consider with density: health and wellness when more people are sharing public spaces. Foresite Realty Partners CEO Don Shapiro moderated.