The Opportunities Of Leasing A Vintage Office Building
In a city where two-thirds of the office product was built in the 1980s or before, landlords of vintage buildings have to get creative in how they appeal to tenants. And while Stream VP Ryan Evanich said at our Dallas Next Generation Leaders event last week that there's clearly been a shift away from the inward-facing office campuses built in suburban areas in the '80s and '90s, vintage buildings are far from obsolete.
Vintage offices should capitalize on their key positive for tenants—lower rents—Avison Young principal Bret Hefton says. When older buildings can compete with newer, Class-A buildings with less sticker shock, potential tenants will take notice. But owners must still adapt to tenant needs, and keep with the times by adding capital. Projects like Billingsley Co's International Business Park added capital improvements such as redoing restrooms, lobbies, corridors and infrastructure, and beefing up amenities.
Landlords should ask leasing reps what potential tenants say—especially the ones who don't sign. Were they turned off by the dark common areas? Was the lack of a fitness center a deal-breaker? Ryan says owners should see a building's age as an opportunity to differentiate. Stream and DRA are taking their own advice in updating common areas, installing better WiFi and building fitness centers for the four-building, 700k SF portfolio in Addison they closed on in June.
Improvements to spiral duct work, HVAC, plumbing and electrical always cost more the second go around, Ryan says. Install top-of-the-line the first time around or be prepared for a big bill when you have to upgrade down the line.
And while tenant improvements in second-generation spaces also cost more than first-generation spaces, Heady Investments EVP Sayres Heady suggests playing it smart. And with construction and concrete costs at an all-time high, it pays (or saves, rather) to do your homework before you buy, Sayres says. One good tip: Temporary partitions that don't damage ceilings can be moved around as companies need more bullpen space or more dedicated offices.
Here are Bret, Sayres, Milestone Apartments director Robert Debs, TIG principal Kevin Mackey and Ryan at our event.