Offices With Good Digital Connectivity Get Better Rents — Especially The Old Ones

A new study has found that offices with better digital connectivity have better leasing performance than those without a digital certification — especially Class-B and C offices.

A study undertaken by rating agency Moody’s looked into the impact of a WiredScore rating on the leasing performance of U.S. office buildings. It found that rents in WiredScore-certified office buildings were $6.50 per SF higher compared to those in similar-profile noncertified buildings.

That is a premium of about 16% when averaged out across all buildings measured. And the increase for older buildings was even sharper.

“It is class B/C office space that really benefits from the certification, with a 40.9% increase in rent versus other Class B/C office buildings that do not carry certification,” Moody’s Analytics Senior Economist Ermengarde Jabir wrote in a report on the study. “The result for the latter holds for metros throughout the country.”

The study showed 3.8% lower vacancy rates in North American office buildings that have WiredScore certification compared to similar-profile noncertified buildings. Such properties also have an average nine months longer lease term, while Class-A offices with the certification bring in 2.2% greater rental growth.

“Despite the office sector’s ongoing state of flux, high-quality office space still commands a premium,” Jabir wrote. “Availability and ease of digital connectivity in an office building powers the new office landscape where companies now blend in-person, hybrid, and completely remote workers who need to communicate with each other effectively on a daily basis.

"Buildings that demonstrate a high standard of digital connectivity by being WiredScore certified position themselves well to not only attract tenants but also improve their building’s fundamentals in an office sector environment whose future remains uncertain.”

WiredScore did not pay Moody’s to produce the report.

Moody’s said its analysis attempted to control for variables like building age, quality and location to ensure it was the digital certification that had led to the rental increase, not another factor.

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