The Role Of Design And Activation In Signing Leases And Winning Tenants In Today's Office Market

The Role Of Design And Activation In Signing Leases And Winning Tenants In Today's Office Market

It’s easy to feel pessimistic about the U.S. office market. Since the pandemic drove millions of Americans to work from home, the market has been described as “obsolete,” “underutilized” and “​​the world's most oversupplied.” 

However, there is a bright spot: Class-A office buildings. 

While Class-B and C offices continue to struggle to fill vacancies, the market has seen a massive flight to quality, with companies vying for high-end, luxurious office space with top-tier amenities. In 2023, more than a quarter of all office leasing activity in Manhattan had rents higher than $100 per SF.

The Role Of Design And Activation In Signing Leases And Winning Tenants In Today's Office Market
A chart highlighting the flight to quality in the office market

Brookfield reported that 90% of all office vacancies are in the bottom 30% of buildings, “largely characterized by older offices with limited amenities and reduced functionality,” while the top 25% are thriving.

While these figures are promising, they beg the question: What makes a successful Class-A office building? Is it in the design, the amenities or the way property managers activate those amenities and keep tenants engaged? 

To find out, Bisnow spoke with office experts from some of the most successful commercial real estate firms in the country — JLL, BGO, Ivanhoé Cambridge, Rudin, Hines and more — to find out the role design and activation play in their successful leasing strategies. Below is an edited selection of their answers.

The Role Of Design And Activation In Signing Leases And Winning Tenants In Today's Office Market
488 Madison from The Feil Organization

Caroline Gadaleta, Regional Manager, Property Management, JLL New York

Gadaleta said design has a huge impact on overall leasing strategies. 

“We have seen a very distinct shift towards Class-A and trophy properties that have prioritized design that is focused on elevating the workplace experience and providing the type of space and amenities that prioritize flexibility,” she said. “Before, big conference rooms were predominant but rarely fully optimized — maybe for a handful of events a year. Now, people are looking for different types of meeting places. They want small, intimate spaces and flexible, large spaces that can be a shared amenity used only when required.” 

She added that activation of unique amenities has become equally important — from birdwatching to beekeeping. 

“Landlords and property managers are working on fun, appealing ESG strategies, such as tracking the bird species that visit their rooftops or installing beehives, as ways to engage with tenants,” she said. “Such undertakings have become the glue that holds landlords and tenants together. When I first started out in property management, the relationship between landlords and tenants was somewhat adversarial and based on who could get the most out of the other. That relationship has been turned on its head, and they now work as partners in a joint effort to inspire employees to come to the office.” 

Andrew Wiener, Head Of Commercial Office Leasing, The Feil Organization

Wiener said The Feil Organization has invested in strategic modernizations to deliver premier tenant experiences that directly address the needs of today's workforce.

“Our upgrades include modernized elevators, upgraded lobbies, brand-new retail storefronts and enhanced interior spaces with increased natural lighting and illuminated ceilings,” he said. “These improvements ensure that our spaces make the best first impression and set the right tone from the moment tenants approach our buildings and see the retailers to walking through the lobby and using our elevators to reach their spaces.”

He added that as a privately held, family-owned-and-operated company, Feil’s philosophy is to prioritize tenant care and satisfaction — and its activation strategy reflects that. 

“We believe this approach encourages tenant retention, engagement and enhances our reputation, inspiring more leasing opportunities,” he said. “Our property management team focuses on the unique needs of each of our tenants, recognizing that no two tenants are the same. We maintain constant communication with our tenants to ensure alignment with their needs and adopt a proactive rather than reactive approach to management.”

The Role Of Design And Activation In Signing Leases And Winning Tenants In Today's Office Market
711 Fifth Avenue from Shvo

Jeff Eckert, Head Of U.S. Agency Leasing, JLL

Eckert said that looking forward, the best office spaces in the best locations will continue to thrive, with rents across the top of the market remaining high and vacancy low. Companies are looking to their offices to help them recruit and retain talent, and they are finding the most success in the highest-quality assets in buzzing mixed-use environments. 

“As these locations fill up, and with very limited new construction beginning across the country, we will see spillover into those next-tier assets,” he said. “Obsolescent offices will need to be repurposed or demolished to serve a better use, which is something we've already started to see, given overall inventory declined by 1.6M SF in the first quarter for the first time on record.”

Jonathan Pearce, Managing Director, Real Estate Investments, Ivanhoé Cambridge

Pearce said his firm takes pride in crafting the workplaces of tomorrow, with design as the cornerstone of its approach, spanning from the shared exterior and lobby spaces to the individual office suites.

“It’s not about a single feature or amenity — it’s about the whole package and the experience that all enhancements and amenities will provide to users,” he said. “We’re currently undergoing a repositioning of 10 and 120 S. Riverside Plaza, a two-building, 1.4M SF, Class-A office complex located in Chicago’s coveted West Loop submarket. The enhancements being put forth — which include an expanded lobby, a redesigned plaza with robust green space and ample seating, a tenant-exclusive indoor-outdoor lounge, an expanded fitness center with an adjacent exterior pickleball court and multiseason fitness court, and river-facing balconies — all converge to blur the line between the indoors and outdoors while simultaneously creating a connection with the Chicago River that wasn’t present before. ”

Tyler Kethcart, Director Of Experience Management, JLL Property Management 

Kethcart said the key to a successful design strategy is flexibility. 

“As an operator, we look at the operational efficiency of the space — its ability to be used in multiple ways and for that usage pattern to be adjusted over time, as tenant demands and needs continue to change,” he said. “It’s about flexibility. A successful space will be flexible for many different types of tenants and use cases. We try to put ourselves into the mindset of who's going to be using this space, what functions are they going to be using it for, and consider each of those functions and its requirements.” 

As for the importance of activation, Kethcart said there is a renewed and continually expanding demand for experiences in the office that has transformed the flight to quality to a flight to experience. 

“We engage with tenants through an increased amount of personalization,” he said. “We want to understand exactly who is occupying the property and what are their reasons for being at the site. Then, my property management, or more specifically, my experience management team, will then design the experiences and the services and the different plug-ins that we need in order to activate those spaces to meet those needs. We’re no longer guessing — we are designing for people based on input from people.”

Hilary Spann, Executive Vice President, New York Region, BXP

Spann said that when it comes to creating a premier, in-demand workplace, thoughtful design and on-site amenities that promote a productive lifestyle are essential components to success. 

“Last year, we introduced a 35K SF amenity suite at the General Motors Building in Midtown Manhattan, Savoy Club,” she said. “The space was designed as a world-class fitness center, elevated dining experience, lounge seating and a state-of-the-art conference and events center. The amenity center was created in direct response to the wants and needs of current clients and has helped maintain the building’s leased status of nearly 100%.”

Michael Shvo, Chairman And CEO, Shvo

Shvo said that to his firm, nothing matters more than the customer experience. 

“We draw no distinction between where you live and where you work, so the same teams that are involved with our ultra-luxury residential properties, such as the Mandarin Oriental Residences Fifth Avenue and Beverly Hills, are involved with our office properties such as 711 Fifth Avenue in New York City and Transamerica Pyramid in San Francisco,” he said. “Our property management team comprises professionals from the hospitality world with team members undergoing regular training in the art of hospitality that is delivered by the likes of Rosewood Hotel Group.” 

The Role Of Design And Activation In Signing Leases And Winning Tenants In Today's Office Market
The exterior of T3 Minneapolis from Hines

Brian Atkinson, Managing Director, Hines

Atkinson said design, amenitization and tenant engagement all play critical roles in driving leasing volume throughout Hines’ office portfolio. 

“We believe the modern office must act as a magnet to attract high-quality talent, and today’s successful properties offer elevated experiences fostering connections and collaboration,” he said. “To that end, our T3 office concept — timber, transit and technology — which we’ve brought to markets around the world, has proven that tenants value the comfort, innovation and sustainability of these mass timber buildings. They want to be in these buildings, and we’re finding that this supports leasing success.”

Rob Naso, Managing Partner And Head Of U.S. Asset Management, BGO

Naso said as organizations adjust to a hybrid approach to work, many tenants don’t know how much space they will need, so flexibility is critical. 

“The availability of an in-house, dedicated design and construction team that can deliver high-quality design projects on time and on budget has been a real differentiator,” he said. “At 757 Third Avenue in New York City, we invested $5M in creative, strategic updates and leveraged our technical expertise and execution capability to open the slab in the lobby. We installed a circular stairwell providing access to 7K SF of never-before-used basement space to create a state-of-the-art amenity offering for tenants. Additionally, we invested $10M in strategic upgrades at Newport Tower in Jersey City, which enticed Bank of America to expand and extend their lease significantly to 550K SF. To put a finer point on it, a $10M capital improvement resulted in the largest lease in Jersey City in over a decade.” 

The Role Of Design And Activation In Signing Leases And Winning Tenants In Today's Office Market
The Diagrid Club at 425 Park Ave. from L&L Holding.

Jamil Lacourt, Chief Operating Officer, L&L Holding

Lacourt said that now more than ever, companies are looking for office spaces that compel employees to come together and collaborate. This is why activation is key. His firm reserved the most valuable space at its building 425 Park Avenue in Manhattan’s Plaza District to create The Diagrid Club, a premier amenity and wellness center.

“The Diagrid Club blends breathtaking views, outdoor spaces, high-end art, transcendental meditation by the David Lynch Foundation, and a world-class F&B program led by Jean-Georges Vongerichten,” he said. “At Terminal Warehouse in West Chelsea, we are activating the building’s historic tunnel with restaurants and retail and creating a grand internal courtyard that acts as both a central meeting place and ensures that natural daylight flows through the entire full-block building. By doing that, we will draw in employees and keep them coming back day after day after day.” 

Michael Rudin, Co-CEO, Rudin

Rudin said the world’s foremost future innovations and cutting-edge technologies are going to require people to work and be together, and owners and developers need to make their offices a place where people want to be and collaborate. 

“Humans are social creatures, and they crave interaction,” Rudin said. “In the wake of Covid majorly shifting the paradigm, people also began to understand — and take advantage of — a more flexible and hybrid approach to working. All of a sudden, it didn’t need to be one or the other.” 

He said that to better ensure Rudin is giving its tenants and their employees a reason to come to the office and collaborate in person as much as possible, it recently hired a dedicated tenant experience manager.

“This manager will help ensure that we are both observant and nimble enough to quickly adjust both our physical spaces and our programming,” he said. “We also provide hospitality training for our front-line workers to enhance the office experience from the moment you enter our buildings.” 

Brian Saenger, President And CEO, The Ratkovich Co. 

Saenger said people are drawn to beautiful buildings, and they do their best work in inspiring settings.

“We are currently developing The Bowcroft Collection, a next-generation tech and media campus near downtown Culver City, and our design decisions are guided by tenants’ desire for both aesthetics and functionality that optimize their creative work,” he said. “In addition to providing our tenants with inspiring physical settings, our property management team produces ongoing tenant engagement events often utilizing a project’s amenities, such as an outdoor meeting space, barbecue island, bocce ball court or putting green.” 

Ambrish Baisiwala, CEO, Portman

Baisiwala said the way we work has changed, and for an office building to be successful, we need to cater to the employers as well the team members.

“Today’s office workers need more than just a coffee shop in the lobby. They want amenity-driven destinations that are convenient and safe environments, can host company and social events, and speak to environmental and climate concerns,” he said. “Knowing this, all of our projects prioritize a proactive approach to management that starts very early in design and continues with the completion of construction. Post-completion of construction, the strategy is about more than just bringing in the newest fitness concept or boutique. It's about communication and connectivity and creating an environment that naturally complements the existing fabric of the neighborhood and adds to the culture of the community.” 

This is the first in a series of three articles on the state of the office market and expert opinions from the people who are succeeding in it. Check back here for the next installment. 

This series is being produced in collaboration between JLL and Studio B. Bisnow news staff was not involved in the production of this content.

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