Columbia Property Trust CEO and President Nelson Mills On The Changing Office Market
Across the U.S.’ high-barrier markets, office owners have entered an amenity arms race. While prime locations in cities like New York, San Francisco and Washington, D.C., continue to command a premium, offices boasting access to high-end services have a leg up attracting tenants.
But beyond walkability, restaurants, retail and accessible public transportation, businesses are drawn to and stay at properties with one key feature: dependable digital connectivity. It is a demand Columbia Property Trust plans to meet across its national office portfolio.
Bisnow sat down with Columbia Property Trust CEO and President Nelson Mills to discuss the changing trends in office amenities and the growing need for reliable digital connectivity.
Bisnow: Over the last 10 years, how have your tenants’ needs changed?
Mills: The shift from hard-walled office build-outs like those seen in traditional law firms and call centers a decade ago has been well documented. Today, those same firms are demanding intelligently designed layouts that blend from one zone to the next — from desks, to quiet focus areas, to collaborative meeting areas and communal break rooms. Most tenants no longer see the four walls of their office building as the sum total of their office. Employees are telecommuting and working from wherever they travel. Capable technology and connectivity are vital to making that collaboration possible.
Bisnow: In today's market, what are your tenants' top three office demands?
Mills: In the highly competitive top markets where we operate and among the top-tier tenants with whom we work, access to flexibility, high-end amenities, CBD locations and technology have become the top demands.
Bisnow: What does it mean to have a flexible office space?
Mills: Flexibility tops most tenants’ lists today as they strive to be prepared for both growth and market downturns. Many companies are managing with more streamlined operational teams and fewer dedicated workspaces, and want to lease space that meets their needs while offering the option to flex up or down in the future. We’ve had great success leasing smaller but efficient floor plates that allow for both high-density desk areas and open meeting and gathering spaces. In our Midtown South portfolio in New York, we’ve seen both TAMI (Tech, Advertising, Media and Information) and more conventional companies attracted to the smaller, boutique-sized floor plates.
Bisnow: What amenities attract and retain modern office tenants?
Mills: On-site amenities that were once distinctive, like modern conference rooms and well-appointed fitness centers, are almost a given in most of our submarkets. Today it takes more exclusive features, like roof decks and dedicated concierge services, to attract top rents. In addition to tenant demand for these features, we’re also seeing demand for ever-increasing data capacity and speed, which is why we chose to pursue Wired Certification across the majority of our portfolio.
Bisnow: Columbia Property Trust has achieved Wired Certification for the majority of its office assets across the country. What benefits have you seen from the process?
Mills: Wired Certification helps our tenants and prospects have specific connectivity information at their fingertips. It allows us to identify how to meet the standards we want to conform to in every area of our assets’ infrastructure. In the same way you hire other consultants, WiredScore helps you think through how to provide best-in-class tenant service to attract top tenants. As proof of the advisability of that strategy, our portfolio is currently more than 95% leased for an average term of nearly eight years.
Bisnow: Is internet connectivity an office feature owners should focus on improving?
Mills: Connectivity is one of the key components required for businesses to operate successfully in today’s environment, where speed of information is often the advantage. The ability to maintain a phone call or connect to WiFi throughout a building is no longer a luxury, but a necessity.
Bisnow: What do you think tenants are going to care about in the future?
Mills: We are already seeing a demand for shared amenity spaces and services that can be utilized as needed, but that are not directly counted within the tenant’s rented space. Columbia has piloted several successful spec-suite programs that feature shared amenity and meeting spaces. We also expect to see a continued trend toward landlords not simply providing space, but offering services and amenities reminiscent of those found in full-service hotels and high-end residences.
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