More Than Open Concepts And Espresso Machines: How Office Landlords Score Tenants in 2018
When SL Green Executive Vice President and Director of Leasing Steven Durels starts working on an office building, he begins by asking a simple question: “Who do we want to move in here?”
From there, Durels said he thinks about how a building should look from the outside, what kind of interiors are best, what type of amenities should be included and what retailers should take up the commercial space.
“There’s strong tenant demand across the market overall,” Durels said. "[It’s a matter of] how do you excel within the market?"
Office tenants have demonstrated enormous appetite for new buildings in the city. Last year in Manhattan, there was a record 2.5M SF worth of office space signed at $100 per SF or more, according to JLL. Of that, 850K SF was in new developments.
With millennials expected to make up half the workplace by 2020, there has been intense focus on how landlords can lure innovative, young companies and encourage them to stay.
Durels said the key to attracting those companies is less about targeting certain demographics and more about carefully curating buildings so they are appealing to certain types of workforces.
Australian company Equiem provides an online platform for tenants to use their amenities and resources within their buildings, and CEO Gabrielle McMillan said tenant demands are not just about their age.
Landlords will be able to attract and retain tenants if they focus on finding ways to help individuals of all demographics be more productive and successful.
"It’s not necessarily based on age, you see cultural differences in organization and in types of work,” she said, adding her company is partnering with firm Adams & Co. and plans to operate at 17 buildings in New York City by the end of the month. "A millennial who works at a hedge fund is not going to want free mimosas every Friday."
"‘It is about curating the right service and amenity mix," she said. "The law firm and financial services want things that are slightly different than creative and technology.”
At the supertall One Vanderbilt, for example, SL Green is targeting high-profile, international companies to fill the building, which is scheduled to deliver in 2020.
“The occupants and the type of business, they are very prestige-orientated in how they present their corporate identity,” he said, pointing to the building’s amenity floor, bike room, observation deck and an 11K SF restaurant partnership with Daniel Boulud on the second floor.
Law firm Greenberg Traurig recently leased four floors in the 1.7M SF building, and Durels said 350K SF of the building is spoken for. Yet-to-be announced, pending deals will push the building to 50% leased, according to Durels.
The REIT’s building at 635 Sixth Ave., he said, features a rooftop bocce court and has a totally different feel than One Vanderbilt.
Landlords should be flexible and amenable to change to lock down tenants.
“If the landlord says, ‘You can’t do this or that,’ then I say ‘I don’t want to be here,’” Shutterstock Head of Global Facilities Razia Ferdousi-Meyer said.
Shutterstock — which provides licensed images and music to businesses — leases 85K SF at the Empire State Building.
“We may need to knock down 50 walls and put in glass," she said. "They need to step out of the old, suit-and-tie way of thinking and know how to take care of us as a client.”
Hear more about the office market at Bisnow's NYC Workplace of the Future event April 12 at 345 Hudson St.
CORRECTION, MARCH 22, 5:45 p.m. ET: Equiem is an integrated technology and services platform. An earlier version of this story misspelled its name. The story has been updated.