Small Office Users Create Big Opportunities In Silicon Valley
Even though Silicon Valley developers are building larger floor plates than in the past, small tenants are presenting significant opportunities across the Valley.
“There is another story to the office market in the Valley and that’s the smaller startup and professional service type of tenants, which are important drivers of long-term growth in the Valley,” Briggs Development President Jeff Rogers said during the recent Bisnow Silicon Valley State of Office event.
Briggs Development typically focuses on value-add opportunities and working in the multi-tenant space. He said Class-B space is in high demand, but these types of offices are down by 24% in recent years.
While there is a lot of demand for 5K SF to 15K SF, many of these prospective tenants do not have internal real estate departments and prefer more market-ready space. That means having offices with well-lit, high-end modern kitchens where people can not only enjoy lunch, but also have a place to gather.
Small companies are having a hard time competing for talent against large enterprise companies that can offer a plethora of amenities, Newmark Cornish & Carey Executive Managing Director Michael Saign said.
“It’s a hard part of the world to be a small tenant,” Saign said.
He said locations that promote better health and wellness are the biggest trend among small and large tenants.
“Coming out of the recession, there were more bocce ball courts and barbecues pumped into this valley than I ever expected,” he said. “Wellness … will carry through to enterprise clients and what they are doing on their campuses down to smaller tenants.”
That has meant including sophisticated health and wellness building features, such as tunable lighting that can change the color and brightness of a light to promote the balance of circadian rhythms, living walls and smart building applications like Comfy. He said fitness centers are a given.
“The scale of fitness centers developed challenge the greatest health centers,” he said.
Location and proximity to transit also is a big determiner for small tenants. Brick founder and CEO Rob Zirkle said the transit aspect of a building is massive. He said commute times are long and people are stressed getting to and from work. Employers want to make it easy and possible for employees to get to work, he said.
“The power of urban infill centered on transit is huge,” he said.