Turnkey – A New Approach to Workplace Strategy
What is a workplace strategy? Put simply, it’s the process of considering the factors, requirements, data, and other evidence – to improve and optimize the performance of a company.
The number of pre-built, turnkey offices has increased significantly in recent years. One of the reasons is an attempt to modernize emerging office design and attract small space tenants. One of the reasons for this modernization are the millennials: Their desire for a future workplace has influenced the turnkeys – because of their progressive vision of an ideal workplace experience.
There are pros and cons for a business to do their own build-out – vs. moving into a pre-build/turnkey office.
In the past, pre-built office spaces were generally inferior to customization. They were just good enough to get tenants to ink a contract.
Today, trends in the workplace are different – and pre-builds are becoming more sophisticated. The quality is often higher now – to land high-end tenants like law firms, financial companies, and high-tech. Many also include shared amenities such as conference rooms, kitchen and lounge areas. This difference improves their workplace experience, and should increase their stay there.
There are a number of factors to consider when planning a workplace strategy, and selecting the right turnkey offices.
Of course, contemplating and/or matching a turn-key to a tenant isn’t a science: These factors all have different values, which can change from company to company. However, the time that brokers invest in getting into the heads of prospective tenants can go a long way: It can lower the vacancy rate and keep tenants happy in the long run.
- Money: Pre-built spaces carry less risk: Tenant build-outs are notorious for going over budget or beyond the timeline. Although a landlord will have to ask for a higher premium to a tenant for pre-built, they can often undercut the cost of a tenant build-out – and pass the savings onto them.
Pro Tip: Pre-built offices are more cost effective, and carry much less risk than a tenant build-out.
- Customization: A pre-build offers more flexibility in terms of items like architecture, IT infrastructure, and brand integration. A tenant build-out will be harder to adapt to the next tenant, which will often have different requirements in terms of infrastructure, layout, and appearance.
Pro Tip: Create a build-out that offers practical infrastructure – so the space can be reused for the next tenant.
- Quality: This factor creates a huge gray area: When the tenant does the build-out, they’re in complete control of the quality. Most landlords doing turn-key suites will instill just enough quality to get tenants to sign a lease.
Pro Tip: Make sure the build-out is durable and attractive with important elements – but weigh each element against the target budget to prevent overspending.
- Availability: Tenants don’t always have the luxury of choosing their ideal future workplace. Pre, partial, and existing builds are most common in smaller spaces (2,000-5,000 square feet). Larger spaces are often kept as a clean slate because of the risk involved in ‘permanently’ altering it.
Pro Tip: Reserve larger spaces for select tenants that have more stakes in their company – and are willing to invest in a longer lease.
Additional Elements of Trends in the Workplace...
Real estate developers and landlords are borrowing ideas from the hospitality and residential side to attract tenants.
This change in emerging office design is a response to some significant trends: Buildings and their surroundings can improve productivity by at least 12%, or reduce them by 17% - based on amenities they’ve chosen.
- Terraces: In the past, this element was a staple at luxury apartment buildings or condominiums. Developers now see the advantage of offering this structural element: It offers an island for employees to make phone calls, eat meals, decompress, or even host an event.
- Gym: Employees who work out three times per week usually perform 15% more effectively. Offering an in-house gym makes a lot more sense for employees who simply can’t make the time to break away for a good workout.
- Lounge/Lobby: Employees can use this type of upgrade for networking, collaboration, and to check in remotely. An alternative to the concierge.
- Food & Beverage Alternatives: Landlords are realizing that employees want more eating choices. Some buildings offer their own food courts, or have meal trucks rotated each week.
The Power of Tenant Perspective...
Brokers and landlords should spend some time considering emerging office design, and try to discern what a modern, progressive company is looking for in their workplace experience.
If the tenant improvement budget in the lease agreement is nonexistent or limited, the nature of a potential move-in space become even more critical for prospective tenants. This is why brokers should carefully research the various current trends in office architecture and amenities – so they can attract and land more tenants. This speculation can ease the rapid and seemingly chaotic process of leasing in the commercial real estate world.
Need Help Finding Your Future Workplace?
Do you have a company that needs to move into a pre-built office space? Or, are you a building owner having trouble figuring out how to design a new property for future tenants? StellaPop will consult on your needs – and find solutions for these concerns. Call us today – You’ll be glad you did!