High-quality amenities have become increasingly important to discerning office tenants. Some can significantly impact an office building’s occupancy and get tenants to pay a premium in rent vs. competing, similar buildings. On top of most prospective tenant’s lists are:
- Outdoor spaces
- Food service
- Gyms
- Direct access to public transportation
However, tenants put a further premium on enhanced versions of each of the above:
- Roof terraces with active services/other amenities garner a 5% rent premium over ordinary/static terraces.
- Fitness centers with showers and locker rooms and, or personal trainers command 2.5% higher rents than the same classed buildings with basic fitness centers. Interesting paradox on this one- Most user groups that tour buildings love to see that there is a gym. However, utilization is miniscule!
- Cafes with varied, healthy menu options and longer hours of operation garner 2% higher rents on average than buildings with basic food service options.
Other in demand amenities include courtyards with outdoor seating, wellness activities, shuttle services and LEED certifications. They too attract more tenants and command higher rents.
Amenities are also driving up occupancy. Highly amenitized buildings, defined as assets with 6 or more tagged amenities and at least one differentiated offering like a roof terrace or full-service fitness center, have gained 23.3M SF of absorption since the onset of the pandemic, while other urban Class-A product lost more than 50M SF of occupancy!
Yet, amenities alone won’t do all the work of increasing occupancy and hiking rents. According to a recent study, which cites location, building infrastructure, building age and the user friendliness of landlords as significant factors in tenant’s decision process as well.
