The Real Deal New York

Guess who’s dropping big money to keep millennial workers happy?

Big commercial landlords are laying down millions to update offices
January 07, 2018 01:45PM

(Credit left to right: The Real Deal for Brian Kingston and Owen Thomas photos; Stephen Schwarzman photo by World Economic Forum; Pexels photo, back)

If you guessed Blackstone Group, Brookfield Property Partners and Boston Properties, you’d be right. The major commercial landlords are investing big to stave off the WeWorks of the world and keep millennial workers in their offices.

Without altering office to include the perks of a gym, free in-office cafes and bars and a flexible, open-concept layout, these landlords don’t believe they can hold on to tenants, according to Bloomberg.

“The way towers were built in the 1980s, they were a monument to the corporation,” says Lisa Picard, CEO and president of Blackstone’s Equity Office. “Now, if it feels corporate, that’s the kiss of death.”

The numbers support her theory: Colliers’ research team noted vacancy rates were up to 11.5 percent in Boston last year in the fourth quarter while in Manhattan, the firm expects about 8 million square feet to be vacant in the coming years.

To keep old tenants and attract new ones, landlords are getting creative: Boston Properties reportedly dropped $100 million to renovate 399 Park to include bike valets among other new features, while Brookfield’s tenant JPMorgan Chase is renting new space for its software engineers in 5 Manhattan West which will be outfitted with soundproof rooms for playing music or games.

[Bloomberg] — Erin Hudson