search

The Real Deal Logo

Trending

H-E-B snags 21 acres in Celina, hinting at development boomH-E-B snags 21 acres in Celina, hinting at development boomRent board’s 4% hike will “plunge” buildings into distress: landlordsRent board’s 4% hike will “plunge” buildings into distress: landlordsLawmakers reach sweeping housing deal with “good cause eviction,” new 421aLawmakers reach sweeping housing deal with “good cause eviction,” new 421aHGTV’s “Mr. Flip It” gets four years in jail for $10M fraudHGTV’s “Mr. Flip It” gets four years in jail for $10M fraud
Commercial
New York

The commodity office playbook is “dead:” Developers bet on pricey perks

Amid hybrid work and delayed returns, office developers roll out amenities

Various views from One Vanderbilt (onevanderbilt.com)
Various views from One Vanderbilt (onevanderbilt.com)

Developers desperate to bring employees back to the office are trying to lure them with pricey perks — and in some cases, it could be working.

Amid hybrid work policies and delayed office-return dates, the Wall Street Journal reported developers are still turning to added perks like outdoor spaces and on-site chefs as amenities in hopes of making their office properties more enticing than working from home.

“Commodity office is just something we’re not thinking about,” Hines CIO David Steinbech told the Journal; the company is working on making terrace options for its Houston developments. “That playbook is dead.”

One Vanderbilt in New York City is one such development laying out as many perks as it can for employees. The building has high-end air filtration systems, a 4,000-square-foot terrace and a cafe with celebrity chef Daniel Boulud in charge.

While it’s hard to definitively track whether or not those perks are pulling tenants back to the space, SL Green CEO Marc Holliday said in October the building is more than 90 percent leased. Asking rents for the top floor are $322 per square foot and $312 per square foot for the penultimate floor, making it the priciest office space in the city.

Sign Up for the undefined Newsletter

Read more

In markets across the country, demand is highest for new, top-shelf space. According to VTS data reported by the Journal, rents in the top 10 percent of most expensive office buildings are 50 percent higher than other office buildings in their respective markets in November. New York saw even higher premiums at 85 percent, while Los Angeles’ were 68 percent.

Not everyone is fearful of how the office market will fare in the wake of the pandemic, however. Related Companies CEO Jeff Blau recently predicted that New York City’s office would start to see a big influx of vaccinated workers at the beginning of 2022.

Signs of recovery blanketed the Manhattan office market in November, when more than 3 million square feet in leases were signed for the first time since January 2020, according to Colliers. However, most of those leases came before the latest variant became a big story in the United States.

[WSJ] — Holden Walter-Warner

Tags
Commercial Real EstateOffice LeasingOffice Market