Office vacancies hit record highs this year, leaving landlords to puzzle over what could draw workers back to their buildings and bolster the values of their distressed assets.
The elixir to this vacancy headache appears to be golf simulators, movie theaters, in-building gyms and restaurants, according to the Wall Street Journal. Amenities once rarely seen beyond the confines of Silicon Valley’s tech campuses are cropping up in office buildings around the country and helping to attract tenants and employees and boost rents.
In East Brunswick, New Jersey, American Equity Partners owns a 40-year-old, 435,000-square-foot office building that is nearly 100 percent leased –– an unheard of feat in today’s dismal office market.
“Our tenants told us what they needed in order to fill up their offices,” American Equity co-founder David Ekouby told the outlet.
After buying the building, dubbed 1 Tower Center, for $38 million in 2019, the firm dropped $20 million on renovating the space, adding a new lobby, fitness center, movie theater, golf simulator and a lounge with arcade games.
“You can’t just open an office and expect [employees] to be there,” Meenakshi Benjwal told WSJ. Benjwal is head of Americas marketing for HCLTech, an Indian IT consulting giant and tenant in 1 Tower Center. HCLTech’s leaders liked that the building was close to homes of employees and MetLife Stadium, where it pays for a 75-person suite on the 50 yard line.
Other heavily amenitized offices are also finding success with offering perks. SL Green’s One Vanderbilt in Manhattan, which has a Michelin-star restaurant by chef Daniel Boulud and outdoor spaces, is fully leased and charging some of the priciest office rents in New York City.
In Culver City, California, the 11-story Entrada has a sky deck, concierge services and plans for a restaurant, the outlet reported. Lincoln Property Company and Gensler launched the $225 million project in 2018, and a spokesperson confirmed Entrada has landed three of the biggest Los Angeles area office leases this year.
In West Palm Beach, Brand Atlantic Real Estate Partners and its joint venture partner Wheelock Street Capital are in construction on the amenity-heavy, two-building office project Banyan & Olive. When completed, the offices will have a concierge, 2,500-square-foot fitness center, a golf simulator, car wash, restaurant and cafe. The Banyan Avenue building is 60-percent preleased, and the Olive Avenue building is 50-percent preleased, and the retail space across the project is 95-percent preleased, a spokesperson confirmed.
Jamie Drummond, a Newmark senior managing director and 1 Tower Center’s leasing agent told the outlet, “Most owners don’t have the wherewithal to do what is required. Owners positioned to highly amenitize their buildings are the ones who are successful.”
–– Kate Hinsche
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