Marc DeLuca, CEO and eastern regional president of KBS
Although nearly every company has had to reevaluate how it uses office space post-pandemic, the overwhelming majority are realizing that they still need a physical office for their teams — for collaboration, culture, mentorship, and events.
Whether physically in an office or working from home, companies are being drawn to better-quality work environments. Yet, in a workplace that is redefining itself, many of today’s businesses are struggling to find office space that satisfies all their needs while allowing them to remain competitive and nimble. Moving into a traditional office can take a year or more to complete and involve a lot of decisions for companies of any size, from communications systems to furniture and beyond. Some small firms and startups may not have the resources or insight to manage all of these decisions while keeping their business operating.
Many of the real estate challenges today’s companies face can be resolved with an innovative approach to office space known as spec suites. These are turn-key office spaces that provide tenants more than a plain space upon moving in. In fact, when executed and designed well by the owner, they include a variety of built-in modern features that help today’s companies gain an edge in the marketplace — and navigate the challenges before them.
Time and effort
Today’s firms want offices that allow them to be up and running fast. They’d prefer not to lease a cookie-cutter “box” that they need to furnish and equip or be stuck in a lengthy permitting process to build out their own space; instead, they want offices that meets their requirements from the get-go.
These workspaces must also function smoothly and provide a comfortable environment that fosters productivity and innovation among team members. This can be difficult to achieve when businesses are moving into new space, scrambling to get furniture and equipment in place and struggling to function without missing a beat.
Spec suites can help companies overcome these challenges by providing them with ready-to-go spaces. These suites are typically beautifully furnished — in fact, we typically furnish our suites so that at move-in, our tenants come into a ready-made home for their company. Many suites in the market are already equipped with essential features such as high-speed internet access and conferencing capabilities —which are available at every spec suite in our portfolio and are especially relevant as hybrid and remote work policies become common in the workplace.
These features mean companies can minimize downtime and focus on operating their businesses seamlessly upon moving in. Often, this space is located in premium-quality buildings that are provide access to amenities like gourmet food options, cutting-edge conference facilities, nearby shopping, and services that make working in an office more convenient and pleasant.
Expenses
Controlling costs in the workplace can be a major issue for companies. In addition, higher price tags on construction can make processes such as building out office space even more expensive for building owners and their tenants.
Spec suites can help keep expenses in check for these firms. Construction costs for spec suite space tend to be lower than the tenant improvement allowances many landlords offer tenants to build out their space for move-in. So, while a bit more capital outlay is required before the tenant is secured, owners are often saving money in the long run and saving on lost income due to having move-in ready space and not showing tenants space that’s older and unattractive — minimizing costs that might have otherwise been passed on to companies in the form of higher rental rates or other fees in the lease agreement.
Spec suites also provide companies with high-end finishes that these businesses would otherwise need to expend hefty up-front capital to implement themselves, presenting additional cost savings for these firms.
Lack of flexibility
Office size is often an issue for today’s companies, many of which are either expanding or contracting to accommodate growth or downsizing in light of current economic uncertainty. Office space that allows them to grow without feeling cramped or decrease in size while remaining in place is in high demand. While this type of flexibility is often difficult to find in traditional office space, spec suites can offer space that is more customizable to companies’ changing size needs.
Also, although spec suites meet the needs of smaller firms and start-ups eager to get their companies off the ground, this space can accommodate companies of all sizes. For example, at Carillon in Charlotte, North Carolina, our firm built out seven suites to move-in ready offices that ranged from 1,500 to 14,000 square feet, and we created a 25,000 square-foot full-floor spec suite at 201 17th Street in Atlanta. Our spec suites tend to be bigger than most — and some have the ability to expand quickly into an adjacent suite to meet the demand of a larger space — which attracts many larger tenants.
In addition, spec suites can be used as ancillary workspaces to prepare for more permanent space use in the future — a solution for an increasing number of companies.
And this space is usually available for shorter lease periods than most offices, providing even more flexibility.
Future potential
Spec suites solve many pain points for today’s businesses and office building owners. Historically, they lease up quickly — particularly in large cities like Chicago and Minneapolis, where quality offices in a top-tier building can be out of reach for many smaller or fledgling companies.
Our firm has had great success with our spec suite program at Accenture Tower, a 1.46 million square-foot high-rise in Chicago, where we’ve built out and leased more than 150,000 square feet of spec space. Prior to the pandemic, the building was 70% leased; now with the help of spec suites and upgraded amenities, it’s nearly 100% leased.
As businesses increasingly look to bring their teams back to a space that’s new and creative these ready-to-go spaces are helping to their alleviate office space challenges in cities across the country.
Learn more at KBS.com/Insights.
