The real estate market is experiencing an ongoing flight to quality. How can you keep your building competitive?
A constantly evolving office market is heavily influencing occupier decisions according to research by Moody’s and WiredScore. This is due to the ongoing changes people are making to where, when and how they work. In fact, flexible working arrangements are one of the top requests from applicants about new roles. This highlights the need to make offices more appealing in order to convince workers to trade in their sofas for meeting rooms.
Occupiers are looking for trophy office space with world-class amenities and the technology to support business growth. This has helped drive the surge of Class A office development over the past decade, with an average of 31.5 million sq. ft. constructed per year since 2010. These offices are offering occupiers premium fixtures, amenities, HVAC and digital systems that dramatically improve their experience. Class A office spaces which add value via these features are, unsurprisingly, the most popular. However, these developments are not cheap and require a large commitment upfront.
So, how can you guarantee a good return on your investment?
Despite the ongoing stress of the market, it is possible to achieve rent growth. Our data shows that the clients who have committed to future-ready technology with a WiredScore certification have achieved an average rent growth that’s 2.2% higher than the national average.
Gaining this competitive advantage puts buildings firmly into the ‘best-in-class’ category, and occupiers agree. In Atlanta, Class A office spaces displayed a 27.9% increase in rent premiums. This proves occupiers are willing to pay a higher rent to ensure they receive a better, more seamless user experience. Occupiers will also win, as they can expect to enjoy this premium experience for longer. Office buildings in the US can expect an average of 9 months longer leases when they are WiredScore certified when compared to similar, non-certified buildings. This shows that occupiers don’t feel the need to move office spaces as frequently, saving them time, effort and expense.
This is also true for Class B and C buildings. By holding a WiredScore certification, Class B/C properties in the Atlanta metro were found to have a 28.7% premium when compared to their non-certified counterparts. In Houston, this difference became even more marked as it increased to 40.9%. While this is significantly higher than the national average, it shows the extremity of opportunity for all classes of real estate.
These results show that despite an ever-changing market, landlords, developers and building owners can expect to be rewarded by staying ahead of the technology curve. High-quality office spaces still command a premium and stand to attract occupiers by improving their positioning within a competitive market.