What Tenants Consider When Choosing Office Space
Tenants are essential to commercial real estate properties. With the right tenant, the investment property can increase in value and potential over time.
Since the pandemic, global commercial real estate market has changed dramatically, and many have wondered what would happen to it moving forward. Shorter office leases and flexible working spaces are becoming the norm in some areas, while there is a growing demand for office rental property in others.
So what do tenants consider when choosing office space? Keep reading to learn more.
Consider Remote or Hybrid Work
In the U.S., the office isn’t dead, but it is challenged. Tenants need to consider if a physical office space is the best use of their resources. While many people have returned to the office for at least part of the week, flexible and hybrid office solutions have reduced the overall demand for office space. On the other hand, in the UK, the increasing demand for prime office space has led to a shortage of available rental space.
When considering remote or hybrid offices, tenants will look for buildings that are set up to incorporate technology, such as a secure Wi-Fi network just for employees. A workstation furniture supplier like Office Gallery can help ensure that you have the appropriate commercial desk furniture for employees who work just a few days a week or who share a desk as part of a hybrid work environment.
Location and Cost of Space
Location, location, location—it’s the real estate agent’s mantra for a reason. Tenants need a property where customers can find them and where they can easily sell or develop their products and services.
Another factor tenants must now consider is Energy Performance Certificate (EPC) ratings laws. This rating is a review of a building’s energy efficiency and may push up demand in cities where space is already at a premium.
Rental rates are closely tied to vacancy levels, and from July 2020 to December 2021, base rental rates in the U.S. were in the high-single-digit range with occupancy down around 3-4%. Changes in vacancy impact rent significantly, with a rent change of 2-3% for every point change in national vacancy.
Flexibility is key for today’s tenants. They can’t see into the future to know how long they will need the space or how many employees will fill the space. Therefore, they are not as willing as they used to be to sign a five- or ten-year lease. Tenants want shorter leases and may also be looking for things like shared offices and coworking spaces.
Because the landscape of the office is changing, this brings opportunities to appeal to customers through customization. Landlords can offer perks such as parking spaces or an electrical grid backup in case of power failure.
At Office Gallery, our office interior design services can provide the items you need to appeal to tenants in any office space. Contact us today for a consultation.