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— Property Management Quarterly — April 2016
When debating the financials,
many might consider “hypotheti-
cal space,” said Nichols. Hypotheti-
cal spaces are renderings that are
intended to give prospective tenants
a vision of what the space could look
like.There is less risk on the building
owner with this project because the
cost is much lower.
However, it’s debated if renderings
pack the same punch as build-outs.
“[Renderings] are huge in terms of
helping people visualize,” said Baldwin.
Cresa, which represents the occupiers
of space, often sees that their clients
need the landlord to sell the space by
explaining, in a visual context, what
is possible. “These days, it is relatively
inexpensive for landlords to do 3-D
renderings and visual fly-through of a
space,” he said.
In many of the projects Box Studios
has worked on, the space is leased
based on the floor plan and 3-D ren-
derings, without the need to build out
the space, said Jim Graczyk, a principal
at Box Studios.
However, the broker panel disagreed,
and said that renderings are not nearly
as powerful as actual built space.
When prospective tenants just see
renderings of possibilities, it makes the
space “average,” and doesn’t compare
as well to other spaces they see that
are built out.
The decision should come down to
ability and opportunity for a leasing
broker to lease the space, Nichols said.
He suggests that if a vacant space is
shown for a period of time with no real
interest, it may be more cost-effective
to renovate the vacancy in an effort
to lease the space sooner. In these
instance, the decision to build may be
more of a leasing decision than a prop-
erty management decisions.
How toMake It Successful
Once the decision to build is made,
the project becomes a property man-
ager’s task. At this point, it is wise to
pair up with a design team, which can
point out problem areas as well as best
features.
“Emphasizing the absolute best char-
acteristics of the space are key,” said
Liebling. “Whether it be column-free
bay depths, magnificent views or stel-
lar amenities, a well-designed spec
suite should highlight the greatest
attributes.”
The best spec spaces are simple and
relevant to currently accepted aesthet-
ics, said Nichols. Spec spaces that are
open and take advantage of natural
light show better and can maximize
the features that the space has to
offer.
“If the space is new, well-lit and
intelligently designed, landlords will
typically get a pretty quick return on
their investment,” said Baldwin.
Traditional planning models
with perimeter offices and inboard
enclosed space with limited natural
light may deter the potential tenant
base, said Liebling.
In general, most spec spaces need a
reception area, a meeting/conference
room, a break room that includes
a sink and a couple private offices.
The break room can feature modern
updates to make it feel more like a
lounge or cafe than a pantry or kitch-
enette.
“If landlords present the space as
a fresh and pleasant workplace, this
will sell,” Baldwin said. “Usually this
means demolishing the majority of
the existing condition, upgrading
the ceiling and lighting systems, and
replacing the doors and hardware to
something that is current. If there is
a kitchen, on a speculative basis if
a landlord were to replace the cabi-
netry and flooring, this goes a long
way.”
The spaces should limit personal-
ization and use quality products. If
the materials are cheap, it will reflect
on the overall space. Colors that are
too radical should be avoided as well
as bold patterns that might not speak
to a company’s cultures. It’s often
best to consider two or three coordi-
nating color scheme for the building.
“You want to appeal to as broad an
audience as possible for the size of
the suite,” said Baldwin. “They have
to be able to visualize their company
in there, and using too much color or
stylized design will limit the target
audience. This is easily added later.”
Another thing to avoid is overde-
signing the space. It is easier for
prospective tenants to visualize what
they can add to a space rather than
visualize what they have to remove
to make a space work, said Nichols.
“Additionally, it can be more cost-
effective to add additional rooms
after construction (if necessary) as
opposed to demolishing/removing
offices and repairing finish treat-
ments due to over design.”
s
Management
As the nature of work evolves, so too must office suites. When plan-
ning a spec space for a vacant suite or floor, property managers must
take these changes into consideration. One of the most important con-
siderations is addressing higher densities in a smaller footprint. Another
is the importance of health and well-being in the work environment.
From this, there are two emerging trends worth noting:
1. Furnished space.
When landlords provide furnished spaces, it is an
attractive feature to younger start-up companies, which are abundant in
Colorado.
“There is a growing trend of early stage companies to co-locate in incu-
bator-type spaces and as these tenants outgrow these spaces, they will
need to find their own offices,” said Bill Baldwin, a Cresa tenant rep bro-
ker. “The capital cost for a company to move into a space is significant,
and the more landlords can do to mitigate this upfront cost, the more
successful they will be in attracting these tenants.”
Furniture dealers and manufacturers are getting in on the trend and
offering flexible economical solutions to property managers to furnish
the suites, which presents a creative solution in budgeting and market-
ing the space, said Jim Graczyk, a principal at Box Studios.
The term “furnkey” – a play off “turnkey” that implies fully furnished in
addition to being built out – was trademarked by Cassidy Turley, now part
of Cushman &Wakefield.
2. Tech space.
A tech suite is a spec suite that has been enhanced
through details to make it more tailored and cool, said Graczyk, whose
firm specializes in tech spaces.
“For young tech companies, this is what makes the office more appeal-
ing than your average spec suite,” he said. “These creative environments
have an open plan mixed in with unique details that can be simply per-
sonalized to the incoming tenant’s brand, without necessarily a lot more
money.”
Originally, tech spec spaces usually were around 3,000 to 5,000 square
feet. Now some tech suite projects range from 12,000 to 16,000 sf, he said.
For the design aspect, tech companies want a functional open plan,
flexible furniture, exposed ceilings and brand identity. Employees also
like to work in environments that offer alternative workspaces, such as
reception areas, comfortable lounges, communal meeting area and small
private, quiet rooms, all of which should feature comfortable and hip fur-
niture.
Photo courtesy Box Studios
Tech suites are more tailored spec spaces targeting technology firms.
Photo courtesy Gensler
Spec spaces need a break room that includes a sink. These areas can feature modern updates to make it feel like a lounge or café.
