By Caroline Shelly
On September 20, 2023, the Park Avenue Club’s Professional Growth Group invited Caroline Shelly, Marcy Gross Glick, and Michael Marchese to sit on a Real Estate Panel moderated by Cal Thomas. Below are some key take aways:
The commercial real estate market has been in flux ever since the pandemic. While employees continue to work from home all or some of the time, commercial real estate office spaces have literally been left in the dark. Corporations are walking a fine line knowing the cost of office space vs. the demand for employees to be remote is hanging in the balance. The need for a commercial office building to stand out against its competition is at the forefront of investors’ minds.
To attract potential tenants, investors are beginning to put their money into creating Class A commercial real estate due to high demands of hybrid working and new talent. This means more amenities and collaborative spaces. Specific building features being sought out are:
Sustainability and Green Building Elements in Offices:
Working for companies with eco-friendly environments and energy-efficient buildings are high priority for Gen Z. By 2025, they will make up 27% of the workforce. They seek truly sustainable companies, both to work for and buy from. They expect responsible building practices to become normalized. Included on this long list are:
- Energy Efficiency/Net Zero: Improving a building’s energy performance through measures like superior insulation, energy-efficient windows, and high-efficiency HVAC systems. Renewable energy sources like solar panels can also be integrated.
- Water Efficiency: Reducing water consumption through low-flow fixtures, and rainwater harvesting.
- Materials and Resources: Using cradle to cradle materials, such as recycled, reclaimed, or rapidly renewable resources, like bamboo.
- Indoor Air Quality: Designing good indoor air quality by using low or no-VOC (volatile organic compound) materials, proper ventilation/return air systems, and moisture control to promote occupant health and comfort.
- Transportation Alternatives: Encouraging the use of public transportation, biking, and walking by providing access to these options and amenities such as bike racks and shower facilities. Even when a location precedes public transportation corporations can provide alternate mass-transit options on their own.
Designing and Planning for Flexible Office Space
In addition to sustainable design the increasing demand for flexible workspaces has impacted the design and management of commercial properties including:
- Open and adaptable layouts, for both task and health motivated changes.
- Amenities and shared spaces like cafeterias and training centers.
- Technology integration for continuous untethered connectivity.
- Scalability to accommodate fluctuations in staffing while running the building efficiently is crucial in the design. As well as when and where do the air conditioning and lighting need to be on.
- Expansion options; being proactive about the future needs of the company.
A viable solution to addressing the challenges and opportunities of a sustainable, flexible office includes adaptive reuse and repurposing of office space. These strategies can help breathe new life into underutilized or obsolete office buildings while addressing changing needs and trends in the real estate market.
Some key considerations associated with adaptive reuse and repurposing are:
Challenges:
- Zoning regulations and building codes may not align with the intended new use, requiring variances or rezoning.
- Infrastructure and Building Condition: Aging infrastructure and outdated building systems may require significant investment to meet modern standards.
- Cost and Financing: Repurposing projects can be expensive, and securing financing for unconventional projects may be more difficult.
Opportunities:
- Unique design features and layout: The existing layout and design may not suit the new purpose, opening the door to redesign and reconstruction to meet a company’s vision.
- Cost effective decisions made during design: Identifying ways to make cost-effective decisions upfront reduces the need for change orders later.
Smart Building Technologies to Manage Facilities
Integrating smart systems helps with energy management, lighting control, and building automation to optimize resource use and occupant comfort. Technology Integration to create intelligent building systems and IoT devices, can transform a building management and tenant’s experiences in commercial real estate.
The Internet of Things (IoT) describes the network of embedded sensors, software, and other technologies within a building for the purpose of connecting and exchanging data with other devices and systems over the internet. Smart building systems, powered by IoT devices, have enabled building managers to optimize their operations and improve energy efficiency. These systems can monitor and control various aspects of a building, such as lighting, HVAC systems, and security, in real-time.
Artificial Intelligence (AI) can help analyze data collected from sensors, and automatically adjust settings to ensure optimal comfort while minimizing energy waste. This not only reduces costs for building owners but also creates a more sustainable and environmentally friendly environment.
Next Steps for Investing in Commercial Real Estate
Investing in commercial real estate can indeed be a complex and risky endeavor, but it can also be highly profitable if done correctly. To ensure that a commercial property is the right fit for you, whether you are an owner or a tenant, it’s essential to undertake thorough due diligence and make informed decisions.
When done well, you’ll have beautiful, functional, and efficient workspaces that helps to implement a whole new workplace strategy. HF Planners has served the commercial market for more than 20 years. We welcome your inquiries on how we can help you with your next project.
