Focus on Tenant Improvements Despite Reduced Space

Posted on January 10, 2016 · Posted in Leasing, Tenant Representation

Businesses are more conservative than ever in the amount of office space that they lease, but they are still willing to invest in tenant improvement projects, looking to make the best use of the office space that they do have.

One trend in TI construction in 2016 is on moving back to focus on the basics, emphasizing excellent customer service and follow-through. Many decision makers have managed through a plethora of changes over the past ten years, and have learned to focus on making smart decisions for the long run. As a result, we are seeing a trend of smaller office spaces (to cut down on rental costs) with more of an effort being made to optimize that space.

More specifically, focus is changing where companies focus less on a prestigious street address and more on creating an office environment conducive to creativity and efficient work. Emphasis is being placed on employee happiness and a positive work culture, with more instances of things like game rooms and nice kitchens to make the office a nice place to come to work.

More effort is now being placed on placing offices near residential areas and freeways, cutting down on employee commute times and increasing access to local amenities. Mixed-use area offices focus on work/life balance as well as shorter commutes, as these things are appealing more and more to employees. Businesses are recognizing that office space and location can be a way to attract talented employees.

When looking for a TI contractor, companies focus on choosing a partner that can meet timelines and stay on budget. A company and a contractor will have to work together as a team, with the TI contractor joining in on planning, embracing vision, and providing quality services.

From a landlord perspective, this emphasis on TI can lead to provides spaces that are “plug-and-play,” meaning that they are basic layouts which can be easily customized and transported based on the tenants needs. Another thing is being seen more and more are multiple companies sharing spaces, creating a type of synergy and interaction between companies that can promote growth.

In San Diego, tenant improvement projects are expected to increase in 2016, with many new companies cropping up as existing companies expand and grow. As time passes, more and more focus is being placed on efficiency and working as smart as possible. Increase real estate activity is also making things busier, as firms look to renovate properties that they purchase.

As time goes by in California, strict sustainability laws are becoming more common, meaning that these types of certifications will be already put in place by landlords as standard features. Where in the past renovations have been needed to get buildings and office spaces into code, those should be less common as landlords are forced to do these upgrades themselves to stay competitive.
Another trend that could emerge is landlords focusing on renovating old office spaces, rather than simply trying to work with whatever improvements previous tenants made. This should lead to more updated and attractive office spaces.

When renovating office spaces, it helps to include TI contractors in the process as early as possible, so that they can work with the design process from beginning to end. This can help ensure that improvements are made to meet business specifications, and within the time frame needed. With tenant improvement work being more and more of a factor in attracting and retaining top talent, an investment in office upgrades is often well worth the cost, helping to build company culture and identity.

Photo Credit: Jeffrey Zeldman