Nearly two-thirds of potential office renters consider image and “cool factor” when looking at a new space, according to a report from Transwestern Tenant Advisory Services (Transwestern TAS).
The report, “Quantifying the Cool Factor in Real Estate,” was compiled based upon quantitative and qualitative responses from the company’s tenant advisors.
According to Transwestern TAS, the analysis underscores the importance of intangible variables in real estate decisions. Of the respondents, 63 percent said that in more than half of transactions they facilitate a company’s image is a significant factor in its location decision; 18 percent said image is a significant factor in all transactions.
The report found that more and more often, perhaps due to the attention paid to firms like Google, Microsoft and others that have integrated unique features into their workspaces, “cool” is the image clients aspire to project via their space.
“We hear regularly from our occupier clients that they want ‘cool’ space,” says Amber Strang, executive managing director of Transwestern TAS. “Our cursory look at this topic aimed to better define the term and measure how big of an influence this variable is in the final decision-making process. What we found is that physical space first and foremost must prove functional, practical and cost-effective. The cool factor, while certainly part of the equation, is icing on the cake.”
Additional findings include:
- Two-thirds of survey respondents felt that the property itself, rather than the submarket in which it is located, has the most impact on the cool factor. Tenants often view locating in a new business district or emerging submarket as a risky proposition.
- Only 32 percent of respondents indicated that “outside the box” factors, such as a location’s accessibility to public transportation, good schools and walkability to shopping and dining, were more important than factors “inside the box.” In other words, in-building conveniences still rank higher on tenants’ desired amenities lists than those offered by the immediate neighborhood.
- A total of 59 percent of the advisors surveyed believe the open office concept is a fad, reporting that the majority of their tenants are opting for a mix of private offices and open spaces to accommodate different work styles and functions. However, more than two-thirds feel that communal space for relaxing and socializing is essential for attracting and retaining high-quality talent.
- To increase the cool factor within a tenant’s space, corporate occupiers tend to take a more conservative approach, focusing on decorating with bright colors or adding a recreation room — relatively inexpensive features that are easy to integrate into space planning.
- While it may be cool to be green, nearly two-thirds of respondents reported that if all other factors are equal, clients are not willing to pay a premium for space in a LEED-certified building unless they are convinced they will achieve operational cost savings.
- Cool space can be an attention-getter, but can also achieve more. For example, the ability to transform an old property, such as an outdated industrial warehouse or a mid-century office building into modern, new space subtly communicates to employees and customers that a company is creative and visionary.
Click here to view the full report.
— Haisten Willis