Over the last decade, Dallas-Fort Worth (DFW) has been consistently recognized as one of the fastest-growing metropolitan areas in the nation, and there are no immediate signs that the growth is stagnating.
Particularly in the last several years, DFW has experienced a wave of corporate relocations and expansions from a wide variety of industries. This activity has brought an assortment of valuable economic opportunities to the metroplex, resulting in a robust construction pipeline. This new product is focused on meeting the strong demand for highly amenitized, future-proofed Class A office space and embracing the high-tech connectivity that helps guard against obsolescence.
Fortune 500 and other prominent companies continue to eye DFW as a top location. These users expect buildings to include not only standard amenities like fitness centers and conference rooms, but also access to the latest technology and seamless connectivity.
Arie Barendrecht, WiredScore
How We Got Here
In the 1980s, a major commercial construction boom in North Texas set the benchmark for Class A office buildings, which were traditionally developed without modern technology in mind.
Buildings such as The Crescent, Bank of America Plaza and Fountain Place were the gold standard for office properties and served as benchmarks for quality for much of downtown and Uptown Dallas.
Over time, these upscale buildings evolved to offer advanced services and amenities, such as covered parking, high-end finishes, open gathering spaces for collaboration, on-site food-and-beverage options, health and wellness services and conference facilities.
Nowadays, discerning tenants at Class A properties tend to view traditional amenities as standard features and necessary conveniences. As such, office users are increasingly looking for developers and building owners to provide additional, innovative infrastructure that can meet and adapt to evolving technological needs.
J.J. Leonard, Stream Realty Partners
In addition to common offerings like eco-friendly efforts — such as achieving LEED certification, activity-based designs and on-site meeting facilities — Class A offices are now expected to be outfitted for present and future tenant requirements in the digital era.
Shifting Priorities
In a recent WiredScore survey, 84 percent of office tenants indicated they would pay more rent for a space if the building owner could prove the development had reliable connectivity.
This shift in expectations for on-site offerings in office spaces has redefined corporate standards nationwide. It has led developers to design buildings with both present and future tenant needs in mind, as opposed to simply emulating existing buildings.
Similarly, in the recent Value of Connectivity survey, which polled leasing decision-makers across the 10 largest U.S. cities about issues pertaining to the availability and quality of internet connections in the workplace, 75 percent of office tenants stated that poor connectivity impacted their company’s profitability. To stay competitive, DFW’s commercial real estate industry has elevated the general standard for Class A office product to support the sophisticated technology that tenants are starting to use on a daily basis.
Both DFW and the nation have learned through Amazon HQ2’s request for proposals (RFP). Not only are requirements such as proximity to local transit, access to a robust talent pool and buildings within walking distance to entertainment among the top preferences, but so too are standards around sustainability and connectivity. According to Amazon’s RFP, “ensuring optimal fiber connectivity is paramount at our HQ2 location.” Responses to the RFP needed to demonstrate the fiber connectivity on all submitted potential sites, while also offering multiple cellular phone coverage maps to ensure optimal service.
Amazon HQ2’s RFP is just one prominent example of how office tenants in today’s market are seeking properties with built-in infrastructure that supports telecommunications and data connectivity, including multiple points of entry, extensive capacities, backup power, conduit availability and numerous service providers available to cover the building and premises.
In addition to high-speed Wi-Fi connections, corporations specifically request distributed antenna services (DAS) installation during the development process to help combat and prevent poor coverage.
Employee recruitment and retention also drive demand for tech-based amenities in top office assets. It’s no secret that this is critical to operations for any business. Consequently, tenants are tasking landlords and developers with providing buildings that feature integrated, reliable technology that enhances the overall employee experience.
By taking advantage of new technologies that are accessible in state-of-the-art office spaces, tenants can gather valuable data to ease employees’ workloads, save money and optimize operations. A good example of this trend in action lies in the Internet of Things (IoT), a network of interrelated devices, embedded electronics and digital machines that are used to transfer data over a network to determine the status of a slew of in-office activities, alerts and even human-to-human interactions.
Take, for instance, IoT-powered HVAC systems that understand how office temperatures react to changing weather conditions. These systems can track office temperatures in real-time and adapt their heating and cooling functions more intelligently, resulting in more pleasant working conditions and happier employees. Workplaces today need to be ready to accommodate smart sensors, artificial intelligence (AI), robots and much more as such technologies become more prevalent in sophisticated office environments.
What’s Next?
Due to technological evolution in Class A office space, many landlords in DFW are enhancing existing assets — Pinnacle Tower, New York Life and Encore Office’s newly renovated building and Fortis Property Group’s Chase Tower — with digital connectivity capabilities that match tenant needs.
To get ahead of the technology challenge and offer top-of-the-line office space, some developers are also building office properties from the ground-up with these technologies embedded.
According to the recent estimates, sustained job growth is anticipated in DFW, which naturally creates demand for office space. Developers and investors will continue to experience shifting tenant needs and expectations regarding future-proofed Class A office space.
Developments such as JPMorgan Chase’s 2000 Ross mixed-use project and Stream Realty Partners’ Platinum Park in Legacy are prime examples of DFW-area buildings being constructed to serve future technology needs. With many similarly ambitious buildings and major renovations on the horizon in North Texas, developers have already begun constructing smarter buildings — a necessary first step in helping to create a truly “smart city.”
— By Arie Barendrecht, founder and CEO, WiredScore, and J.J. Leonard, managing director, Stream Realty Partners. This article first appeared in the August 2018 issue of Texas Real Estate Business magazine.