Tenant-Focused Approaches Fuel Leasing Growth Within New Jersey’s Suburban Office Markets
By Mark Meisner, president and founder, The Birch Group
For many years, corporations have been rethinking their office space utilization, both in terms of square footage per employee and various configurations that allow employees to collaborate and thrive within office settings. As we look ahead to the return to the office, we are already hearing that corporate culture, the sharing of ideas and training of new hires have become driving forces in getting people back into the workplace.
At the same time, an increasing number of companies are also considering the hub-and-spoke model as part of their overarching corporate strategic planning. The openings of these satellite offices allow companies to tap into larger talent pools, reduce employee commute times and in some cases, avoid mass transit altogether. Over the past several years, we’ve seen companies like Ross Dress for Less take space on both sides of “The River,” opening offices on Long Island and in The Meadowlands to supplement its New York City headquarters.
Now more than ever, with the suburban office market showing signs of a resurgence, there is an onus to go back to the basics and leverage a tenant-focused approach to bolster leasing and differentiate properties.
At many of the suburban office properties across our portfolio, which spans from Parsippany to Short Hills and Morristown, there has been strong momentum and an uptick in tenant showings over the past month, especially from small- to mid-sized companies.
In order to capitalize on this increased interest from prospective tenants, there are several approaches we have found that can have a significant impact on boosting occupancy. These include implementing custom strategies that vary based on each property and individual tenant needs, demonstrating receptiveness to tenant feedback (both current tenants and prospects) and adding flexibility and creativity when it comes to lease agreements.
Avoiding a standardized, cookie-cutter approach is paramount and is further necessitated in times like these as we move past an extremely challenging year defined by much uncertainty. As landlords, we need to think about the most effective way to redesign our common areas and amenity spaces and activate outdoor areas to make employees feel safe when they return to the office environment.
Being proactive does not mean taking the same approach at every property, regardless of the location or building occupancy. Each property is different and requires a tailored strategy that will lead to successful lease up.
Prior to Birch Group’s purchase of 99 & 119 Cherry Hill Road in Parsippany early last year, we conducted a comprehensive audit to determine how we compared to the offices around us, what key features would make our properties stand out and what capital improvements we should prioritize immediately after acquisition.
Integrating amenities that rival those available in office properties in densely populated cities like Manhattan is always something to think about. But it’s also important to look at the immediate area — what’s currently lacking? Are there features or amenity spaces that are not being activated? What else can be added — in both the long and short term — that will appeal to tenants and their employees?
Also, it’s imperative to examine the existing and prospective target tenant base for each property to truly understand users’ current wants and needs. Is this a property that is best suited to financial services firms? Medical office? Taking the time to understand the target tenant profiles and their unique wants and needs can go a long way in giving your property an edge.
Receptiveness to Tenant Feedback
As tenant demographics in the suburban office market changed over the last year, it was important to stay up to speed with tenant needs, ensuring that renovations and amenities were successfully meeting and exceeding user expectations. After purchasing a property, we connect and carefully listen to the current tenants through surveys and direct conversations to help prioritize capital improvements.
At our Short Hills properties — four Class A office buildings located at 51, 101, 103 and 150 JFK Parkway — an email was sent out immediately upon closing to determine what improvements the tenants would like to see right out of the gate. The idea was to solicit feedback from the people who know the buildings best: the companies already residing there.
Tenant feedback is extremely valuable, but only if you’re willing to listen and make actionable changes based on the insight you receive. Even something as simple as lobby upgrades or activating outdoor space can make a huge difference in the happiness and satisfaction of current tenants. Building those relationships and allowing those voices to be heard is a small but significant step that can yield fantastic results.
Flexible, Creative Leases
Flexibility and creativity during the lease negotiation process are key. An office building’s biggest expense is vacancy, so determining strategic ways to attract interest from new tenants should always be a top priority.
When interacting with prospective tenants, it’s important to determine if there are any key factors that will impact their overall decision. Perhaps signage opportunities or branding on the building help move the needle? Think carefully about how the location and key attributes of the property will not only meet prospects’ current needs, but also set them up for success in the future (i.e. access to talent, etc.).
Lastly, at each and every property, the goal is to not only attract new tenants but to keep your current tenants happy. At the end of the day, this tenant-based approach can help ensure tenant satisfaction and occupancy at all properties remains high.
— Mark Meisner is president and co-founder of The Birch Group, a privately held commercial real estate investor, owner and operator. Over the past two years, The Birch Group has acquired nearly $750 million in suburban office properties.