2014 Outlook, From Both Sides

Tenant Perspective
By Peter Conlin

There are many factors to consider when choosing real estate, but at the end of the day, many lead back to recruiting and retaining top talent.

Clustering: CEOs and top talent are increasingly focused on the corporate ecosystem, looking for places to meet and share ideas with like-minded companies. The life sciences industry has exhibited this trend for years, clustering in areas such as Kendall Square. Today, tenants of all industries should be cognizant of where relevant clusters may be forming.

Workplace Innovation: Workplace innovation is not just for startups. PricewaterhouseCoopers and State Street have proven this with their collaborative build-to-suits, among countless other firms making similar decisions. Tenants need to examine their space utilization so they can maximize efficiency and adapt to the evolving workforce.

Opportunistic: Timing is everything. Stay up to speed on upcoming vacancies and remain proactive, not reactive. Taking an objective approach can open up many creative opportunities in today’s market.

Flexibility: Make sure to enter into an agreement that accommodates the various life cycles of your company. Stay flexible.

 

Landlord Perspective
By Ogden White

Be creative. Tenants are looking for new reasons to move, so make sure your product is enticing. It needs to be functional for traditional users, but also compelling to the innovators.

Keep existing buildings relevant. Focus on both aesthetics and functionality. Workplace innovation is not just for tenants. Evolve with today’s workforce, because your competitors will.

Follow demand closely. Without real tenant growth (net absorption) over the next two years, a significant amount of vacancy will hit the market in 2015 and beyond. As you look at deals, consider the possible downside along with your optimistic underwriting.

 

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