More people in less space. That seems the trend in today’s office market.
According to CoreNet Global, the average amount of office space per worker dropped to 176 square feet, from 225 square feet in 2010, and is expected to continue to drop.
The rationale for this trend is based more on how we work than just cost savings. The rapidly growing millennial workforce prefers working in teams with like-minded people. Open work spaces provide a creative environment that fosters employee social interaction.
Open-area break rooms, game rooms, lounges and outdoor Wi-Fi hotspots are replacing hard-walled offices to cultivate collaborative collisions and provide a relaxed atmosphere. Large desktop computers have been replaced with smaller wireless devices, and many companies have converted to digital storage, thus streamlining employee work areas.
In many cases, occupancy cost no longer is the main driver in choosing an office location. There is much more emphasis now on quality, efficiency, functionality and amenities to attract and retain employees.
How does this affect Nevada’s office market? The biggest challenge is retrofitting existing buildings to handle increased parking, ingress and egress concerns and strains on building systems such as plumbing and mechanical distribution.
For instance, the average traditional office building in Southern Nevada is designed to accommodate four parking stalls per 1,000 square feet of space leased. The current demand is 5.5 stalls per 1,000 square feet.
Other markets solved this issue by implementing valet service, or tandem parking cars to accommodate tenants, which in most cases is much cheaper than building a parking structure. Another solution is balancing the project-tenant mix. Not all industry types embrace the open concept, and strategically blending users is paramount in minimizing impact on the building and the parking.
When speculative office development occurs, we no longer will be a “build it, and they will come” market. Successful projects will take into account how we work and how we attract and retain talent.
So who is on the forefront of accommodating these trends in Southern Nevada?
Existing mixed-use or “lifestyle” centers such as Town Square, the District at Green Valley Ranch, Tivoli Village and Downtown Summerlin have been successful attracting office tenants who value the restaurant and retail amenities offered. In addition, a traditional office project, the HC|Hughes Center, proactively built contemporary “move-in ready suites,” added a free fitness center that is exclusive for office tenants, and is building five new restaurants in response to tenant demand.