Written by: Collin Fitzgerald
Collin specializes in research capabilities, providing support for the Colliers Columbus Office, Industrial and Retail groups. He is responsible for executing data reports, maintaining a commercial property database, reporting quarterly trends, performing data analysis and utilizing statistical information to predict future behavior in the market. Keep reading for his take on trends in office tenant behavior and case studies.
The Trend: Office Conversions
The workplace is in one of its biggest evolutions in decades, with less office space necessary and higher quality space valued. During this time, property owners with vacancy rates below 50% have fewer options to stay competitive in the market. Several conversions have been reported, as many developers have decided to repurpose aging office buildings into apartments as the remote and/or hybrid work trend has increased vacancy rates for commercial space across American cities.
In addition to conversions, there are also numerous building owners who have started upgrading their amenities, common areas and office spaces in their Class B buildings to attract more tenants looking for quality space.
CASE STUDY 1: Continental Centre
Bernstein Cos., who purchased the Continental Centre in 2021 for $11.9 million, announced in 2023 that they will convert the historic 26-floor building into apartments, with retail spaces on the ground floor. Phil Aftuck, Director of Investments for Bernstein Cos., stated that the building works particularly well for conversion due to its abundance of windows and floor plate structure. With conversions becoming more common, along with the housing crisis that many cities are facing, developers are receiving tax credits for conversion projects. Bernstein Cos. received a $10 million tax credit for this project, which will cost over $100 million.
This is what we’re passionate about, this is what we do really well. We identify these office buildings which are candidly functionally obsolete and we breathe new life into them.
-Phil Aftuck
The Bernstein Companies
Columbus Dispatch
CASE STUDY 2: 7575 Huntington Park Dr
Tempus Realty Partners purchased the 129,826 SF building in 2021 for $7 million and decided to turn around the Class B building, investing $2 million into renovations. The investment went toward revitalizing the lobby and adding a new amenity floor, transforming it into a Class A building. They also converted it from a single-user building to a multi-tenant building. With a goal of attracting tenants to a newly renovated suburban office building, the upgrades have allowed building ownership and management to begin leasing the vacant tenant spaces.
The Trend: Workplace Reintegration
This strategic initiative marks a significant milestone, as businesses navigate the complexities of returning to physical office spaces. With a focus on fostering collaboration, enhancing productivity and revitalizing corporate culture, workplace reintegration represents a pivotal opportunity for companies to adapt to the ever-changing landscape of modern work environments. Between hybrid, flexible and decentralized, employees want a hybrid approach to work.
Recent research conducted by IWG says that six in ten workers want to return to the office when employers allow it. However, the report also states that half of them would leave their jobs if required to work five days a week in the office. Another study by Addeco shows 74% of people now want a mix of office-based and remote working. They want to spend 51% of their working time at the office and 49% working remotely. This year, 90% of companies plan to implement return-to-office policies by the end of 2024, according to an August 2023 report from Resume Builder. While some companies are taking the approach to decrease their portfolio size to adjust to their new employee schedules of hybrid work, many companies are using new performance metrics such as utilization rates and employee sentiment instead of older metrics, like square feet per seat, to make space decisions. Companies are also looking towards ergonomic decisions to improve productivity. The Washington State Department of Labor and Industries found a 25% increase in productivity from implementing ergonomic solutions at work after their review of 250 ergonomic case studies. Some of the solutions are adjustable chairs and desks to help with posture or workplace environment solutions such as lighting that causes less glare, temperature regulation and noise control. This is leading to new-looking office spaces with open concepts and more collaborative spaces.
CASE STUDY 1: Huntington Bank
Huntington Bank was one of the first larger companies in Columbus to start a major shift of bringing employees back to the office. In 2023, they started the year by asking workers to come in to the office at least three days per week. They were quoted saying they wanted other Columbus companies to follow their same approach. CEO Steve Steinour said, “The Columbus Partnership has made downtown vitality a priority, and success is essential or more than a dozen years of work by downtown employers and planners could be lost.” Huntington is facilitating the return of its employees to the office, recognizing that this move not only enhances their well-being, but also contributes to the vitality of the city and fosters collaboration with neighboring businesses.
CASE STUDY 2: Nationwide Insurance
During the height of the pandemic, Nationwide initially went fully remote before starting to plan their next steps to return to the office. They made the decision to renovate and reimagine their office space, with modifications that included an open and flexible floor plan where employees could connect and additional amenities, such as an updated fitness center filled with natural light. They also created more welcoming space for visitors while providing private space where employees could make a phone call or work independently. Kieran Sherry, Senior Vice President, Corporate Real Estate for Nationwide said, “It’s really geared mostly toward the hybrid population. They do spend time in the office. They do want to bring people together. They want to bring their teams together. They want an opportunity to have an experience in the space.”
For more information on current office trends, check out our 2024 Columbus Office Tenant Report!
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