Wednesday, August 13, 2014
By: Richard Lee
Shrewd office-building owners try to get ahead of the competition in luring tenants.
Many do it by offering lower lease rates and deeper concessions than the building down the street, while others provide amenities that companies shopping for space would find hard to ignore.
Offering an array of amenities makes a building highly attractive to prospective corporate tenants, according to Kim DePra, director of marketing of the Ashforth Co., which owns 3001 Summer St., a 290,000-square-foot office building in Stamford that underwent a $12 million reconstruction in 2012. Ashforth's construction division, A.P. Construction, was the construction manager and general contractor for the project.
"With major trends impacting the office market such as a move to more standardized work space, non-dedicated office space (sharing), along with more amenities and more collaborative work spaces, a building with a variety and abundant amount amenities is highly attractive to companies," she said.
Those changes in office-use strategy come as Stamford faces an office vacancy rate of about 20 percent.
Since completion of the 3001 Summer St. project, which included a new fitness center and full-service cafeteria called Summerfords, Pitney Bowes has announced it will move its headquarters from 1 Elmcroft Road in Stamford to a 74,192-square-foot space in the building.
It will be joined by O'Connor Davies, an accounting firm, and Willis, a global insurance broker.
"Amenities are one of several variables that factor into site selection along with quality of building, life-cycle cost and ease of access from major arteries and the train line," said Carol Wallace, a Pitney Bowes spokeswoman. "The new space at 3001 Summer Street has features that support our objective of creating a modern, collaborative office environment including a beautiful fitness center, the cafe and a shuttle to the train." With KPMG and Genworth as long-term tenants and with the new leases signed in the first and second quarter, 3001 Summer is about 65 percent occupied, Depra said.
"A great deal (of prospective tenants) look for access to the train station, as well as other amenities that promote and additional areas for congregating and for work and a healthy and productive work environment," she said.
The complex provides van transport to and from the Stamford Transportation Center.
Besides the full-service cafeteria and fitness facility with an on-site personal fitness trainer, the complex offers an electric vehicle charging station, outdoor seating and lobby for additional congregating and work areas.
Ashforth's client services program includes building services, regular communications with clients, client-appreciation events and local community-based activities, DePra said, all designed to provide a productive work environment and create a sense of community at the building.
Ice-cream socials, crop shares
Typical events include ice-cream socials, health fairs, environmental awareness week featuring an e-cycling drive and food, clothing and blood drives benefiting the community.
"Ashforth strives to include as many amenities that would be attractive and reasonable in terms of the number and type of tenants in our buildings," DePra said. "This year, we are testing a farm share at work program at our 707 Summer Street building where Ashforth is headquartered. We teamed up with Stone Gardens Farm in Shelton. They deliver a variety of vegetables directly to our building every Thursday for the season through mid-October. We plan to roll out the program at our other owned properties next season."
Amenities can go a long way in attracting tenants, according to John Hannigan, principal in Choyce Peterson, a Stamford-based firm that assists corporate tenants in their search for space. Amenities are high on the discussion list prior to the start of searching for a property.
"Beyond the first question of geography are amenities -- what are must-haves and what amenities aren't important," he said, adding companies consider amenities to be important in attracting and retaining employees. "A good cafeteria and a shuttle service (to and from a train station) typically are the highest ranked in the needs of a tenant."
A covered parking lot, a concierge and conference rooms are also on most lists, Hannigan said.
`Live, work, play attitude'
Building owners are upgrading their cafeterias, gyms and conference room technology to keep pace with the competition, he said, citing the efforts of the Davis Cos., new owner of 40 Richards Ave., in Norwalk to improve amenities, including a new fitness center and full-service cafeteria.
The Merritt 7 in Norwalk is an example of an office complex where amenities are continually being added or changed, Hannigan said.
"They (Ashforth) are on a roll at 3001 Summer St., adding O'Connor Davies and Pitney Bowes and Genworth relocating within the building," he said. "Those amenities were significant factors in the decision making."
Landlord's need to be competitive in today's market, and an attractive amenity package including 24-hour security, covered parking and upgraded cafeterias are all what intrigues a tenant about a property, said Jeff Williams executive managing director of the Stamford office of Colliers International, a commercial real estate firm, as the office vacancy rate in the city hovers around 20.9 percent.
"There are a number of landlords that have adopted the "Live, Work, Play" attitude so they have installed convenient retailers for their tenants," Williams said, including banks (automatic teller machines), convenience stores, sundry shops, on-site car wash/detailer in parking garage and on-site management.
Forstone Capital, a Darien-based commercial building owner, has made great strides in improving an office building at 9 W. Broad St., in Stamford, he said, renovating the HVAC system, lobby, common areas, bathrooms, facade, and building access points.
"They are making a significant investment in upgrading their amenity package which includes on-site security, curbside drop-off/pick up, a cafeteria with outside dining, a new fitness center and a shared conference facility with state-of-the-art electronics," Williams said.
At 9 W. Broad, Forstone has starting lease rates ranging from the high $20s to the low $30s per square foot. The revitalized building will offer new amenities including a fitness center, cafeteria, a business auditorium, outdoor green space and a shuttle service.
Location, rental rate and how a lease is structured still take priority, said Maureen McAvey, a senior resident fellow at the Urban Land Institute, based in Washington, D.C.
"Then they look at amenities. The biggest is transit accessibility by anything other than a car. This is something that affects your employees. After that, it's the fitness center, the cafeteria and the landscaping. We still have good vacancies in urban centers so tenants can request or demand improvements," McAvey said.