The Office Building of the Past and FutureFebruary 20, 2013
As a full service brokerage firm, Cassidy Turley’s Gary Helminsky (Executive Managing Director of Project and Development Services in our Washington DC office) recently posted an article on the trends that our Project and Development Services are seeing on a national basis. We are seeing landlords focus on bringing older assets up to the current standards with an eye toward sustainability and mixed use. This trend is happening in both major and suburban markets.
Sustainable urban design presents immense challenges. Cities can be victims of their own success and desirability, as they continue to draw an increasingly high percentage of the population and require more resources. Cities’ aging stocks of commercial and residential property are part of the challenge, too, but they also present tremendous opportunities and potential solutions.
In 2011, 80 percent of Americans lived in cities, and by 2050 it will be 90 percent. Cities are responsible for around two thirds of the energy used, 60 percent of all water consumed and 70 percent of all greenhouse gases produced worldwide. Already, cities in North America and around the world are leveraging technology, design and redevelopment to address changing demographics and better, more sustainable resource management.
With the built environment, the future lies in existing structures adapted for multiple purposes, beyond a use dedicated solely to traditional office work. Live/work/play mixed-use development and the de-emphasis of the automobile change the landscape, and the nature of the workplace is drastically changing from housing employees to serving employees.
Research suggests the vision for the office building of the future in North America is no longer a new building. Of the estimated 4.6 billion square feet (sf) of office space, nearly 70%, or 3.1 billion sf, is at least 20 years old. Many of these buildings are undergoing “repositioning” and renovation in order to remain competitive in the marketplace.
Appeal to the Bottom Line
Cassidy Turley’s Project and Development Services (PDS) team is providing re-development services for this new “building type” all across the U.S. A few examples of this trend undertaken by PDS include:1800 M Street in Washington, DC, owned by Prudential, Yahoo’s campus in Sunnyvale, CA, and 270 Park Avenue in New York City, which is owned by JP Morgan Chase.
Most urban office buildings in mid-career are well-built, reasonably well planned and in locations that warrant new investment. Repositioning is popular with owners because it’s easier to upgrade a building in many U.S. cities than to tear it down and rebuild. Repositioning offers a combination of higher rents and lower operating costs that’s hard to beat. It’s also inherently sustainable.
The practice has taken hold across the U.S. and in Europe and Japan. Wherever there’s an established urban context with good buildings, there are owners wondering how to make them better. While every building is different, we’ve developed an approach to repositioning that is very effective in determining the possibilities and then quickly and painlessly executing the appropriate redevelopment plan.
How is your city adapting to development and workplace trends?