Virtual constructions are changing the way business buys office space
We all know the future of work will be different from what it was before the pandemic. For the real estate industry, there is an important unanswered question. Are commercial property owners willing to accept that 86 percent of businesses now see flexible office spaces as a key part of their future real estate strategies? As work becomes hybrid, the key word here is flexibility, which in today’s working environment applies not only to employee schedules and locations, but also to the demands of the physical office.
Companies are focused on retaining and recruiting talent, and they look to their offices for help. They want an office that can make coming to the office desirable without forcing their employees to be in a certain place at a certain time. Google is a prime example of this trend, as open-plan desktop pioneers are now trying to “reinventing office spaces to deal with workplace sensitivities changed by the pandemic. The point is, Google has all the money in the world to make this work for them. For everyone, the task and the risk of getting it wrong can be quite daunting.
As the rest of the world tries to respond, homeowners find themselves in need of innovation. They must prove that their offices can meet new demands for flexibility, without burdening themselves or overloading their tenants with potentially expensive and time-consuming constructions. When recruiting new tenants, landlords now need to prove that a space can work perfectly for a potential tenant from day one and give them confidence that it will continue to be a good investment no matter what. of their face-to-face work requirements.
The big problem is that the two most common ways to manage builds don’t perform well in a rapidly changing commercial office space landscape. Today there are two polarized paths available for the design and set-up of a physical office during the rental process. And while there are significant advantages to each model, they both have significant drawbacks that limit their value to the wider market. We will explore them and then propose a new third way which emerges at the rate of these new requirements.
Take what u got
The first office rental model is the pre-built office. This is generally referred to as a specification suite, a concept similar to a specification house. What a potential tenant sees is what they get on move-in day. The role of the landlord in this scenario is to design and create in advance a generic space that will meet the majority of the needs of the majority of tenants.
On the bright side, stock designs provide an affordable option for renters and homeowners. This approach helps homeowners quickly fill space with tenants who don’t expect perfection, while helping to control their development costs.
The problem is, this model puts a lot of pressure on tenants to find a space that better meets their needs. The perfect option is not a possibility, they just need to know when they have found what comes closest to it. The low cost of entry is paid for by the extra time to find a good space.
This means a smaller pool of potential tenants for landlords. The space may also be left blank for a while while applicants weigh all of their options. At worst, we’ve seen examples of multi-million dollar constructions that need to be completely redone after the landlord couldn’t find a tenant who wanted their design.
Do it your way
On the other hand, we have the personalized office suite. In this scenario, the tenant (or landlord, but less often) hires architects to write plans to ensure that a potential tenant gets exactly what they want from the available space. It’s the analogy of a fully personalized house.
Renters with deep pockets and the patience to invest in this process can purchase a space that perfectly meets their needs on move-in day. They can ensure that their growth plans and unique business approach is reflected in the space.
The downside is that custom builds tend to be slow and expensive proposals. The average cost to build a fully custom mid-size office in the United States is $ 1.5-2 million, and it takes six to nine months to complete. Even though time and money aren’t a major concern on the tenant’s side, it can be confusing to make heavy, long-term financial commitments based on architectural drawings rather than seeing a space in person.
Plus, as businesses grapple with the uncertainty of a hybrid business future, there’s no guarantee that even the personalized space will meet their needs soon after. To top it off, landlords can’t collect rent during the process, which often takes months.
The virtual route
Going forward, I expect to see the drawbacks of each model addressed by the rise of the âvirtual specification suite,â which might be easier to understand in the context of new residential construction. The economic basis for new homes is that cookie cutter homes are all built exactly the same. Buyers can change the finishes, but overall you get what you get. On the other end of the spectrum are custom homes. Again, a lot of money and time is required for this, but With a bit of luck it means the buyer likes what they are moving into. But the middle of this market structure has been occupied for quite some time now by developers like KB Homes who offer a plethora of model design options for buyers to choose from. This achieves two essential things. First, it limits the otherwise endless design possibilities, reducing construction costs and time. Second, it gives buyers the feeling that their home reflects their unique needs and is not just a mass product.
My hunch is that we will see a lot more of this in commercial office spaces in the future. Homeowners will work with design partners to create highly desirable designs for tenants to browse and choose from. From there, they can add those custom design finishes like lighting and flooring that really make the space their own.
The only obstacle to making this a reality (and why it hasn’t already) is that tenants still can’t experience the space before they buy. We might be ready to shop for clothes online, but you can’t just make an office that isn’t right for you. Landlords can improve the likelihood of renting their modeled space by making it easy for tenants to see what an empty space will look like based on their unique needs. Think of it this way: if you could see yourself wearing the clothes you bought online before purchasing them, the returns process wouldn’t be a problem in the first place. The same goes for the suite of virtual specifications in the office environment.
For example, in my company Pivot, we have designed a solution that allows potential tenants to virtually and immersively explore a space as it appears in its current form and also toggle between different layouts, finishes and furnishings to show tenants how different layouts can meet their needs. their needs. I’ve learned to never assume that someone can see the finished product from the empty shell. Instead of hoping that a business representative sees the potential of an empty space, or hoping that an inventory buildup matches their needs exactly, owners need to present different options that appeal to a variety of users. .
With immersive 3D modeling, office buyers can virtually explore a highly detailed digital copy of a building model and ensure it matches their vision and requirements. If something is wrong, adjustments can be made to the digital environment before it is something that needs to be dealt with in real life. Every part of the process goes faster, cheaper, and with more confidence – a triple whammy that reduces risk and costs, and improves speed and outcome satisfaction for each part. The demand for flexibility that accompanies the era of hybrid work does not end with the flexibility of employers in where employees are located. It’s a whole change of ecosystem that will influence the way they buy and design their offices. The world is becoming virtual. So is the purchase of office space.