I came across an article titled “Real estate value tied to human behavior” which takes an interesting view of the future values of commercial real estate properties, office in particular, when it comes to the psychology of the upcoming millennial workforce.
In commercial real estate, the asset value is often attributed to lease rates. But it’s a unique concept to think employee wants and needs could be a contributing factor in achieving value for a space as well.
The concept, as explained in Rebecca Melnynk’s article, is that it comes down to psychographics: the study of personalities, values, opinions, attitudes, interests and lifestyles.
Millennial employees are commonly described as people between the ages of 18 and 34. Using psychographics to determine what kind of professional space these individuals want to work in is huge.
As Melnyk sums up, “The people inside the buildings are becoming the main focal point of the industry, not just the building themselves.”
Not your father’s office
We’re seeing examples of this in Saskatoon, where employers are outfitting work environments with bonus amenities such as private gyms, bike storage rooms and comfortable lounge areas. With high competition for qualified employees, this is a means to entice millennials into accepting one work placement over another.
I’ve had experience with firms that insist on some degree of natural light touching upon everybody in a building. It has certainly changed the decisions they make in regards to leasing and building their own structures.
Removing smoking from the workplace was a massive step in improving the quality of life for employees over the last few decades. Air quality can be a huge factor in building decisions, and it simply can’t be achieved without major renovations on some properties.
In an ideal world, we’d all work in a bright, cheery workspace, but these value-added perks don’t come cheap.
The capital needed to upgrade existing, older office buildings to newer office standards is substantial. The difference in paying a higher lease rate certainly becomes attractive compared to the investment and hassle of upgrading existing space.
Desirable office space with eye-catching layouts and design always fetched much higher rates than older functional offices. What I’m proposing is that the layout and design going forward may no longer be enough.
I’m not suggesting every office building start adding saunas or rooftop terraces to attract companies with strong employee considerations in mind. However, it would be important to consider the framework they put in place that may accommodate specialized improvements.
The elements developers can implement, such as natural light and clear span space, will certainly add value. We see examples where thoughtful design with employee retention in mind improves leasability.
Times are changing
My first “office” was a cubicle in the corner of a printing press room. The pungent and literally intoxicating smell of the press ink on a big run day was hard to ignore. The building we worked in had no air conditioning and minimal air flow.
No part of this particular building was comfortable for any employee, but I think I had the worst spot. I toughed it out for approximately 2 1/2 years before I called it quits.
My, how things have changed. Our biggest concern in the ICR north office is whether we set the air conditioning at bone-chilling or just mildly chilly in the heat of summer. I’ve really moved up in the world.
Have you ever worked in a place less than awesome or left a company because of your work conditions? I’d love to hear your war story.