Is the surge of new office space nearing its peak in Seattle, or will the influx of tech companies support long term growth? This topic and more was discussed at last week’s “Office Revolution and the Rise of the Tech Sector” panel presented by Bisnow Seattle.
Insights were provided by a dynamic panel of local experts in commercial real estate, including: Paladino and Company’s Dina Belon; Martin Selig of Martin Selig Real Estate; Ty Bennion of Hines; MJ Munsell of MG2 Architecture; Wende Miller of Talon Private Capital; Joe Ferguson of Lake Union Partners; Lindsey Engh of Impact Hub Seattle; and moderator Jeffrey Rosen of Seattle Pacific Realty.
As large tech companies (including Amazon, Microsoft, Starbucks, T-Mobile and Expedia, among others) continue to move in and set up shop in Seattle, tech tenants’ office space demands are drastically changing. Panelists discussed what these new office trends look like, how traditional office space can adapt to compete, and what their expectations are for the future of Seattle’s office building sector.
Tech Tenant Office Trends
Panelists described the needs and wants of the typical tech tenant, including: convenient, dense, urban locations close to public transportation; appealing infrastructure and environment that connects them to the community; large blocks of office space that are adaptable; and wellness features like high ceilings, ample natural daylighting and indoor air quality.
Panelists emphasized the demand for collaborative space, and the ability of an environment to adapt to meeting the ever changing needs of the tenant. While some addressed concerns that the open-floor plan can be distracting and lacking in privacy, Dina Belon pointed out that open space should mean flexible space, giving tenants options for differing needs. Whether it’s a collaborative meeting room, technology space, quiet space, phone booth, nap, mother, break or event rooms, open floor plans can be designed to comfortably and adequately work for all uses with the right allocation of space.
Martin Selig shared that removing the ceiling is one of the biggest tenant demands he has seen lately, but he has worked on projects that have installed a variety of off-the-wall amenities such as fire poles, slides and running tracks. Through the incorporation of unusual amenities and enhanced experiences, space becomes more than just a typical office but an environment that encourages employees to be comfortable, happy and productive.
Connecting Tenants to the Story of a Space
Moderator Jeffrey Rosen asked the panelists if they were concerned that the influx of new class A office space would affect the leasing of older office buildings. Most agreed that existing buildings would not be heavily affected, but instead need to differentiate from the new, with the undeniable selling point of being more cost efficient.
Aside from lower leasing rates, another appeal for older buildings are the unique characteristics and the “story” a space can provide. Lindsey Engh pointed out that Millennials tend to connect best with a story, and shared that some her prewar properties’ bestselling points were their lively history – including one Pioneer Square building that once served as a brothel. These original stories better connect tenants to the community, and companies are then able to build on that story with their own brand.
Will We Be Dancing When the Music Stops?
When panelists were asked about their concerns and expectations for the future of Seattle commercial real estate, they shared various points including not to heavily rely on Amazon for our city’s growth, despite the fact that Amazon will own 25% of Seattle’s downtown real estate by year end. When comparing to the real estate crash of 2007, panelists agreed that we don’t need to be concerned about the city’s rapid growth as the abundance of buildings under construction aren’t speculative – the demand for them is real. In fact, many are often leased before construction is complete, with current vacancies at less than 10%.
Overall, panelists shared a positive outlook on Seattle’s growth and are looking forward to seeing a number of improvements and changes come to fruition, including the redevelopment of Pioneer Square and Yesler Terrace, to the eventual removal of the unsightly (and unsafe) Alaskan Way viaduct, as well as the hopeful increase of incentives for sustainable building and alignment and owners’ improved understanding of the economic sense and value in green building.
With these plans of positive change and growth on Seattle’s horizon, it is apparent that the appetite for office space in Seattle isn’t waning – and owners and developers will continue to adapt to meet the needs of the incoming tech tenant.
Did you attend the Bisnow event? If you have further questions, please reach out to Dina or pose your questions in the comments section below. We’d love to hear from you!