HOW FAR TO GO VALUE DRIVEN INVESTMENT
Landlords are having conversations around how far investment should go in terms of upgrading the lobby and common areas, how often this should be upgraded and what services, amenities and facilities they should offer. Tenants now want, and expect, the entire experience within premium grade assets.
Campbell Pritchard, National Director, Office Leasing at CBRE says: "On top of their unique usable office space, tenant expectations from landlords include: high-quality foyers, common areas, incentives, end-of-trip facilities, concierge services and more. All of these factors form a big part of the puzzle to help entice and retain the right, and ideally long-term, tenants into the building."
The ability of a lobby to set the tone as the first impression should not be underestimated says Karl Henry, Director, Property Management, CBRE. "The internal and external arrival experience that tenants and visitors initially have can leave a lasting impression of the building, landlord and associated tenants. The lobby should be a hub of meeting and greeting, with usable meeting spaces that are both bookable and generally available. Overall, the lobby should bring a vibe to the building, creating a destination where tenants and their clients want to be seen."
The internal and external arrival experience that tenants and visitors initially have can leave a lasting impression
HOW DESIGN CAN CREATE A DESTINATION
Chris Stevens, Founder and Director of CTRL Space is well versed in creating environments that make visitors want to sit down and stay a while. "People want to feel welcome and part of something. When you consider that many building lobbies are beautiful spaces with noble materiality and epic volumes, the key to the success of the space is to retain a human scale to provide a connection to the environment. We look to develop spaces that create the right ambience by applying considered design techniques and the use of soft furnishings and wayfinding throughout to ensure they have the right dynamic fit. The aim is to have an engaging space that visitors can go about their business throughout the day, which creates a continual welcoming vibe."
Chris approaches this by applying traditional hospitality design methodology into these spaces - what do people think when they walk in? how do they move through the space? how do you make their journey smooth and enjoyable and what options do they want that can be met? All of these factors help CTRL Space analyse the journey of the tenant in a similar way to that of a bar or restaurant patron. "Really successful spaces engage with the tenant and customer on an intrinsic level and make them feel part of it. As such, they want to spend time there - the crossover is critical to get right so they don't just move through the lobby."
Chris has noted that there are a couple of factors that have influenced the sudden interest in providing these influential and attractive lobbies. "Firstly, even prior to Covid, landlords understood the critical need be competitive within the market to retain key, anchor tenants and also attract new ones.
"Secondly, we're seeing a change in the profile of people using the buildings and spaces in the CBD. The higher levels of vacancy are attracting a different type of worker into the city who may previously be based in the city-fringe. This is creating a more eclectic mix of tenants that are demanding change and with less activity happening on the work floor and more on the ground floor, they want common areas and shared amenities rather than paying for a seldom used meeting room. This results in the building needing to provide an inviting space for them to use. Workers now have a choice to come into the office, so the idea that a building and workplace needs to provide more than just an environment of productivity is setting the new standards - sociability is the key and the lobby space has the ability to deliver this.
"Landlords are taking this seriously and insisting on a proactive approach to these environments to ensure they achieve lively and energised areas. They are establishing budgets upfront and it's less of an emotional journey for them when they can see the real value in the end product. When you consider international examples that are activated successfully such as Soho House in Chicago, a space which offers an incredible hybrid environment between corporate and hospitality and pushes the boundaries of what a building can deliver, it's exciting to see what international influences will end up here."
The lobby and common area are unequivocally part of the decision-making process for tenants. Pritchard points out: "You can't always tell where it sits on individual occupier priorities of must haves, but the impression they get from the lobby area is material to their decision of whether to consider the building or not. We frequently have occupiers dismissing buildings based on a poor first arrival experience." The value that comes from an investment in the lobby area can be seen both ways. When you have owners who provide these energised and highly utilised spaces it has a material impact on a tenant's fitout cost and their ability to change occupancy levels as required.
Henry says: "For many existing buildings the lobby area is a dead space and underutilised. Through prudent investment of an upgraded and highly-usable lobby area, owners will increase their ability to retain tenants and arguably receive higher returns. Organisations currently navigating the hybrid working environment need all the help they can get to attract people back into the office."
Pritchard says: "A noticeable level of investment in common spaces is an indicator of an owner who is willing to invest in the asset from the lobby through to the rest of the building functions. If you're looking for that all welcoming and high-quality arrival experience extending through to unique office footprints, then come and see the CBRE Office Leasing team."