Until recently, an area company intent upon leasing a fully finished, ultramodern office on a short timetable needed to direct its search to various buildings within the Central Business District of the Chicago Loop. Dubbed “spec suites” because the spaces are finished out by the landlord on a speculative basis without a specific tenant requirement, these built out and furnished offices can eliminate months of downtime spent waiting for building permits and construction to prepare a space for occupancy.
Now beginning to appear in the suburbs, such spec suites have proved extremely popular with startups and high tech companies that are new to real estate decision making. Spec ready space can eliminate the need to pore over layouts, fixtures and furniture. Like many first-time homebuyers who prefer to purchase an existing residence rather than go through the lengthy process of designing and building a custom home, some companies prefer to see the final product before committing to an office lease.
A successful spec suite program must match the work habits of the young office workers that companies are recruiting today; and the new environment in which those employees work and interact is radically different from the office behavior patterns of previous decades. Today’s professionals demand the infrastructure to stay continually connected to their social and professional networks through mobile devices. Flexible configurations provide venues for impromptu meetings and project teams that will command an area for the duration of a task and then disband to pursue other goals.
These behavioral preferences bring new opportunities to control costs. A landlord that builds out an entire floor of spec suites will generate economies of scale for a single design, permitting and construction effort that each tenant would otherwise incur to finish out individual spaces. That savings can be passed along to tenants.
Shared spaces, commonly described as “we space”, are another feature of a spec suite program that can save tenants money over time. Tenants share a well-equipped fitness center, kitchen and lounge without tying up square footage in leased space.
Because the newest members of the workforce often prefer to work in coffee shops or other public areas to stimulate creativity, enterprising landlords are taking space sharing a step further by providing lavish coffee bars and other vibrant community gathering points for tenant use. One Chicago landlord has finished out the entire top floor in its suburban office building as a solarium where tenants can gather for work or leisure in a warm, naturally lit environment.
As spec suites take a firmer hold in the suburbs, tenants will have more opportunities to access these turnkey offices without the challenges that come with a Central Business District address. Many companies prefer the suburbs for their lower rental rates, ease of access for employees and customers, and ample, free parking that is a rarity in the Loop. Although the CBD is attractive to younger workers, it will be interesting to observe as this base of employees grow older and raise families, if they will be drawn back to the suburbs for housing and other conveniences of suburban life.
Suburban landlords, and particularly those with substantial blocks of vacant space, are realizing that spec suites are a good way to differentiate their properties and attract the kind of companies that are likely to grow. That is good news for tenants that want a fresh, collaborative space beyond the confines of the Central Loop while providing an opportunity to enhance culture and overall company brand.
Jason Streepy is a senior vice president in the suburban office leasing team at NAI Hiffman.
Source: Daily Herald Business Ledger