Creative ways sought to fill commercial real estate | Real Estate
When the COVID-19 pandemic stormed the nation, many businesses opted to switch to a work from home structure. Office buildings became desolate and, still today, they are not yet back to full capacity. The lack of need for office space has led several businesses to downsizing or eliminating their spaces altogether. This has created a bit of a challenge for commercial real estate companies and many have had to come up with creative ways to entice businesses to lease.
Experts Enzo Cannata, real estate manager at Cannata Cos. in Beachwood, Terry Coyne, vice chairman at Newmark in Cleveland, and Seth Task, senior partner at Berkshire Hathaway HomeServices in Beachwood, discussed the ways in which they are making leasing more appealing to businesses.
“Some properties, we’ve done different incentives to have broker open houses where, if a broker brings a qualified tenant to a showing, they either get a gift card or they’re entered into some sort of drawing for some sort of larger gift ,” Cannata said.
Other incentives that Cannata mentioned might be offered are a few months of free rent leasing and “different services included in the lease,” he said.
“It’s sort of a case-by-case basis,” Cannata noted. “We personally like to explore all options to make sure we can lease our spaces.”
Coyne pointed out that amenities are important in appealing to potential lessees.
“Either you treat your office building like a hotel or you’re going to have a dead office building where people hate coming to work and they’re going to stay at home,” Coyne advised.
Coyne explained that the AECOM building in downtown Cleveland has a multitude of hotel-like amenities that stand out to businesses looking to lease. The building includes a $70,000 golf simulator, Peloton bikes, a 6,000-square-foot gym, four restaurants, Wi-Fi, coffee shops and conference rooms, he said.
“We start our tours at the golf simulator and the gym, and that’s how we begin,” Coyne noted. “We don’t even start with the office space.”
As leases start to expire, companies are looking to decrease their footprint, which puts pressure on office buildings to be more appealing, Coyne said.
“You go to a hotel, the lobby is a place where people congregate,” Coyne explained. “You go to an office building, the lobby is simply a way to get to the elevator quickly. Well, that has changed. Make it an amenity. Make it something you want to (say) ‘hey, this is fun, we’re going to go get a coffee.’”
Task said leasing for retail properties has been surprising, despite the longtime desire of people to stay home.
“I think that the retail market has been an incredible surprise,” Task said. “There was a flip at the beginning of COVID, statistically, in retail with people not going out and a lot of the hospitality and other industries taking a big hit during COVID.”
Task also noted his surprise at the industrial real estate market’s steadfastness, despite the pandemic.
“The industrial market is incredibly active right now,” Task informed. “In fact, it’s probably much more active than anybody predicted post-COVID.”