Future of Work: Seattle and Bellevue Commercial Real Estate Panel Examines “What Tenants Need to Know for 2021 and Beyond”
BELLEVUE, Wash .– (BUSINESS WIRE) – ExtraSlice (www.extraslice.com), a corporate real estate (CRE), technology and flexible workspace platform, today released a recent executive board discussion from half a dozen prominent CRE companies in the Seattle area, including Hughes Marino , Savills, Broderick Group, SECO, CoStar, WeWork and the hosts of ExtraSlice. Available in its entirety free of charge at www.extraslice.com/crepanel. “What Office Tenants Need to Know for 2021 and Beyond” includes owner, broker, developer, and analyst considerations to provide an outlook on the greater Seattle / Bellevue CRE marketplace.
To the most important takeaways (with time stamps of the individual speakers):
In the Seattle office market, demand has declined due to the pandemic and the subsequent work-from-home effect, resulting in decreased leasing activity and an increase in sublet availability. According to Jared Kadry, Senior Market Analyst for the CoStar Group (3:10), the relocation presents opportunities for companies looking to move up in class as tenants have more leverage.
Innovation goes hand in hand with change. We can expect landlords and tenants to keep the “employee experience” in mind when employees return to the office, said Maverick Olivares, VP, Broderick Group (5:00 pm).
2020 was just a warm-up for the commercial real estate office space. It can be assumed that by the end of 2021, an increase in availability will result in availability rates in all office markets in the Seattle area of between 15% and 25% and in downtown Seattle far north of 30%. Tragically, we’ve never seen what’s coming up for the office market before. For tenants, this means the strongest tenant market in over two decades. The free rent is already rising. According to Owen Rice, VP, Hughes Marino (28:15), tenant improvement allowances are also rising, and we are seeing landlords offering relocation allowances for tenants to move into their building.
Similarly, Brian Kelly, Executive MD of Savills, noted that what has changed most is the level of concessions available to the tenant’s space and to the tenants viewing the space. “Today I think that many of the different people who represent the landlord’s community are probably more inclined to give more concessions, possibly free rent and a higher tenant improvement allowance, to make it easier for the tenant to sign up for a lease Term ”(30:25).
Buildings that offer safe and inspired work spaces will recover first. Flexibility in terms of runtime, location and configuration will be a key component of the workplace in the future. First movers will be able to secure the best spot in the most favorable economic conditions, claims Cody Morrison, PNW Portfolio Director at WeWork (46:30).
The cure for insecurity is flexibility. It’s not that tenants don’t want to go back to the office, most do. It’s more about not knowing how much office they need and how long, explained Meghana Subramanian, Co-CEO of ExtraSlice (54:55). Additionally, most tenants know that office use will change in the next 6 to 36 months, so the office they need today is likely to no longer meet their needs in the future. “That’s why we’ve reinvented the way we structure our office contracts to accommodate changes and options for an uncertain future,” said Binu Reghunathan, Co-CEO of ExtraSlice. (53:00)
“This is more of a ‘tech worker market’ than a ‘tenant market’, and since most of the companies here are tech, their biggest challenge is attracting and retaining talent. And given last year’s profitability, they’ll have to grow significantly to maintain the PE ratios that the tech companies were getting at that point in time. More and better office space is needed to attract and retain workers. With the work from home factor, these offices must be commuter-free, offering near-quality living that is affordable for the workforce, with convenience in the home office, easy and ample parking, spacious gatherings and common areas. A strong connection to open spaces and nature, healthy spaces as well as food and shopping opportunities must be combined in one project in order to achieve what the employees want, ”says Michael Christ, founder and CEO of SECO Development. (1:00:10)
“This roundtable provides an honest and comprehensive view of today’s momentum and focuses on what office tenants should consider as they return to the market this year and beyond,” said Scott Warner, VP of Growth, ExtraSlice. “At such a critical point for the commercial real estate industry, we think the time is perfect to share open perspectives from many of the best minds in our region.”
The entire panel is available free of charge at www.extraslice.com/crepanel.
ExtraSlice integrates corporate real estate, technology, and flexible workspace expertise to provide offices that are truly best for businesses today and “tomorrow” as work evolves in the future. ExtraSlice is based in Bellevue, WA and was founded by technology managers. The company caters to technology companies of all sizes, including early startups, emerging and enterprise.