Future of Work: Seattle and Bellevue Commercial Real Estate Panel Examines "What Tenants Need to Know for 2021 and Beyond"
ExtraSlice (www.extraslice.com), a corporate real estate (CRE), technology and flexible workspace platform, today posted a recently held roundtable discussion featuring leadership perspectives from a half-dozen prominent Seattle-area CRE firms, including Hughes Marino, Savills, Broderick Group, SECO, CoStar, WeWork, and the hosts from ExtraSlice. Available in its entirety for free at www.extraslice.com/crepanel, "What Office Tenants Need to Know for 2021 And Beyond" includes considerations tied to owners, brokers, developers, and analysts in providing a look ahead for the Greater Seattle/Bellevue CRE marketplace.
Among its key takeaways (with timestamps of each speaker):
- The Seattle office market has seen demand soften due to the pandemic and the subsequent work-from-home effect, which has resulted in lower leasing activity and an onslaught of sublet availabilities. While adverse for landlords and developers, the shift provides opportunities for companies looking to move up in class as tenants have more leverage, according to Jared Kadry, Senior Market Analyst, CoStar Group (3:10).
- With change, comes innovation. We can expect landlords and tenants to keep "the employee experience" at the forefront of their minds, as people transition back to the office, shared Maverick Olivares, VP, Broderick Group (17:00).
- 2020 was just a warm-up of things to come for the commercial real estate office sector. It would be reasonable to assume that by the end of 2021, increases in availability will result in availability rates in all Seattle-area office markets ranging from 15% to 25% and Downtown Seattle well north of 30%. Tragically, what's lining up for the office market isn't something that we've ever seen before. What that means for tenants is the strongest tenant market in over two decades. Free rent is already going up. Tenant improvement allowances are also going up and we are starting to see landlords offer relocation allowances for tenants to move into their building versus others, according to Owen Rice, VP, Hughes Marino (28:15).
- Similarly, Brian Kelly, Executive MD for Savills, noted that what has changed the most is the level of concessions available to the occupier's space, to the tenants looking at space. "Today, I think a lot of the different people representing the landlord community are probably more apt to provide more concessions, so maybe free rent and a higher tenant improvement allowance in order to make it easier for the tenant to make that commitment to a lease term" (30:25).
- Buildings that deliver safe and inspired work spaces are going to recover first. Flexibility in term, location, and configuration will all be key components of the workplace moving forward. First movers will be able to secure the best space, with the most favorable economic conditions, maintains Cody Morrison, PNW Portfolio Director for WeWork (46:30).
- The cure for uncertainty is flexibility. It's not that tenants don't want to get back into the office, most do. It's more about not knowing how much office they need, and for how long, explained Meghana Subramanian, ExtraSlice co-CEO (54:55). What's more, most tenants know that office usage will change over the next 6?36 months, so the office they need today will likely not fit their needs in the future. "So, we've reinvented the way we structure our office agreements to accommodate change and options for an uncertain future," said Binu Reghunathan, ExtraSlice co-CEO. (53:00)
- "This is more of a ?tech-workers market' than a "tenant's market,' and since most companies here are tech, their greatest challenge is hiring and retaining talent. And given how profitable they have been in the last year, they will need to grow significantly to maintain the PE ratios those tech companies attained at this point. More and better office space will be needed to attract and retain workers. With the Work from Home factor, those offices will need to be low- to no-commute, near quality housing affordable to the workforce, with home comforts in-office, easy and ample parking, roomy gathering and collaborative spaces. A strong connection to open spaces and nature, healthy space, and food and shopping all must combine in a project to deliver what workers want," according to Michael Christ, founder and CEO of SECO Development. (1:00:10)
"This roundtable provides an honest and comprehensive look at all the dynamics in play today, focusing on what office tenants should consider as they return to the marketplace this year and beyond," said Scott Warner, ExtraSlice VP of Growth. "At such a critical juncture for the commercial real estate industry, we feel the timing is perfect to share candid perspectives from many of our region's best minds."
The entire panel is available for free at www.extraslice.com/crepanel.
About ExtraSlice:
ExtraSlice integrates corporate real estate, technology, and flexible workspace expertise to deliver offices that truly work best for business today, and "tomorrow" as working evolves in the future. Based in Bellevue, WA and founded by tech executives, ExtraSlice caters to technology companies of all sizes including early startup, emerging and enterprise.
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