Tenant Improvements that Convert Office Vacancies to Long-Term Occupancy

CBRE, Savills, Wilshire Courtyard, Onni Group, Cushman & Wakefield, CO Architects
Courtesy of CO Architects

Office Design Trends for the New Workplace

By James Simeo, FAIA, LEED AP 

At a recent CRE symposium on the Los Angeles market, CBRE Executive Vice President Grafton Tanquary offered, “CBRE expects that we’ll have a full occupancy recovery in between four and 4½ years, in comparison—by the way—to about six or seven years for the dot-com bust in 2001 and the financial-crisis correction in 2008. As many companies transition to a hybrid in-person/remote working approach, architects and interior designers are devising tenant-improvement strategies that help property owners and building managers maximize occupancy. 

A case history: our firm’s relocation to a new office effectively made us our own client, providing an opportunity to implement design solutions. While most companies are condensing their footprints, our office move resulted from unanticipated growth during the pandemic, going from about 120 people in March 2020 to 160 currently. We outgrew the 19,000-square-foot office space in a midrise building in the Miracle Mile district in Los Angeles, where we’d been for the past 30 years. 

Irrespective of square footage, priorities for our new office follow the process we use for clients’ return-to-workplace recommendations. Step one in optimizing office design is a tip that CRE professionals can borrow from architects to better understand tenants’ needs: define the company’s culture. For example, collaboration is the single word we use most often at our firm. Although more space was available at our existing location, growth would have required expanding to multiple floors. This isn’t optimal for us—creative solutions often originate from chance interactions between individual teams.

Our previous office’s large terrace was also an integral part of our culture. With views of the Hollywood Hills, it served as an ideal lunch spot, place of respite, all-hands meeting area, and after-hours social space where the firm hosted many guests over the years. Outdoor spaces are increasingly important for elevating physical and mental health in all built environments and are particularly valuable assets that are increasingly expected in the workplace by a new generation of employees.

We outlined our priorities for a new location: a Class-A building in the same Los Angeles neighborhood, approximately 25,000 square feet on a single floor, a large terrace area, and amenities that would elevate enthusiasm for returning to the office. We were looking for space that would allow for flexibility to adapt and change our office layout as new paradigms in workplace environments evolve. Savills helped us find Wilshire Courtyard, a few blocks west of our current office: Class A, with an Equinox health club in the building, 27,241 square feet on a single floor with an option to expand, and terraces on four sides with expansive views to all of Los Angeles that allow for convenient outdoor access and views from anywhere on the floorplate¾the catalyst that sealed the deal. The Wilshire Courtyard campus is also certified LEED O+M Gold, which resonated with us as sustainable-design practitioners. Thanks to favorable market conditions, we were able to add nearly 50% more space at only a modest increase over our previous rent by signing a 10-year lease.

Tenant Improvements

Building owner Onni Group and leasing agent Cushman & Wakefield approached our tenant improvement as a team project. Our requests generally fit within the landlord’s build-out criteria, but as designers we chose many “over-standard” upgrades tailored to our specific aesthetics. Areas where we exceeded Onni’s building standards and absorbed the extra costs included upgraded lighting, carpeting, and sliding-glass partition walls. As a general concept for our new office, we wanted to keep the built space very neutral to appeal to staff and visitors alike.

Our approach to our own workplace is consistent with how we design office environments for clients. Compared to two years ago, economic factors, such as inflation and supply-chain concerns, have increased budget-consciousness. How and where people work have also changed, requiring more flexibility in companies’ approaches to workplace design.

First and foremost, lower workplace budgets follow the current corporate trend of doing more with less. Downsizing office square footage while accommodating pre-pandemic staff sizes led many companies to explore hybrid working models. Design-wise, hoteling stations are a popular solution for lowering office density as well as square footage by rotating staff through the office on different days. Demand for assigned desks is declining as more employees work remotely. 

Further, companies are pushing back on open-office footprints, placing more emphasis on social distancing and private areas. The original open-office goal—the ability to hear all conversations and increase collaboration as a result—compromises concentrated work. Investment in technology, one area where we’re seeing clients’ budgets increase, provides solutions. Company-issued laptops allow staff to work from home, while traveling, or at various locations throughout the office. For employees who are still based in open-office environments, company-supplied headsets bolster concentrated work. 

Along these lines, acoustics are increasingly important in modern office design. Research shows that quieter spaces reduce stress; people remain in them longer. We incorporate additional absorptive materials with STC ratings wherever possible, particularly floor coverings instead of the previously popular bare concrete. 

Conference accommodation is another high-importance area. Virtual meetings are here to stay. As a result, varying-sized conference rooms are an alternative to the former practice of fewer, larger rooms. Depending on company size, requested conference-room configurations typically accommodate in-person groups of 1-2, 4-6, and 8-12. Very small, soundproof meeting rooms are in high demand. One-person phone booths have evolved to include a small desk for a keyboard, monitor, and camera for individual online calls.

Private Offices

An emphasis on concentrated work combined with social distancing has re-elevated the importance of private offices. However, the trend is toward smaller offices, so tenants are looking for more wall allowance in building standards for offices as well as conference rooms. Pre-pandemic, we estimated 130-150 square feet per private office. Demand is now in the range of 110-130 square feet. Office space allocations are still hierarchical, but we are seeing a flattening of the curve where higher-ups are closer to overall individual office square footage. 

Budgets for furnishings are also trending lower. One way to address these reduced budgets is to pepper in select specialty pieces where possible to serve as accent points in the office design. An emphasis on “home away from home” furnishings, such as comfortable chairs and sofas, helps employees transition back to the office. Paying particular attention to coloration with something as simple as paint is another way to improve the design impact in tight-budget projects. Each client has its own tastes with regards to office colorations, so getting to know the client and how they want to project their corporate image is very important.

Also noteworthy is that, contrary to popular reports, we’re finding that younger employees are excited about returning to offices. Their at-home working conditions are often cramped, they miss social interaction, and in-person work is more equitable: equal access to senior leadership, tech isn’t limited by home internet bandwidth, and work hours are more defined. Amenities are more important than ever for a positive office atmosphere. Employees want a relaxed space for eating/break areas, whether in their company’s office or as an extra amenity in the building.

Safety protocols also bear repeating. Public areas of both the building and company offices, particularly lobbies and bathrooms, need appropriate signage and to be cleaned regularly to demonstrate a commitment to health. Hand sanitizer should be prevalent in public areas.

These insights are intended to help CRE professionals familiarize themselves with current TI design priorities (such as an emphasis on acoustics) that tenants are currently seeking. On-the-move companies have abundant options, as we found during our relocation process. Knowing prospective tenants’ beyond-square-footage needs helps commercial realtors, landlords, and property managers become valued partners in the process, filling vacancies with long-term leases.

About the Author

James Simeo, FAIA, LEEP AP, is a principal at CO Architects in Los Angeles and leads the firm’s Interior Architecture and Design Team.

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