Office properties with an outdoor feel and access are gaining popularity with tenants as the industry rethinks office space use and design in the wake of the pandemic.
Real estate managers aren't taking a crowbar to all hermetically sealed windows in their buildings, but they are starting to include open spaces in their projects, such as patios on each floor, rooftop conference areas and outdoor parks.
While the trend toward "healthier buildings" predates the COVID-19 crisis, the pandemic put it top of mind with tenants and their employees. Professors at Harvard University and Massachusetts Institute of Technology are currently doing research on what constitutes a so-called healthy building in a COVID-19 world.
"There will be a process of discovery" on what types of filters, open-air access and other features are needed to give the workforce comfort that the building owner and their employers are providing a healthy environment, said Jacques Gordon, Chicago-based global head of research and strategy at real estate manager LaSalle Investment Management Inc. LaSalle Investment Management has $73 billion in assets under management.
In the meantime, some tenants are viewing outdoor access as an amenity that they would pay more for, Mr. Gordon said.
"The ability to go to an outdoor space is often highly valued by tenants," he said.
The existing trend toward open office design, envisioned as a way to bolster employee collaboration, also lends itself to incorporating outdoor areas, he said.
In the U.S., offices prices are coming back from the depths of 2020, with the RCA Commercial Property Price index for the office sector up 6% in the year ended June 30, according to a August report by real estate firm CBRE Group Inc. However, not all markets are faring the same. Manhattan prices dipped 1% in the second quarter from a year earlier, CBRE reported.
Meanwhile, global investment in commercial real estate across all sectors grew by 15% year over year to $459 billion in the first half of 2021, with the office sector accounting for the largest share, at 26% of total worldwide investment in the six months ended June 30, another CBRE report shows.
Office returns were up to 1.44% for the second quarter ended June 30, from 0.99% at the end of the first quarter and -0.50% at the end of the year-earlier quarter, according to the NCREIF Property Index.
In one project completed in 2018, LaSalle introduced outdoor features at one of its buildings in Chicago. LaSalle executives made windows on one floor openable, created an indoor/outdoor tenant lounge with 20-foot ceilings on the top floor and added a private tenant roof deck on the 28th floor.
In doing so, they created a common area for tenants to have access to outdoor air at "times in Chicago when you would want that, which is six months of the year," Mr. Gordon said.