CRE Is Spending Big On Office Amenities. Will It Matter And What Does It Mean For Old Properties?
April 17, 2022 | Lane Gillespie | Bisnow
1000 Main is not an old building. The prominent downtown Houston skyscraper boasts major oil and gas tenants and is located near major attractions, like parks, retail, transit and the tunnel system. Still, it shelled out cash for a new tenant amenity center last year, including a 12.5K SF lounge area, a conference center, a gaming area and a fitness center.
Consensus is forming that the post-pandemic office market will center around a flight to quality, prompting even relatively recent, Class-A buildings to spruce up their amenities to herd workers back to the office. In downtowns like Houston, which took a massive hit when pandemic restrictions locked most of it down, renovation money is flowing in hopes raising the standard will herd workers away from dens and sofas.
But huge swaths of Houston offices were built in the 1970s and 1980s in its real estate boom and are now considered out-of-date Class-B or Class-C properties. They may face a much harder time renovating sufficiently to reach the new standard for workers.
“If there’s not any improvements, capital improvements, that are made to the buildings, those buildings are going to be left behind,” said Ariel Guerrero, senior vice president and director of research and market analysis with Madison Marquette.
“Those owners are going to have to consider repurposing that to a different use, or what have you. That’s the reality.”
