Remote Work Has Transformed the Definition of Class A Office Space
It’s no secret that the pandemic rocked the office sector. No commercial real estate asset class has been impacted more by the global Covid-19 outbreak, which sent nearly 50 million US office workers home to work remotely. For many, remote work became a permanent change. Now, office property owners and corporate leadership are grappling with the new role of the office.
While the shift to remote work has widespread implications – from corporate workplace strategy to city planning – it has already proven to have a profound impact on office design and amenities. Let’s take a closer look at how class-A offices have evolved since the pandemic, and the key traits a class-A office property must have in a post-pandemic world.
Standard Quality Rankings for Office
Before diving into the evolution of class-A office, we should first explain the standard office quality scores. As with all commercial real estate assets, office properties are graded using a letter system, A through C. Keeping with the format, class-A properties are the highest quality, while class-C properties are the lowest quality. Class-A offices are new or newer construction assets in prime locations, typically near the central business district or another job center. Class-B office properties are older buildings that are still functional and in generally good condition. While class-C offices are the oldest stock of buildings and generally have dated design and fixtures. Class-C offices are also often in need of repairs and are sometimes functionally obsolete.
In addition, office properties can also be defined by the users. An office space is part of a company’s brand and culture, and it’s an important facet in attracting and retaining professional talent. Many companies consider an office and the build-out of an office space to be an important investment, hiring experienced teams or seeking third-party expertise to create a successful workplace strategy. Class-A properties appeal to, and target, large corporations, high-end businesses or profitable boutique businesses that can afford top-tier rents. Class-B properties will likely appeal to small national businesses and regional businesses. Class-C properties will appeal to businesses seeking the most affordably priced office space. This category typically includes small mom-and-pop and other local businesses, as well as government agencies.
Class-A Office Advances
The class-A office segment has changed over the last decade. Once a signifier of high-rise buildings in downtown metros, where lawyers held corner offices or CEOs practiced their putting skills, class-A office was transformed to include creative-style and amenitized office spaces. Popularized by technology companies, this new form of office found a home in converted manufacturing and warehouse facilities, and low-rise buildings, often including a suite of hotel-like amenities as well, from fitness centers and yoga studios to game rooms, snack and coffee bars, rooftop lounges and WiFi-outfitted outdoor areas where employees can escape the office.
This was to be the “new” class-A office—until the pandemic upended the transition. Following the pandemic, 77% of office goers work from home at least one day per week, and as a result, modern offices must serve a different purpose. Class-A office space must compel workers to make the commute, becoming a destination for work rather than a place you have to go. It must also facilitate tasks that cannot be done at home. The office space is continuing to evolve following the pandemic, but several noteworthy trends have already emerged.
5 Key Traits of a Post-Pandemic Class-A Office Building
Health and Wellness
Following the pandemic, health and wellness are at the top of every employee's wish list. Most corporations have launched wellness programs, and the physical space can help support wellness initiatives. Buildings should have plenty of natural light, operable windows when possible, access to outdoor space and a state-of-the-art HVAC system to improve ventilation and air filtration. More than half of employees are also requesting quiet spaces free from distractions. According to JLL, relaxation spaces, healthy food options and outdoor spaces are the top three requests from employees today. Additionally, thoughtful office layouts from the parking garage into the building improve the experience, reduce daily stressors and help create a positive workplace experience.
Space for Socialization
Today, head-down tasks can be completed at home, but team building and collaboration are still important ways to drive innovation and achieve corporate goals. The office space has become a place for teams to come together, socialize and catch-up, as well as discuss business. The culture and comradery built when workers spend time together is immeasurable, with nearly half of office occupants saying that collaboration is now the central purpose of a physical office space. As such, offices should include spaces both where people can gather and talk as well as break-out meeting areas where teams can collaboratively work on projects.
Smart Workspace
Today, we rely on smartphones and other smart appliances to manage nearly every aspect of our daily lives – and workers look for the same conveniences in the office. According to research published by Propmodo, 70% of landlords understand that tech is important to flex work environments. Workers want the ability to scan into their office building, book conference rooms, and order lunch from an in-house restaurant all from their personal smart devices. It’s so important, in fact, that the same report showed that more than half of office occupiers are willing to pay a premium for access to smart features. Developers must keep this in mind, including tech infrastructure to accommodate smart features in their future projects.
Sustainability Certification
Employees are increasingly worried about the environment and the environmental impact of their workplace. Sustainable buildings help to attract quality talent. In fact, a survey from the US Green Building Council found that 79% of employees said, all else being equal, they would be more likely to accept a job offer if the office building had a LEED certification. Green certifications also help improve employee retention. 93% of employees who work in LEED buildings are satisfied with their jobs, with 50% reporting they are extremely satisfied. Developers with sustainability certifications will be ahead of the curve in appealing to corporations that are laser focused on meeting sustainability goals and targets.
Services, Services, Services
In many ways, the modern office looks more like a hotel than a traditional workplace. For that reason, many companies are hiring hospitality leaders to design and execute concierge programs for employees, offering a range of services to meet varied employee needs and reduce work-life friction. This might include making reservations, booking travel plans or even finding the right professional for a home-improvement repair. The focus on services has been coined real estate-as-a-service, and has changed the operating model for property owners. Developers should be keenly aware of this new operating function when building a ground-up office project.
Meeting new workplace standards is no easy task, and for many developers, it could mean costly changes to projects that have already been planned. By leveraging new technologies, like automation and predictive analytics, office developers can make these changes and preserve their return profile. Northspyre’s technology, for example, automates up to 80% of administrative tasks and reduces human error in the process. As real estate use evolves, so too must the tools that developers use to execute a construction project.
In the end, meeting user demands within the development budget will ensure a successful end result. The office market may be going through a transition, but office spaces offering value to workers are continuing to thrive.
Want to learn more about how modern technology can help you achieve outsized returns on your next project, even amid market uncertainty? Download Maximizing Returns: A Real Estate Developer Recession Guide for actionable steps you can take to maximize ROI.