Within five years, they’ll make up 50 percent of the workforce, but Millennials are already having a huge impact on the way commercial real estate markets expand and improve.
According to recent reports tracking national commercial construction trends, tenant improvement is the new priority for landlords eager to compete for Millennial tenants. This trend toward the renovation of existing space has been a highlight for the construction industry, even as labor and construction costs are on the rise.
Tenant improvement projects have increased by 14.2 percent since this time in 2013, helped by the fact that costs are declining in many key markets. Office building owners can expect to pay roughly $30-50 per square foot for improvement packages, but the changes are essential for tenants hoping to customize their office space to attract and retain employees.
As we noted in earlier blogs, contemporary tenants are driving the demand for dynamic, updated office space. Whether it’s creative build-outs or customized e-commerce space, tenant improvement gives these companies greater opportunities for customization while ensuring a lower cost compared to new construction.
Many older buildings in existing locations near urban developments are getting a second chance thanks to the tenant improvement trend and their proximity to amenities Millennials value. As a result, office space vacancies are dropping – down 10.2 percent since second quarter of 2011.
The impact of Millennials in the commercial real estate market will only grow as companies snap up vacant properties in primary and secondary markets, intending to build out and meet the unique needs of tenants. The activity will emphasize the need for strategic capital planning and construction management to make the most of future opportunities.
To discuss the feasibility for tenant improvements in your current commercial real estate portfolio, or to explore investment opportunities prime for targeting a Millennial workforce, contact Intelica CRE. We can help you determine the best moves to maximize your returns.