Commercial real estate is a constantly-evolving industry with ever-changing preferences for space use, design and common areas. Within the office sector, industry experts have witnessed a decade-long shift from traditional office formats with perimeter offices and interior support stations to more open, collaborative and efficient designs. This evolution continues today as creative space has gained popularity with tenants and landlords. So what is creative space and why is it worth the investment?
Traditional office space is easy to describe; it's a workplace with standard carpeting, nine-foot ceilings with acoustic tiles, overhead fluorescent lights and dry wall. Creative space is a little more amorphous and is described by its finishes, which often include exposed columns, often “brick and beam”; high ceilings with exposed wood or concrete; and a combination of quiet work areas, collaborative lounge areas and relaxing break areas. However, creative space is truly identified by those who occupy it, namely TAMI tenants (those engaged in the fields of Technology, Advertising, Media and Information). What was once seen as a design layout reserved exclusively for small start-ups, creative spaces have become widely accepted and is the preferred fitout for both users and owners.
Creative space is commonly referred to as “Office 2.0”, which correctly suggests its evolution from prior generations. The modern open office environment actually originated in Germany in the 1950s, but it was not popularized in the United States until the dot-com era, when West Coast entrepreneurs embraced the concept out of sheer necessity. Creative space was often less expensive to rent, as it primarily existed in peripheral locations such as San Francisco’s South of Market, New York’s Hell’s Kitchen and Boston’s Seaport. Creative offices could also be built out quickly and cheaply, as tenants eschewed hard walls, suspended ceilings and complicated lighting in favor of no-frills benched seating. The new way of working was also more economical; an emerging company could fit significantly more bodies into the same space and spend that venture backing on human capital as opposed to overhead.
Creative space has also gained popularity due in large part to the changing way in which people work. The very concept of an individual office is seen now as isolated and out of touch with fellow employees. Quite often C-level executives are giving up their offices to be closer to the front lines.
With the advent of mobile devices and remote computing, employees no longer need to be tethered to their desks. As it is with many TAMI employees, their work is more interactive and is often conducted in non-traditional areas. Employees of the messaging app Tango can de-stress in their California headquarters with a quick game of ping pong in the firm’s game room while employees at Arnold Worldwide’s Boston office can head over to "Barnold", the office bar, to continue their work over a few cocktails.
Companies are embracing the creative space trend, realizing the benefits beyond the obvious innovation advantages:
Not only is creative office space preferred by the end user, it is also an extremely attractive investment opportunity for the following reasons:
The work environment has evolved over the past 15 years, shifting from suits and individual offices to more casual attire and a preference for creative space. As the next generation of employees enters the workforce, how else will the work environment change? The only thing that is for certain is that for right now, creative office is all the rage.
Ben Sayles is a director in the Boston office of HFF with more than 15 years of experience in commercial real estate. He is primarily responsible for investment sales transactions focusing on office, multi-housing and retail properties.
A graduate of Trinity College in Hartford, Connecticut, Mr. Sayles is the director of the Commercial Brokers Association and an executive committee member of NAIOP Massachusetts. Additionally, he is active in several other notable commercial real estate professional groups, including Urban Land Institute and International Council of Shopping Centers.