The NAOIP Research Foundation released a recent report (naioprf.org) on suburban office park redevelopment projects and the latest commercial real estate trends in the transformation of these office environments. In recent years, filling the suburban office park has become more difficult as demand for office space has centered around the urban cores, that feature more accessible, walkable, and amenity-rich environments.
As vacancies continued leading up to the Great Recession, owners responded by becoming more creative about ways to keep their projects relevant, and office space leased. Some owners made minor changes by upgrading food and fitness amenities, while others embarked on massive rezoning and redevelopment projects. The researchers found several factors that played into the transformation of suburban office parks in recent years.
Factors of Latest Commercial Real Estate Trends:
- State and local governments are losing jobs to other areas as tenants choose to locate to more accessible, walkable, amenity-rich, mixed-use environments. Municipalities are working with landowners to rezone properties to make changes reflecting this demand.
- The recovery in the economy overall has increased the availability of private financing to make massive wholesale changes rather than minor adjustments to properties. Redevelopment of these projects have benefited from the use of public grants, tax incentives and fast track approval by state and local governments.
- Suburban office parks are usually owned by a single entity, which results in fewer delays typically involved in new large scale development.
- Office parks are integrating and opening up their space to be less institutional and more inclusive with “main street” entrances to generate activity beyond the nine to five workday. Owners are redeveloping walkways and trails to connect to adjacent properties and integrate the existing streetscape.
- The Great Recession, which resulted in a stalled economy, enabled office park owners in some cases to buy property at deep discounts and others to redesign and develop at higher densities when the market came back. Owners with community roots built upon their relationships in the local municipality to rezone office parks. Later they were able to sell their properties to developers interested in carrying out these plans at a premium when the market rebounded.
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Source: NAIOP Research Foundation, “Repositioning Office Parks: Case Studies,” January 2016