Whether you call it a modernization, renovation, rebranding, repurposing, or repositioning, there comes a time when every high-rise will need to invest in a refresh in order to stay competitive. The driver in most modernization projects is a decrease in leasing, or the potential of losing tenants.
“Our primary goal is to stabilize the value-add office properties that we purchase,” explains Rubenstein Partners’ Regional Director of Mid-Atlantic Stephen Card. “Many of our properties require a significant lease-up component to get to stabilization, so our focus is on doing everything possible to increase tenant retention and appeal to new tenants in the market.”
Rubenstein Partners believes that the right type of modernization and rebranding can help even the most rundown of buildings experience new life. The firm purchased One Washington Square in Philadelphia (formerly Penn Mutual Towers) in early 2014 after several years of maintenance neglect and vacancy rates as high as 20 percent. The three-building, 850,000-square-foot, Class-A property will see a capital investment to restore the historic landmark office tower to its previous distinction. Significant investments are planned to modernize the building’s systems, upgrade lobbies and common areas, and clean and repair the façade.
Depending on the age of the building, the goals of the owner, and current market demands, modernization may include aesthetic upgrades, but also often includes infrastructure upgrades to provide better services and a more comfortable environment. “The latter appeals to tenants because it may provide economic benefits through savings on operating expenses,” says Card.
Simply keeping up with local competition also drives many high-rise modernization projects. “We’re working with a client right now that has a modern, new building – but it doesn’t have any outdoor space,” explains Dan Ringler, project director at LPA Inc. , a California-based design firm.“So they’re investing in an outdoor amenity space because there are other high-rises in the area that do offer usable outdoor space.”
Focusing on what Ringler calls “impactful moments” like these is becoming more important in high-rise towers. “Owners and developers want to make sure they’re getting a return on their investment. It’s no longer about making a ‘beautiful building,’ especially if it’s not going to produce a return.” Instead, Ringler recommends identifying improvements that will help retain current tenants and attract new ones.
Analyzing high-rises to find these opportunities for impactful moments is a science. There’s a lot of listening and data that should be collected first.
Dan Ringler, LPA Inc.
In the case of impactful improvements at One Washington Square, as Rubenstein Partners’ Director of Asset Management Craig Zolot explains, an enclosed mezzanine level is being removed to open up views from the lobby to Independence Hall across the street. Doing this ensures that tenants aren’t sealed off from their surroundings, and allows them to enjoy views of the park, and experience the four seasons.
“Analyzing high-rises to find these opportunities for impactful moments is a science,” says Ringler. “There’s a lot of listening and data that should be collected first.” Tenants may not make formal complaints about problems they’re experiencing, but you probably don’t have to dig too deep to figure out what needs to change.
For example, are guests coming to see tenants, but having problems finding a public restroom or the right elevator bank? If so, they’re most likely voicing their frustrations to the receptionist when they finally arrive on the correct floor. Comments can cause tenants to question why they’re choosing to lease space in a certain building. Don’t plan a modernization project without talking to tenants at all levels to find out what they’re hearing and experiencing. Otherwise, you may miss an opportunity to fix a financially damaging situation.
Another philosophy to keep in mind during modernization: “People don’t often raise their heads and actually look up,” Ringler points out. “Keep your dollars to use in areas where there’s a line of sight or things you literally touch and interact with.” This includes things on the main floor, in hallways, and the landscape and hardscape around the building exterior. It can even apply to small, seemingly unimportant details like door handles and entrances.
“What does entering that building or opening that door feel like?” asks Ringler. “Those types of projects have really strong impact. If you invest in projects to only create a visual statement, the tenants will see it once and then it’s out of their mind. But the interactions they have with the building at the main level and throughout their line of sight is really important. It’s where the most impactful things happen.”
Ringler says he has seen building owners invest in modernization projects that tenants couldn’t see or experience – so they didn’t realize the results they had hoped for. “You won’t create an emotional response if the tenants don’t know what’s happening, or it’s a project that won’t affect them.”
It’s What’s Outside that Counts
Working with the modernization project team to create a “top 10 list” is a good way to identify what the project should entail. The list should include any must-have improvements that will allow the building to serve tenants like it’s supposed to. It should also include any projects necessary due to code requirements or updates. Once those improvements are documented, it’s time to talk about the projects that will positively affect return on investment and increase tenant retention and attraction.
When discussing projects that will provide an ROI, start by finding existing features that can be used to build value. A great example of this is at 1 Columbia Place in San Diego, a recent LPA Inc. project owned by Emmes Asset Management Company. The 27-story building’s first five floors are terraced, providing the opportunity for accessible outdoor space. But the outdoor areas feature nothing but concrete.
Ringler says 1 Columbia Place isn’t alone in its request for outdoor space. LPA Inc. has received recent similar requests from at least four other high-rises in downtown San Diego alone. “It’s becoming one of the first items on their modernization lists: To talk about how they can get more outdoor space.”
Finding Your Way
Another common challenge often addressed during modernization is improving identity at building entrances. At 1 Columbia Place, for example, there are five entrances into the building – but no front door. To make matters worse, the main floor provided access to three separate elevator lobbies, and there was no signage or wayfinding system to help guests navigate the building or decide which elevator lobby to use.
To help solve this problem, a new entrance was created to give the building a stronger, more recognizable presence at the street edge. The decision was also made to close off one side of an elevator tower to dissuade guests from going the wrong direction in the first place. Large visual signage helps direct people, along with the lighting system. “Lighting should always guide you to your next destination,” says Ringler. “It’s a subliminal thing, but it works.” Fabric-wrapped, lit ceilings guide guests to the main tower elevator banks, and the lighting in elevator lobby areas helps draw guests in the right direction.
Although it may be one of the last things building owners think about when it comes to high-rise modernization, parking can be a big frustration that impacts tenant retention and attraction. Even if the building doesn’t present an effective way to expand or improve upon parking as part of the modernization, building owners can look into other options, such as finding nearby spots to give to tenants who need help with parking overflow.
“In a perfect world, most tenants would rather not have a parking garage below their building,” says Ringler. “No one wants to have to go down into a winding tunnel to park, then take one elevator up to the main level, and then another elevator to their final destination. That repetitive sequence of events can really wear on tenants in high-rise situations. When we talk about tenant and visitor experiences, we should include thoughts about parking. That’s when the building experience really starts.”
Improving wireless access in underground parking garages can also help with tenant satisfaction. The thick concrete and metal used to frame the building can disrupt wireless signals, but an in-building wireless solution can solve the problem and lessen tenant fears about safety.
The “Inside” Story
Lots of the tenants entering today’s high-rise workplaces are younger businesspeople who have certain expectations about their space. “They want it to look like Google’s office,” says Ringler. “But how do you do that in a high-rise?” Designing and establishing more types of creative spaces vs. rows of cubicles and offices is a good way to start. “These tenants want to go beyond the standard 2×4 lights and 2×4 and 2×2 ceiling tile and grid, with private offices that take up all the glass.”
Part of this new workplace aesthetic also involves higher ceilings. “There’s a big movement to make ceilings as high as possible,” Ringler explains. “Eight-foot ceilings? No way. Brokers and tenants hate them. Nine-foot ceilings are okay. But the true question is: Can we blow out the ceiling and make it even higher than that?”
Doing this is more of a challenge in older buildings, but plenum space above the ceiling tile and grid system looks different in almost every building. Raising ceiling heights also involves analyzing the glazing above the original ceiling line, as well as the costs associated with improving its aesthetic appeal.
Although communication during times of modernization is essential, renovations impacting tenant access to the building – such as lobby projects – makes good communication even more critical, says Zolot. “Precise staging is crucial to maintain a safe, comfortable environment.” If tenants are used to the lobby serving as a place to meet or spend time, make sure they have another place in the building to use for these types of interactions during the modernization.
Taking cues from Disneyland can also be helpful in handling communication. “When Disney is doing a new project, you don’t even really know it’s being done,” says Ringler. “The way it’s handled and phased helps explain to guests what’s coming and directs foot traffic.”
But in cases where signage and regular updates aren’t enough, Zolot recommends maintaining an open dialogue. Encourage questions from tenants, and respond to them quickly – even if it’s not with the answer they may want. The information shared with tenants should explain progress and describe how frustrations will be lessened moving forward with these new improvements. They’ll appreciate knowing that you’re making an effort to address their concerns, even if they’re inconvenienced by it for a short period of time.
It may seem obvious, but maintaining a very clean jobsite is another top priority that sometimes gets overlooked. Keeping dirt and noise to a minimum will reduce tenant questions and complaints.
Zolot’s advice: “Plan for the worst, expect the unexpected, and make it your mission to communicate with your tenants to avoid surprises.”