Office spec suites are on the rise. Learn more about this revolutionary new workspace and why this trend may be more than just a fad.
The 21st century is the era of flexibility. Technology has transformed work, family, and health care in unimaginable ways. From virtual meetings to smart homes to patient data management, we are facing a brave new world. The realm of commercial real estate has also been able to benefit from this technological evolution.
First came the advent of short-term workspace solutions like those offered by WeWork.com. Yet space sharing is not conducive to every business. Many prefer their own office suites yet want them at times and places of their choosing. Enter “spec suites,” the latest commercial real estate offerings trend.
What Is a Spec Suite?
Short for speculative, a spec suite is constructed before a tenant agrees to lease office space. Essentially, landlords build these units on the speculation that there is a market for them in the small business community, i.e., that potential occupants are looking for just such a layout and location.
While there is a risk to the spec suite strategy, property owners count on the diversity of suite designs to draw a variety of prospective tenants.
Are Spec Suites a New Deal?
Unlike large companies, small businesses rarely retain staff solely to look after their brick-and-mortar interests. When lease expirations approach, their management often scrambles to renew or find a more suitable building. As landlords began to field these urgent calls in recent years, the spec suite idea gained traction.
Under normal circumstances, owners were given a long heads-up and worked with the new tenant to build out the space according to their specifications. Under the spec suite regime, tenants trade in their cherished design preferences for the convenience of an immediate move-in.
What Is The Appeal in Pre-Designed Office Space?
After all, does one size fit all? People want a floor plan that fits the way they operate, right? To the first objection, a spec suite landlord can simply reply that the building has numerous units, each with differing floor plans and square footage. Second, operational fit is only one of multiple assets an office array might possess.
Furthermore, many business leaders are unsure of what optimal space looks like. Plus, budget and time constraints preclude a lengthy build-out process much of the time. A ready-made unit, on the other hand, can save many headaches.
Do Spec Suites Share Common Features?
As noted above, spec suites will vary in square footage and perimeter. Still, the differences are not that stark. Typically, spec suites are around 1,000 to 3,000 square feet; some owners even decide to install larger specs, anywhere from 5,000 to 10,000 square feet. The rationale is that a too-specialized or personalized suite will only attract a narrow range of space seekers. Nevertheless, landlords provide what most tenants want: kitchen facilities, conference rooms, and a variable combination of walled-off offices and open spaces hosting cubicle workspaces. Areas of indulgence often include deep-pile carpeting and top-quality glass, Herculite-tempered, for example.
Are Floor Plans Relatively Uniform?
It bears repeating: differences among the office suites are the key to the successful leasing of spec suites and long-term retention of occupants. Square footage can vary by a thousand or so. A business will settle for a little too large or too small a suite as long as the other features meet their must-have requirements – conference rooms, work rooms, a galley/break room, offices, and open areas. Some landlords also build these spec suites with the idea that more than one can be easily combined if needed.
When the need arises, the tenant can work with the landlord to subdivide an office or combine a workroom with a conference room. So, there are differences among suites, but not dramatic ones.
Does a Building House Have an Optimal Number of Units?
All buildings have their own profiles, and those with spec suites are no exception. The ratio of spec suites to traditional ones is not a hard and fast formula. Larger companies will seek space that they can reconfigure to their liking. Being large, and paying more in rental remittances, these firms should receive decent attention from landlords.
A rectangular building with equal square footage per floor might benefit from a 50-50 spec suite/traditional suite arrangement. Yet there are other factors at play: who is in the market for space, and what are rents going for? The right number of spec suites can be a fluid number.
Do Spec Suites Get Wired and Connected Like Other Units?
Most spec suites come without furnishings, though the property owner might opt to make that investment for the sake of staging and aesthetics. Outfitting the space for cable and Wi-Fi are other features that can attract businesses to a unit that is not built out to their liking. Affording such amenities to new tenants is a cost that owners hope will pay off in dependable, rent-paying, long-term occupancies.
Since a major selling point of a spec suite is immediate availability, and since nearly every business demands some level of technology to operate, it is no surprise that an increasing number of landlords offer these conveniences. Of course, the commercial real estate market is the best indicator of the extent to which property owners go in terms of technological resources.
Are Spec Suites Here to Stay?
Are spec suites a flash in the pan? A fad that will quickly pass? As long as modestly-sized firms, with an eye to urgency and the bottom line, are around, landlords do well to keep some spec suites in-house as the need will probably persist. Build-out construction is a burden for which the rising generation of entrepreneurs has less patience. At the same time, the cost of construction in spec suites falls exclusively on the landlord.
For the suites to pay off as desired, tenants need to spend years in their space, suffering the subsequent rent increases. The best means of retention is sound management.