Creative companies – those in the technology, advertising, media and information sectors – are known for spaces that reflect their unique, collaborative cultures. But many are trading in their wood beams, exposed brick and eclectic neighborhoods for office space in high-rise buildings that has typically been occupied by legal and professional services firms, according to JLL’s Skyline.
Over the past decade, creative firms’ desire for nontraditional office space led them away from the central business district in search of distinctive space, which they found in uniquely designed suburban campuses, fringe markets and city outskirts.
“We saw a meaningful shift in what creative companies desired in their work spaces,” explained Scott Homa, Director of U.S. Office Research at JLL. “Their migration outside traditional office buildings in central business districts had a significant impact on office leases in Skylines across the U.S.”
But that trend has already started to reverse: many of those creative firms are moving back to traditional high-rise office buildings in central business districts.
Rising rents, diminishing space
As creative businesses migrated to unique buildings in fringe markets, owners were able to charge more and more for that space. The once plentiful warehouse conversions were picked over, and in many cases became more expensive than the skyline space creative tenants had initially left.
“Large tenants are increasingly being squeezed out of creative office locations,” said Homa. “The availability of space and the value a traditional high-rise office building can now offer is driving more creative tenants back to the Skyline.”
Office demand comes full circle
Creative companies have returned to the Skyline in search of office space, but building owners know they have plenty of options to choose from. Knowing they won’t settle for the same offices they left just a few years ago, landlords are getting creative to offer the best of the best.
“Traditional office buildings are catering to today’s tenants with appealing amenities, modern design and energy efficient spaces,” said Homa. “Owners are investing in new perks to entice these companies to come back.”
To stand out among the competition, owners are pulling out all the stops to recruit and retain tenants. Think dog-friendly buildings, elaborate fitness centers, game rooms and even electric car charging stations. Perks that facilitate positive work-life balances, like the ability to have your car washed while you’re at work or book a personal training session in the building, are increasingly popular among creative firms.
Will creative companies stay in the Skyline?
Over the past year, Spotify, Expedia, Salesforce and Twitch accounted for 1.4 million square feet in Skyline lease signings larger than 100,000 square feet. These tech giants are leading the way, and other companies are following in their footsteps.
“As long as there’s space available, we expect creative tenants to continue seeking office leases in the Skyline,” noted Homa. “Owners will continue to offer new and exciting perks, which will help attract companies of all sorts and sizes.”