Millennials are impacting the built environment under construction in 2015, according to a report from JLL tracking national construction trends. Throughout 2015, tenant improvement (TI)—or the renovation of existing space—has been a bright spot in the construction industry, even as labor and construction costs continue to rise.
There has been a 14.2% rise in TI projects since the second quarter of 2013, as landlords compete to attract tenants and companies compete for Millennial talent. This is especially prevalent in office markets that are saturated with new construction and renovation.
According to JLL’s latest report on U.S. non-residential construction activity, TI costs are declining in most key markets, as landlords are more willing to pay for them. For office building owners, the average TI package nationwide is approximately $30-$50 per-sf in Central Business Districts (CBDs). These packages have become especially important as tenants look to customize office space to attract and retain employees, especially Millennials.
“Millennials are shaping how and where we work, and also how and where we shop, and even the path our packages take from ship to doorstep,” said Todd Burns, President, JLL Project and Development Services, Americas. “By 2020, the U.S. workforce will be comprised of 50% Millennials. Individually, they may not realize that they’re influencing national construction trends to favor tenant improvement over new construction, but the numbers show it’s no coincidence.”
Companies are focused on accommodating their Millennial employees and their preference for offices in existing urban locations that are close to amenities and often with unique, open interior spaces. As a result, as companies begin to renovate older buildings, office space vacancies are slowly declining and are down 10.2% since Q2 2011.
The JLL research also points to other key construction industry trends playing out in 2015 including:
• Rethinking the retail environment: New “omnichannel” strategies emphasize convenience for customers by leveraging their brick-and-mortar stores as e-commerce pick-up/return depots, which in turn requires a revamped store configuration.
• Manufacturing industry driving construction volume: While construction in the education sector has been strong as universities focus on building new space to keep students engaged on campus, it’s been upstaged by a surprising category: manufacturing. Annual project spend on construction within the manufacturing sector has increased from $57.8 billion in 2014 to $90.3 billion YTD in 2015.
• Technology leads the charge: Technology companies are driving demand for cool, renovated office space. At the same time, industrial occupiers want and need, more custom e-commerce space, with higher shelving, specialized lighting, new technology and office space. Similarly, in retail, quick service restaurant chains are investing in new, creative interior build-outs to better compete with fast casual concepts.
• Future opportunity and capital planning: With construction starts at their highest point since the recession, the industry is still in the early stages of its recovery and will continue to grow in response to overall economic growth. Activity is still far below pre-recession highs, indicating growth will continue over the next several years, and dollar value of TI allowances will too.
Related Stories
Office Buildings | Jul 9, 2020
Sydney will be home to the world’s tallest hybrid timber tower
SHoP Architects, in collaboration with BVN, is designing the project.
Office Buildings | Jun 25, 2020
New HQ for Chinese tech supplier will feature gardens on every floor
NBBJ’s spiral design maximizes worker exposure to the green spaces.
Coronavirus | Jun 12, 2020
BD+C launches 'The Weekly,' a streaming program for the design and construction industry
The first episode, now available on demand, features experts from Robins & Morton, Gensler, and FMI on the current state of the AEC market.
Office Buildings | Jun 1, 2020
Luxembourg office complex breaks ground in Belval
Foster + Partners designed the building.
Office Buildings | May 27, 2020
512 West 22nd Street: Biophilic design on the High Line
COOKFOX Architects designed the project.
Coronavirus | May 18, 2020
Infection control in office buildings: Preparing for re-occupancy amid the coronavirus
Making workplaces safer will require behavioral resolve nudged by design.
Office Buildings | May 15, 2020
KPF designs three-building San Jose office campus
The project will be adjacent to Google's planned eight million square foot transit village and Diridon Station.
Office Buildings | May 8, 2020
The pillars of work
The workplace will most certainly look different in the future, but how different it looks will be unique to every organization. There (still) is no one-size-fits-all solution.
Office Buildings | Mar 24, 2020
Morphosis designs lululemon’s new global headquarters
The HQ’s design is meant to serve as an extension of lululemon’s core values.
Office Buildings | Mar 16, 2020
Investments in ‘human experiences’ are paying off for employers
A recent survey conducted by JLL and Harvard Business Review found that more companies are giving their employees greater say in changing their work environments.
