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
Coronavirus | Mar 15, 2020
Designing office building lobbies to respond to the coronavirus
Touch-free design solutions and air purifiers can enhance workplace wellness.
Plumbing | Mar 13, 2020
Pioneer Industries launches new website
Pioneer Industries launches new website
Architects | Mar 9, 2020
New York's façade inspection program gets an overhaul following a death from falling terra cotta
January 14, 2020, kicked off big changes to the NYC Local Law 11 Façade Inspection and Safety Program (FISP) for Cycle 9.
Office Buildings | Mar 5, 2020
SOM design’s Disney’s New York HQ
The HQ is being built in the Hudson Square neighborhood.
Office Buildings | Mar 3, 2020
REI’s new headquarters is all about the outdoors
NBBJ designed the project.
Adaptive Reuse | Feb 25, 2020
Hastings Architecture creates its new HQ from a former Nashville Public Library building
The building was originally constructed in 1965.
Office Buildings | Feb 13, 2020
CareerBuilder’s Chicago HQ undergoes renovation
Perkins and Will designed the project.
Office Buildings | Feb 11, 2020
Want your organization to be more creative? Embrace these 4 workplace strategies
Creativity is the secret sauce in the success of every business.
Office Buildings | Feb 11, 2020
Forget Class A: The opportunity is with Class B and C office properties
There’s money to be made in rehabbing Class B and Class C office buildings, according to a new ULI report.
Office Buildings | Feb 3, 2020
Balancing the work-life balance
For companies experiencing rapid growth, work-life balance can be a challenge to maintain, yet it remains a vital aspect of a healthy work environment.