The office vacancy rate in the U.S., which stood at 12.9% in the fourth quarter of 2017, is expected to decline to around 12% over the next two years. But there are still areas of the country where vacancy rates continue to rise, leaving brokers and property managers with office spaces that, for a variety of reasons, just don't inspire renters.
Enter spec suites: ready-to-move-in offices that a growing number of owners are building out and brokers are marketing. These have become increasingly popular in certain markets, especially those where startup companies are in need of quick move-in or co-working solutions with shorter lease commitments.
This has been in a trend in some markets for a while. “Spec suites … are growing in popularity and in size, with new projects devoting entire floors and buildings to spec space,” reported the Colorado Real Estate Journal in 2016.
Spec suites have been catching on more recently in Washington, D.C., where office vacancies are up. Bisnow reported last October on a $60 million renovation of the 670,000-sf Metropolitan Square in which landlord Boston Properties is creating multiple spec suites, designed by Gensler, some larger than 19,000 sf. At Westwood Metro Tower in Tyson, Va., landlord MRP has converted two floors and 40,000 sf to spec suites ranging from 1,000 to 5,000 sf, revolving around a 3,500-sf two-floor amenity zone.
In Phoenix last September, Fin, a San Francisco-based virtual assistant company, agreed to lease an 8,081-sf spec suite in The Monroe office tower as its second location and first in Arizona. This lease “further highlights the demand for built-out, modern, move-in-ready office space,” said Bryan Taute, Executive Vice President with CBRE’s Phoenix office, which represented the building's landlord ViaWest Group. JLL represented the tenant.
ViaWest Group has since been building out additional spec suites in The Monroe, ranging from 1,500 sf to a full floor at 14,719 sf. Two contiguous spec suites on the fourth and fifth floors offer 21,208 square feet of combined office space with an available private rooftop patio.
In Boston, spec suites “have become part of many brokers’ marketing packages,” says Karen Bala, AIA, LEED AP, Senior Architect for the Dyer Brown, the design firm that over the years has worked on between 50 and 60 buildings in downtown Boston.
She tells BD+C that spec suites have been steadily coming onto the local real estate scene for the past few years. They are filling spaces that would be harder to rent otherwise, she explains, because they are on lower floors, are too small, or aren’t accessible to a lot of natural light.
“We’re doing a ton of these [spec suites] right now,” says Bala. Dyer Brown’s recent designs have ranged from as small as 3,000 sf, to as large as 30,000 sf.
A spec suite inside the office building at 100 Summer Street in Boston includes an intimate phone room and reception area. Image: Darrin Hunter, courtesy of Dyer Brown
Bala says spec suites typically include “must have” features such as a kitchen, a conference room, workspaces, and a reception area (which doesn’t need to be too elaborate or overly furnished). She notes that glass-enclosed “phone rooms,” where workers can talk in private, are now more popular than conference areas in these suites.
Renting spec suites entails a degree of market savvy, says Bala. First and foremost, landlords must understand their local codes about subdividing spaces. It is also “critical,” she says, for landlords and brokers to accentuate the positives about spec suites, and to make those spaces more appealing with better finishes and lighting.
She notes that the best spec suites “find a careful balance between the building owner’s own identity and the likely profile of incoming tenants,” says Bala.
Some spec suites use high-impact wall graphics and displays to tell a story about their building or neighborhood. Hospitality inspired designs with warmer colors, wood finishes and dimmable lights can attract many companies looking for a workplace that fits a more casual lifestyle or company culture.
Bala cautions that spec suites aren’t panaceas. In some cases, it might still be better simply to take the raw space and market that instead.
But spec suites can give tenants a more immediate sense of what they would be leasing. “The build-out always creates a more sensory experience, which can be much more impressive and convincing than a 3-D walk-through animation or detailed renderings,” Bala says.
Related Stories
| Jul 10, 2013
World's best new skyscrapers [slideshow]
The Bow in Calgary and CCTV Headquarters in Beijing are among the world's best new high-rise projects, according to the Council on Tall Buildings and Urban Habitat.
| Jul 10, 2013
TED talk: Architect Michael Green on why we should build tomorrow's skyscrapers out of wood
In a newly posted TED talk, wood skyscraper expert Michael Green makes the case for building the next-generation of mid- and high-rise buildings out of wood.
High-rise Construction | Jul 9, 2013
5 innovations in high-rise building design
KONE's carbon-fiber hoisting technology and the Broad Group's prefab construction process are among the breakthroughs named 2013 Innovation Award winners by the Council on Tall Buildings and Urban Habitat.
| Jul 8, 2013
RSMeans cost comparisons: offices, daycare centers, convenience stores, fast food
Construction market analysts from RSMeans offer construction costs per square foot for offices, daycare centers, convenience stores, fast food.
| Jul 3, 2013
Architects team with HUD to promote 'Rebuild By Design' competition for Hurricane Sandy recovery effort
The American Institute of Architects (AIA) today announced a communications campaign urging its membership to enter the “Rebuild by Design” multi-stage regional design competition announced by Department of Housing and Urban Development (HUD) Secretary Shaun Donovan on June 20.
| Jul 2, 2013
LEED v4 gets green light, will launch this fall
The U.S. Green Building Council membership has voted to adopt LEED v4, the next update to the world’s premier green building rating system.
| Jul 1, 2013
LEGOLAND builds 12-foot replica of One World Trade Center
The LEGOLAND Discovery Center Westchester in Yonkers, N.Y., celebrated the completion of a LEGO replica of One World Trade Center by lighting the 12-foot-tall, 100-pound model.
| Jul 1, 2013
Report: Global construction market to reach $15 trillion by 2025
A new report released today forecasts the volume of construction output will grow by more than 70% to $15 trillion worldwide by 2025.
| Jun 28, 2013
Building owners cite BIM/VDC as 'most exciting trend' in facilities management, says Mortenson report
A recent survey of more than 60 building owners and facility management professionals by Mortenson Construction shows that BIM/VDC is top of mind among owner professionals.
| Jun 18, 2013
Report: HVAC occupancy sensors could slash building energy demand by 18%
Researchers at the DOE's Pacific Northwest National Laboratory conclude that significant energy savings can be achieved by varying ventilation levels based on the number of people in a given space.