As occupiers demand (and achieve) greater flexibility, utility, innovation and sustainability from their office buildings and raise the bar in many markets, investors and developers might wonder whether location is still the brightest dot on their strategy radar. Could quality be the new key driver in investment and development decisions?
Our Offices 2020 Research says no and reaffirms that location is still the dominant driver in occupier decisions. Despite the undoubted rise of quality up the CRE agenda, the need to access talent, clients and suppliers from the right place is, if anything, strengthening location’s hand.
However, while savvy investors and developers will be determining locations for new supply through sophisticated GIS-type analysis, they should also be paying close attention to occupier’s growing need for quality, or more precisely for space that will be ‘future-proof’ for a flexible, productive, sustainable and cost-efficient business.
And one ‘spec’ will certainly not fit all. Success will only come from understanding the specific requirements of occupiers and, necessarily, delivering bespoke solutions. What should motivate investors and developers is that smart occupiers will be prepared to pay a premium for the right space in the right location, as they can see the true payback it will deliver.
There is ripe potential for value growth in high-quality developments and refurbishments in core locations that are on specific occupier agendas. At the same time, keep an eye on those peripheral locations that might work for corporate support functions (particularly near transport hubs).
In all cases, investors and developers must be fully ‘switched-on’ – monitoring shifts in location preferences, identifying occupier trends and being highly tuned to individual market characteristics and cycles. Only then will you outperform.