As construction activity grows, tenant improvement allowances are following suit. This trend extends beyond office to include industrial, retail and more. JLL recently released the 2015 Q2 Construction Perspective recently. It explores growing tenant improvement (TI) packages, the highest cost markets and the industries with the biggest growth. Globe Street further explored how demographics are driving TI packages.
Their influence on macroeconomic drivers, and therefore on commercial real estate, is everywhere to be seen. Whether it’s office location decisions on the basis of the workers’ convenience rather than the CEO’s or the proliferation of big-box logistics warehouses to accommodate the move toward e-commerce, Millennials are shaping the conversation. A new report from JLL on national construction trends illustrates one more sign of this demographic group’s power: tenant improvements to attract Millennial talent.
“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,” says Todd Burns, president of JLL Project and Development Services, Americas. “By 2020, the US workforce will be comprised of 50% Millennials, more than all other generations combined. 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.”
The report says that office-using tenants are focused on accommodating their Millennial employees and their preference for offices in existing urban locations that are close to amenities. Frequently, these properties come with unique, open interior spaces, such as the high ceilings found in the TAMI enclave of Hudson Square n New York City—due to their origins as industrial buildings early in the previous century. As companies start to renovate and occupy older buildings, office space vacancies are slowly declining and have fallen 10.2% since the second quarter of 2011.
Read the entire article here.