Historically, tenants in the finance, insurance, and real estate industries (known as FIRE tenants) have been the major tenants of CRE office space. However, in the past several years, TAMI tenants, or those who are in the technology, advertising, media, and information industries, have begun to outpace FIRE tenants in their leasing power and number.
The Villager reported in Q4 2018 on this shift among TAMI tenants in NYC, and how they are a big part of the movement displacing more traditional tenants in the Financial District. In fact, they report that just 10 years after the financial crisis of 2008, FIRE tenants were down from 55% overall occupancy to 35% in 2018 — while the TAMI segment tripled in size in the same time period, from 5% to 15%. As a result, Lower Manhattan’s office occupancy is more diverse today than it has ever been before.
What’s more, this trend shows no signs of slowing down anytime soon. With an estimated three-fourths of the workforce being made up of Millennials in just a few short years, it is expected that these younger workers will continue to work predominantly in TAMI industries. And these industries are pushing for new technology in commercial real estate — and they are pushing hard.
According to LinkedIn data, tech and software lead the list for top growing industries for Millennial job switchers. More than any other industry, this particular segment was the top destination for Millennials who changed jobs in 2016, embracing various roles within the sector including software developer and outside sales consultant. LinkedIn’s Talent Blog also digs deeper, noting that “tech already has a Millennial heavy workforce. With its job and income growth, impressive perks, and deeper sense of purpose, it’s not surprising that the tech industry appeals to the Millennial worker.”
While these TAMI tenants are certainly trendy right now, FIRE tenants are still holding their own in commercial real estate. And, when it comes to physical space, these tenants have very different needs. FIRE tenants need more physical space, regularly seeking big spaces of more than 100,000 square feet (the average is somewhere around 80,000 square feet), while TAMI tenants typically occupy less than 50,000 square feet of physical space.
A commercial market report by The Real Deal, New York Real Estate News, mirrors these findings, reporting that even as the TAMI industries are blazing a white-hot trail through Manhattan, it is the FIRE industries that are primed to lease and occupy the most physical commercial space in the coming years. Based on their study of commercial tenants seeking physical space in NYC, the number of FIRE and TAMI tenants were similar (129 to 106, respectively) — but FIRE tenants are in the market for more than twice as much physical space than TAMI tenants (8.7 million square feet vs. 4.3 million square feet, respectively).
While the physical demands of the two industries are drastically different, there is one demand that is ever-present in both industries — technology. And smart and savvy commercial real estate owners and managers are getting in on the trend. Here are 4 ways office landlords are leveraging their building’s technology as an amenity for their tenants.
Remote access to environmental controls
It’s a proven fact that the more employees have the ability to customize their working environment, the happier and more productive they are. Think about it — it’s almost a guarantee that you’ve worked with someone before who like the office just a little too cold in the winter, or a little too warm in the summer. As more offices adapt to flexible models, they are able to offer their employees the ability to individually control their temperature and lighting based on personal preferences — increasing the overall comfort level in the office.
But why is this important to property owners and/or managers? Simple — it all comes down to the bottom line. As any commercial real estate professional can tell you, finding and getting tenants is just the beginning. The real challenge is retaining tenants once their initial contract has expired. For a landlord, losing a commercial tenant could negatively affect their income for up to two years, since these spaces are not always easy to fill. As a result, it’s important to keep your tenants’ comfort and satisfaction in mind when deciding how and when to incorporate technology into the amenities you offer.
No more key cards to keep up with
In order to seem more technologically advanced, office landlords are adding wireless facial recognition technology to help control who goes in and comes out of their buildings. And while this may not seem like a dealbreaker, it is actually a very smart way to be seen as more technologically advanced than buildings with more traditional key card entries — making your building more appealing to Millennials and TAMI firms and organizations. Scanners and other sensors are also leading to better building security by replacing outdated key cards, which are often lost or stolen.
Sequr is an app-based platform that offers your tenants a new way to access the office, saying goodbye to key cards or key fobs forever. Now, there’s a better way to access your office — using only the smartphone you already have in your pocket.
Power stations, universal access to WiFi, and the importance of connectivity
It seems like a no brainer, but it’s still important to mention — we would argue that it is nearly impossible for any landlord to attract and acquire tenants without providing access to universal wireless. And smart commercial landlords are now taking this one step further, by providing on-site power stations that include touchscreen navigation, moving displays, and more.
And while we are focusing on using tech as amenities, we’ll go a step further. Today’s workforce no longer sees connectivity as an amenity — rather, it has become a necessity. VenuesNow seconds this notion in their feature of ExteNet Systems, a company headquartered outside of Chicago that specializes in helping sports arenas, concert halls, stadiums, and other commercial buildings throughout the United States with expanding their data capacity.
ExteNet founder, Ross Manire, explains that he urges his clients to make sure they are offering their tenants and/or visitors good access to data and connectivity — and that it is as important as making sure the lights come on. “Don’t think of (connectivity) as an addition after the fact. Think of this as another utility. Having wireless technology is becoming that important to venues today,” he explains.
Using shared space in new and innovative ways
New co-working business models are all the rage right now, and this allows for turning amenities into shared spaces for lease as part of a tenant’s rental agreement. Shared spaces such as recreational areas, rooftop lounges or meeting areas, restaurants or coffee shops are centrally located, giving access to tenants who choose to take advantage of these amenities in their lease. As a bonus, these spaces are often occupied by other tenants, making it a perfect space to meet your “neighbors” and expand your professional circle.
This common shared space can lead to fostering a community of tribes, where communities can find a “third space” they crave — a space where they can get away from work and the office, but without having to leave the building. Coffee bars or comfortable seating in the lobby can act as a great solution for a gathering place.
But how can you tie this in with technology in order to really create something unique for your tenants? Thinks apps and other systems that can help to build this community, connecting their tenants and helping them to find their tribe. For instance, HqO is a software system that activates your property, connecting people to places, experiences, and each other.