Blog

Investing In Suburban Mid-Rise Office Buildings

For those looking to invest in office buildings, this recent article, Why Mid-Rise Buildings Are the Future of Office Investment,  by Tim Lee a VP with the Olive Hill Group on the National Real Estate Investor site (www.nreionline.com)  has some excellent insight on the benefits of considering mid-rise office buildings as a real estate investment strategy.

The article makes some excellent points, especially with the look at how you can re-work these older office spaces to meet today’s tenant demands for additional amenities and the ability to potentially add a co-working space to further increase NOI and reduce vacancy.

Better suited for creative office and other amenities

Because of the increasing demand for creative office and co-working space, today’s office owners and investors can charge premium rents for office spaces that offer the latest and greatest in creative office and co-working amenities. Many of these amenities are much better suited for low- to mid-size office product rather than high-rise office buildings.

The office campus type feel that many companies and firms look for in their office space is essentially impossible at a high-rise building.

Examples of such amenities include:

  • Outdoor co-working spaces
  • Bocce ball courts
  • Barbeque areas.

(These outdoor amenities are often located on the ground floor.)

In a high-rise, these amenities become exponentially more difficult and less convenient to access for a tenant on the 25th floor.

Renovations to turn a property into creative office space can become increasingly time-consuming and costly at a high-rise development.

Community creation and inter-office connections

Smaller office product is also simply easier to manage and to create a sense of community in. By fostering this feeling of a tight-knit office community between tenants, owners can foster loyalty to a property, which increases tenant retention and NOI.

This interaction between multiple companies and firms leasing office space at the same property is virtually impossible to achieve at a high-rise development.

As this demand for inter-office connections and for the community feel becomes increasingly popular, more and more office investors will turn to mid-rise properties as the best product for providing this environment.

Creativity in Value-Add Office Building Investments

The whole article is definitely worth a read, but as a real estate investor looking for strategies to improve suburban office building investments through creative value-add strategies like adding a co-working space, thinking outside the box is going to be a key.