It’s common knowledge: The landlords of office buildings are investing in amenities as a way to attract and retain tenants. This often means renovating older office buildings to make them competitive. But how much are landlords investing in new amenities? And what amenities are they adding?
JLL tackled this question in its Midwest Amenity Landscape report for 2019. The company studied 189 office buildings in the Midwest that received significant amenity upgrades during the last five years.
What did JLL find? First, building owners have invested more than $4.5 billion in office amenities during this period. The median amenities project cost $5.3 million.
And while landlords continue to invest in common amenities such as fitness facilities and conference centers, they are also sinking their dollars into newer areas such as tenant lounges and outdoor social spaces, JLL reported.
Is this a wise investment? According to JLL, the 189 buildings that received amenity upgrades saw their occupancy levels increase an average of 16.2 percent. Asking rents increased an average of 10.7 percent.
JLL found that the most common amenity added in office upgrades was a fitness facility, with 48.1 percent of the renovated Midwest buildings adding this perk. Next came the addition of a conference center, with 38.6 percent of renovated buildings adding this feature. A tenant lounge was added in 34.4 percent of renovations, restaurants in 30.2 percent and outdoor social spaces in 29.1 percent.
In 20.1 percent of renovations, landlords invested in retail additions, while in 4.2 percent, they invested in bike storage.
It’s little surprise that Chicago was the Midwest city in which landlords spent the most on upgrades during the last five years, with landlords spending more than $2.4 billion on amenity upgrades in this market. Coming in second on JLL’s list was Pittsburgh, where landlords spent $664.3 million on new amenities. Detroit ranked third ($387 million), Minneapolis fourth ($257 million), Cincinnati fifth ($192.5 million) and Indianapolis sixth ($147.9 million).
