No one likes a long commute to work. As a result, the massive generation of millennials began moving to downtown city apartments. “Live, Work, Play”, became a slogan that is synonymous with this generation. They were getting rid of their cars. Living close to work. Living close to the nightlife. With approximately 80MM of them, this was a group large enough to create significant change within city landscapes. This is the largest generation since the baby boomers, who have currently have approximately 74MM people.
With the massive number of Millennials and their trend towards urban city centers, they fueled a nationwide re-generation of demand for downtown office space and apartments. The Millennial generation was born between 1982 and 2000. As of 2019, they now range in age from 19 to 37 years of age. However, as this group ages, something familiar is happening. As with every generation before them, they are having families and looking for a high quality of life.
They are now beginning their migration to the suburbs to raise their families and are looking towards home ownership versus the attachment-free life with an apartment. “Live, Work, Play” is now transforming into “Parks, School and Soccer”.
This generation has many years left for work and having an office close to home has high value. No one likes a long commute.
The Market Assets
The Orlando market as close to 100MM square feet of office space. Roughly 10% is located in the downtown urban core, leaving 90MM of suburban office space. Over the last 10 years there has been very little new office construction.
Most of the suburban office in the market is located in neighborhoods close to the residential population centers. This makes them very attractive for the ease of access and proximity to home. These buildings tend to be older, with most of them being constructed in the 1980’s. In most cases, they have very high intrinsic values with irreplaceable locations.
The transaction market for these properties is fairly active each year with over 400 properties trading hands on average. With new construction pricing over $220 per square foot, these properties trade at a significant discount to the replacement cost of the property. The sales price for suburban office has averaged around $150 per square foot for the last several years.
We feel we can create significant value by acquiring these assets and upgrading them with modern finishes, meeting the increasing demand of the millennial workforce that is relocating to the suburbs.
By incorporating modern finishes, the buildings are given new life for the next generation. These cost-effective upgrades give the property a new feel:
Modern LED lighting
These are both aesthetically pleasing and “green-certified” by reducing the environmental impact of the building. They consume substantially lower amounts of electricity and do not have ballasts and environmentally impactful fluorescent bulbs that need to be replaced.
Environmental Control Systems
These allow for intelligent monitoring of the building’s usage for electricity and Air Conditioning (hvac) systems. Systems can be shut down on off-hours to help eliminate waste and reduce the overall operating expenses of the building.
Common Area Enhancements
A coat of paint goes a long way. Modernizing the color schemes of the building with hallway paint and corresponding new carpet adds a fresh feeling to the well-travelled areas of the building. Upgrades to the door handles and incorporating a master key locking system will also enhance the feel of the building and reduce locksmith costs.
Giving the property new signage, upgrading the tired landscape, seal and stripe the parking lot all go a long way with increasing the curb appeal. This is very important as first impressions really do matter.
We have found by implementing a comprehensive building upgrade plan, we have been able to achieve higher lease rents and occupancies. The demand is there for a quality product that provides above standard finishes. A location with good access and close to restaurants and services is also a factor for a successful project.