Texas Real Estate Business • April 2023

www.REBusinessOnline.com April 2023 • Volume 19, Issue 2 OFFICE OWNERS EMPHASIZE OCCUPANCY OVER RENTS Not all landlords can afford to think this way, but the ability to embrace such new operating philosophies reﬂ ects an awareness that ofﬁ ce usage has changed irrevocably. fﬁ ce owners have spent the last two-plus years undertaking ev-ery creative measure they can fathom — and afford — to get tenants and their employees to legitimately want to come back to their buildings. From investing in upgrades to physical amenities to hiring hospitality-minded professionals for property activation to offering personalized incentives, noth-ing has been out of bounds when it comes to recouping occupancy. Enough time has now passed such that owners can judge the extent to which their ideas and initiatives have worked. Of course, the goalposts for what deﬁ nes success in the ofﬁ ce sec-tor have shifted radically during that O By Taylor Williams time. Proﬁ t margins and forecasts have shrunk as 60 to 70 percent occupancy three to four days a week now starts to look pretty good, all other factors being held equal. It’s simply a different world. “We are never going back to pre-pandemic ways,” says Ami Figg, senior leasing specialist at Houston-based Hartman. “What COVID-19 has done for the ofﬁ ce market is equiva-lent to what September 11 did for the travel industry. There will always be a need for traditional ofﬁ ce space, but it’s changed forever, so it’s upon us as land-lord and tenant reps to educate and pro-vide clients with what the new market is generating and demanding.” In Figg’s view, another major way in Pictured is a rendering of the redeveloped lobby at One West Village, a 240,000-square-foot building in Dallas that formerly served as the headquarters of marketing agency The Richards Group. The new owner, OliveMill Holdings, has launched a capital improvement program to take advantage of the fact that companies want to be in vibrant buildings. SEE OFFICE page 21 MILLENNIALS, GEN Z ERS DRIVE DEMAND FOR ESG AMENITIES AT TEXAS OFFICE PROPERTIES The youngest demographic groups are intensifying the focus on sustainability at work. By Brett Merz, senior vice president, asset management at KBS Realty Advisors he demand for ofﬁ ce proper-ties with amenities that reﬂ ect an awareness of environmental, so-cial and governance (ESG) principles is growing due to younger generations joining the workforce and investing. A recent study by CNBC Make It found that one-third of millennials in the United States place a high focus on investment products with ESG factors. This tendency naturally extends to the places where they work. In fact, 47 percent of 18-to-34-year-olds in the United Kingdom say they T would look for a new role if they thought their employer was not committed to the cause. This ﬁ nding demonstrates that ESG is becoming an essential part of re-cruitment and retention — particularly among younger workers. Since millen-nials and gen Zers make up the majority of today’s workforce, ESG is becoming a rising concern among ofﬁ ce owners. In the growing markets of Dallas and Austin, businesses are now seek-ing ofﬁ ce spaces that offer eco-friendly features to help attract and retain em-ployees. As a large commercial investor, KBS has seen how these amenities can beneﬁ t ofﬁ ce investors. This is one of the reasons we created an in-house “green team” to enhance our sustainability ini-tiatives. Here are some of the ESG-focused amenities we have observed being driv-en by the younger generations in Texas’ current ofﬁ ce environment: Sustainable Systems Many young workers are drawn to companies whose ofﬁ ce spaces feature amenities that reduce their carbon foot-prints and help conserve natural re-sources. In addition to LEED-certiﬁ ed and EN-ERGY STAR-rated properties that are built to eco-friendly standards, these employees are seeking amenities that decrease electricity and water use. These features might include maximized natu-ral lighting, sensors that adjust temper-ature control and lighting according to occupancy, low-ﬂ ow sinks and toilets and integrated energy management systems. Along with these amenities, buildings SEE ESG page 22 INSIDE THIS ISSUE Hires, Promotions and Other Personnel News From Across the State page 7 Our Annual EDC Special Section Spotlights Fast-Growing Municipalities pages 14-20