Luxury rental properties take ‘working from home’ to the next level
When Christopher Dossman and his wife, Yao Li, were looking for an apartment in New York last year, they came up with the usual list of preferences: washer/dryer, proximity to a grocery store, access to the subway. But a top priority for them was a home office space.
In April, the couple moved into the Willoughby, a 34-story tower in downtown Brooklyn, paying $4,300 a month for a bedroom. The building is unfinished, but they chose it because it offered essential amenities: a 22nd-floor coworking space that includes semi-private banquettes and a conference room with views of Fort Greene Park.
“Every day I’m up there,” said Mr. Dossman, an entrepreneur who has founded several tech start-ups. “There are days when I don’t leave the building at all.”
As U.S. companies adjust to employee demands for flexible hours, Mr. Dossman is among a growing number of workers who want to work remotely, but not necessarily from their living room sofa or kitchen table.
The pandemic has forced an exodus of office workers in 2020. Even when workplaces reopen, 59% of employees are still working remotely, according to a survey released earlier this year by the Pew Research Center. Of those remote workers, 78% say they want to continue doing so post-pandemic, up from 64% two years earlier.
Developers across the country are doing what they can to make remote working more convenient to entice potential tenants, sparking an amenities war as luxury rental properties and condos hang on much-needed amenities like private offices, conference rooms, task lighting, wall mounted monitors, podcasting booths and high speed internet.
“It’s something you have to do today; it’s an amenity, like a swimming pool,” said Ric Campo, managing director and chairman of Camden Property Trust, which included a workspace called the Hub in the common area of Camden Harbor View, a residential development in Long Beach, in California.
In most buildings, the cost of workspaces is included in the rent, but some landlords charge a fee to reserve a room for a large meeting or an extended period. Coworking companies like Industrious and WeWork are starting to take notice, hoping not to be left behind by what could become a lucrative market.
Developers have been adding space to apartments for years as architects design bedrooms and alcoves to accommodate desks and other work equipment, a trend that has only accelerated with the pandemic. The size of the average new apartment has increased 9.6% since the start of the pandemic compared to those delivered in the 10 years before the pandemic, said Matt Vance, senior economist for real estate services firm CBRE. The increase is equal to an additional 90 square feet, or the size of a bedroom or workspace.
He added that the demand for workspaces has also extended to common areas. “Over the past decade we’ve had internet cafes with booths and coffee machines, shared spaces in apartment buildings,” he said.
But as Americans settle into a hybrid work model, they’re looking for more professional spaces where they can host a private Zoom call or gather clients for a presentation without going to the office.
“People have high expectations,” said John G. Weigel, senior development executive at DivcoWest, a real estate services company. “We’re incentivized to make sure this is as robust as possible.”
DivcoWest’s portfolio includes Park 151, a 20-story multi-family complex in Cambridge, Massachusetts, set to open this fall with 468 apartments and a common area that will include five work-from-home spaces and conference rooms.
“This is an important part of our equipment set, and it has grown,” Weigel said. “Now that the viability of working from home has been proven, we will see more of it.”
Other developers switch gears halfway through the build. At Brooklyn Crossing in Prospect Heights, Thomas Brodsky, a partner in the family-owned development company Brodsky Organization, ditched plans for an open lounge and added semi-private booths and “phone booths” in place of the The building’s coworking space, scheduled to open in August.
And developer Macklowe Properties has beefed up tech at One Wall Street, a downtown Manhattan condominium, adding microphones and cameras for virtual meetings and booths for podcasting to its now-branded coworking space. One Works by One Wall Street, said Richard Dubrow. , the company’s marketing director.
The increased interest in home workspaces comes as businesses grapple with shrinking their office footprint. Metro areas with a higher percentage of employees working from home had higher office vacancy rates from late 2019 to late 2021, according to a May report by Moody’s Analytics.
Real estate watchers say the concept has legs and, if managed properly, could be successful in the long run.
“There’s such demand for multi-family residences for this space that we think it’s going to be a sticky trend,” CBRE’s Mr. Vance said.
The model could be expanded in higher-density areas to include the surrounding community, said Thomas LaSalvia, senior economist at Moody’s Analytics. “It doesn’t have to be the residents of this building using this space; it could be neighbors,” he said.
This broader vision attracted the interest of Industrious, a workplace provider with 150 locations in 65 cities around the world. “There are starting to be developers who want to create a resort that serves tenants and the outside world,” said Jamie Hodari, the company’s chief executive and co-founder.
He pointed to Monrovia, Calif., where AvalonBay Communities, a real estate investment trust that owns an interest in 296 apartment communities, rents private workspaces on the ground floor of its apartment complex to residents and to the general public under a brand called Second Space Work Suites.
Mr Hodari added that a number of large apartment owners have approached his company about a partnership. “We’re pretty close to an announcement with one of them,” he said.
Tenants have a variety of reasons for seeking a “third space,” a common space separate from home and office. Their home office may be too small or have too many distractions or look unprofessional enough for an important virtual call with clients.
And some, like Mr. Dossman, may have a spouse who also wants to work from home.
“Most of my job is talking to other people,” he said. “It wouldn’t work if we had calls at the same time.”
The added benefit of a work-from-home space has forced some tenants to re-evaluate how much space they need in their own apartments.
Career and business coach Amina Altai was drawn to One South First, a luxury apartment building in Brooklyn’s Williamsburg neighborhood, because of its home office space, which includes two private conference rooms and a larger meeting room. She reluctantly took a studio in the building because there was nothing else available, but when a two-bedroom opened up, she realized she didn’t have one. didn’t need.
“This amenity space is amazing,” she said. “I use it at least twice a month.”
For Ms. AlTai, the space has allowed her to resume in-person meetings, a crucial part of her business that has been interrupted during the pandemic. She had tried typical coworking spaces, but said the quality was inconsistent. At One South First, she pays $100 for a four-hour rental of a private room where she can seat her client in a chair overlooking Domino Park and the East River.
“Sometimes there are experiences that can’t be translated through the screen,” she said.
These spaces can also help tenants reduce other monthly costs, including transportation and restaurant meals. “If I don’t commute, I save $100 a month,” said Mr. LaSalvia of Moody’s.
But one of the most overlooked perks is something an apartment alone can’t provide, a perk many workers crave after two years of working remotely: a social experience. “It creates a more community vibe,” Mr. Vance said.
At the Willoughby, Mr. Dossman and Ms. Li got to know their neighbors through social events like happy hour mixers and wine tastings in the work-from-home space. The experience inspired him and a friend to set up a meeting with other start-up founders in New York, saying it would cost $250 an hour to host an event in the building.
“We looked at a few different places for events, and it’s a lot cheaper than a bar,” he said. “It’s a good place to be and it’s getting better.”