As you like it

What do corporate tenants regard as a distinctive address nowadays? Developers and investors should ask themselves this key question in order to ensure their properties fit the bill. The answer is that buildings need to offer more than just prestige. Companies are thinking very carefully about how to use properties for strategic effect. By Christine Mattauch

The property on offer was in the sought-after Media Harbour district of Düsseldorf – a prominent neighbourhood with striking architecture and a waterfront boulevard. But the tenant, the Handelsblatt Media Group, ultimately chose a completely different location: the La Tête new build in Derendorf, two stops along from the city’s main station on a mass transit line. One reason was that around 220,000 rail passengers travel past La Tête every day. Visibility beat prestige.

When it comes to company headquarters, expectations and requirements have changed. Now more than ever, tenants are rating the location, interior and architecture of a property in terms of the specific benefits they offer. “In the past, businesses used their head office to project size and power,” says Christian Koch, the member of the JLL Strategy Board responsible for Corporate Solutions. “Today, companies are prioritising communication, networking and agile working.” Functionality beats glamour.

At the top of companies’ wish lists are flexible structures and ease of access. That applies not just to major multinational tenants, but also to SMEs. The high-ceilinged entrance halls that used to be so popular, in which a third of the space consists of air, have mostly fallen out of favour, says Wolfgang Speer, Head of Office & Occupier Services at property consultants Colliers. “There’s a much sharper focus on space efficiency than there used to be.” Prestige is still important, but only up to a point.

Real estate with character

Another element that needs to be right is the back story. “Companies are looking at whether a building has character,” says Stephan Kippes, professor of real estate marketing at Nuertingen-Geislingen University. That could mean architectural designs that reflect the history of a location or particular names that indicate an illustrious neighbourhood, such as the “Theresie” complex in Munich’s upmarket Theresienhöhe district. It can also involve features that make properties look distinctive and tailor-made.

For the Handelsblatt Media Group in Düsseldorf, it was crucial that developer Aurelis Real Estate and Cologne-based architect Caspar Schmitz-Morkramer took the occupier’s special requirements into account at La Tête. A third of the planned courtyard was designed as a “town hall” meeting area, for example, and the offices were given a more open feel. The building also features an 82-square-metre advertising screen on the façade, which grabs the attention of rail passengers. “We’re really very happy with the property now,” says Anke Otterbeck, Head of Project and Building Management at Handelsblatt Media Group.

That kind of perfect fit is only possible if designs offer scope for flexibility. “We consider both single-tenant and multi-tenant use when planning a building,” says architect Schmitz-Morkramer. Changes are often made further down the line even on properties designed around a particular main tenant from an early stage. The office concept is not usually an issue. “The tenant is generally familiar – and comfortable – with the overall layout of a building, otherwise they wouldn’t have been interested in the first place. It’s the changes to other areas that are so disruptive.” A larger canteen, maybe. A different mix of parking spaces. Or more meeting rooms.

Central location high on the agenda

Existing buildings can also be refurbished to meet modern-day requirements, as demonstrated by Hamburg-based developer Becken with the AREA 5.0 office complex on the Alsterfleet canal. The building dates from 1993 and is being transformed into a campus with roof terraces, electric scooters, free wi-fi and a lounge, while main tenant Freenet will get its own entrance. Admittedly, it can be more difficult and more expensive to incorporate tenant wishes in existing buildings than new builds. But Olaf Drossert, managing director of Hamburg-based Becken Estates GmbH, says: “The higher costs are typically offset by the lower acquisition price.”

When employees are in short supply, the workforce becomes the most important target group – with the property serving as the trump card in the battle for talent. That has implications for the location, which should be as central as possible. Microsoft, for example, relocated its German headquarters from the outlying town of Unterschleißheim to Parkstadt Schwabing, near the centre of Munich, three years ago. “Companies are giving high priority to convenience for their employees,” says JLL expert Koch. Apple, which already has a design centre in the Bavarian capital, recently leased the KARL building on the former Mahag site, ten minutes’ walk from the main railway station, to accommodate a further 1,500 employees. It intends to keep the building – designed by renowned firm David Chipperfield Architects – as minimalist as possible, at least on the outside: apparently it won’t even have a logo.

Careful calculation of costs

For service providers such as banks, management consultants and law firms, a central location is also important for other reasons. Networking with financial centres is vital for their business. And their high-calibre clients expect a prime address that conveys professionalism, preferably one with a nice view and certified sustainability credentials. Law firm Freshfields recently announced it would be moving from its Bockenheimer Anlage site to Tower 1 of Four, Frankfurt’s new skyscraper ensemble, in 2025. “Our German and international clients will be able to visit us in an even more central location, and we’ll be working in one of the most modern and environmentally advanced buildings in Frankfurt,” says Christoph Gleske, a partner and head of Freshfields’ Frankfurt office.

There are also those who buck the trend. When Deutsche Börse relocated to Eschborn in 2010, one of its aims was to make major savings – rumoured to be EUR 20 million a year in trade tax alone. But the hope that the location would become a new financial centre was not fulfilled, and Eschborn is now seen as more of a back-office address. Nonetheless, Deutsche Börse recently extended the lease for its “black cube” ahead of expiry until 2038. So location isn’t everything.

Money is still important, even if large companies like Google and Apple say they don’t bother too much about rent bills as long as the location is right. The lavish use of space associated with new work concepts actually conceals some very careful costing. Mobile working strategies take account of staff absences and can easily reduce space requirements by a fifth. This trend could be further reinforced by more home working. Speer comments: “Coronavirus will open our eyes to what is possible.”

By Christine Mattauch

Title image: Caro /

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