The Dayton's Project, Minneapolis, Minnesota
The Dayton's Project, Minneapolis, Minnesota

What’s Next for Developers Looking to Reposition Real Estate Assets

Editor’s Note: This blog is part of our Design Forecast blog series, looking at what’s next in 2022 and beyond. Here, we sit down with Ian Zapata and Sheryl Schulze, global leaders for Gensler’s Repositioning & Landlord Services practice area, to discuss what lies ahead for repositioning.

What trends are you now seeing that you weren’t expecting back in 2019?

Ian: The pandemic has compressed the timeline. Things that we were already seeing before, like a focus on wellness and quality of life concerns have come to the forefront much sooner than expected.

Sheryl: Buildings will need to work harder to retain and secure new tenants. The scale and differentiation of amenities, from baseline to gamechanger, continues to evolve. Base building infrastructure upgrades must be more of the narrative in the story a property needs to tell to be a compelling offering.

What challenges are clients coming to you with right now, and how are you addressing them?

Ian: Building owners want to future-proof their real estate assets, but to do that they will need to make the kind of investments that are transformational, not just cosmetic. So we are seeing a demand for concept studies that address how buildings can really stand out, and how they can be impactful in a challenging market.

Sheryl: Over the past 18 months, we’ve helped our traditional office building clients transition into life science, residential spaces, and mixed use. Some are investing in industrial. While it’s anticipated that the office building market will rebound, the safer bet is a diverse portfolio.

What are some features of office buildings landlords will need to attract and retain tenants?

Sheryl: From a health and wellness perspective, buildings need more access to fresh air and outdoor space. Rooftop amenities are not enough; we’re carving floor plates and creating outdoor spaces or terraces on office building tenant and amenity floors. Where possible, we’re capturing the ground plane, introducing greenscape and reducing hardscape.

In addition, we are providing high-quality spaces with amenities that support the building’s environment and the nearby community. Tenants are looking for an ecosystem. Tenants don’t want to build internal amenity spaces within their own leasehold and are keen to share spaces with other tenants to support social, innovation, and collaboration initiatives.

In essence, they’re looking for the owner to deliver hospitality experiences. You’re going to “join” a building because you can have full to access to quality health and wellness offerings, food & beverage, and convenience — amenities that are curated and continually evolve to keep people engaged are a must have.

Ian: Savvy developers are realizing that a marquee building by itself might not be enough, so they are looking to create entire districts. This is exciting, because it opens up opportunities for undervalued parts of a city for redevelopment.

How does that change the overall design process?

Sheryl: We fold in research and analytics on every effort. Our economists and analysts on staff study the area that the building resides, the area’s potential, psychographics, and targeted demographics. They then forecast the highest and best use for the collective team to build from.

We also factor the backbone needed to support the ecosystem’s evolution in terms of programming — from having a concierge or potential operator, allowing the built environment to be flexible and have needed back-of-house space. As the tenancy evolves, you’re creating opportunities and programs that they are likely to respond to.

Ian: Check-the-box amenities are an obsolete way of thinking. Landlords really need to put a lot of thought into what makes a building different and attractive while at the same time being flexible in order to incorporate the post-pandemic workplace lessons that are yet to come.

How will all these changes will affect workers?

Ian: Right now, the compelling argument to be in an office is that it really fits into your work lifestyle — it’s not that you’re just going there to work, but you’re going there to be with other people and have opportunities to socialize and take care of personal business.

Employees are voting with their feet right now, so office buildings and even entire districts are going to have to work harder to make time in the office special. If there was ever a time for human-centered design, it’s now.

What major challenges do you anticipate in workplace design over the next five years?

Sheryl: We’re exploring what hybrid is and, right now, it’s in beta-testing. Once people return to the office, we’ll need to take another look 18 months from now. And it’s going to be very different between markets like financial services or creative firms.

Ian: We’ve been telling clients they should plan for flexibility. Make a plan and be prepared to change it. There will be a lot of innovation, some of it transformative, but not all of it will have staying power.

How are you addressing these trends with clients?

Ian: With the projects that are repositioning in central business districts and urban centers, it’s not just about what you do inside your building — it’s also what happens with your public space outside, and how you build energy and synergy in the spaces in between. Sheryl calls it the “urban block club,” the opportunity for different building owners to work together and create a destination.

Sheryl: Ten years ago, amenities were located in disparate areas of the building. Now, we centralize most amenities into one hub, where you can ignite the creativity, innovation, and meetups between the population within a building. We must offer various modes within a hub — from heads-down, quiet opportunities to interactive social areas and communal coworking. It’s all about choice, convenience, technology, and flexibility.

The activation of the ground plane to create community space is another significant trend, as is the ability to offer dedicated entries to larger tenants. The reduction of retail space offers the opportunity to do this.

How are issues of sustainability shaping your practice?

Sheryl: Repositioning existing buildings is vital to achieve climate goals. However, regulation and incentives will be required to achieve this. In the interim, were working with clients on the responsible things to do respective to each property and collective portfolio. Many clients have established or are creating ESG initiatives to support this.

Ian: The conversation is different depending on where you are. In Europe, where there’s more regulation, the conversation about environmental impacts and investment is something the market understands well. But if you’re in low regulation parts of the world, that conversation is more abstract. Our job is to engage our developer clients about what’s coming and what they can do now to be prepared for decarbonization and climate change.

Which projects are you excited about right now?

Ian: AT&T Discovery District in Dallas is a great success story. It was an old multi-building downtown campus with a public plaza that was underutilized. But it opened in the pandemic, and it became this neighborhood hotspot. It’s really spurred a lot of activity in that entire district.

Since then, we’ve heard from a lot of developers who are looking to replicate that in other parts of the city. So, one cool thing that came out of the pandemic was this idea of how an office repositioning project can be really impactful beyond just one building.

Sheryl: The repositioning work coming out of our European offices is transformational, in part due to regulation and incentives. We just can’t get enough of it right now and using our work there to inspire to our clients outside of Europe.

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Ian Zapata
Ian is a design director and a global leader in Repositioning & Landlord Services at Gensler. Through Ian’s experience and tenure, he has always asserted that great design matters, and this is showcased through projects such as 400 Record, Verizon’s Hidden Ridge mixed-use campus, and the repositioning of several urban buildings to transform the future of cities. He is based in Dallas. Contact him at .
Sheryl Schulze
Sheryl is a principal who leads Gensler’s Repositioning & Landlord Services practice, focused on collaborating with developers and owners to develop strategies that address human capital, healthy buildings and ROI. She has over 30 years of experience in working with clients in strategic planning and design with particular expertise in repositioning. Sheryl is based in Chicago. Contact her at .