Texas Real Estate Business

OCT 2017

Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.

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40 • October 2017 • Texas Real Estate Business www.REBusinessOnline.com S ay the words "mixed-use" in commercial real estate circles today and generally the first thought that comes to mind is a prop- erty featuring a combination of multi- family and retail space. But there's no written rule that says what property classes can or can't be included in mixed-use. As such, a number of multifamily developers in Texas are redefining the term's scope and application by bringing together apartment living and office compo- nents in new projects. As part of the InterFace Multifam- ily Texas conference, a panel of real estate experts convened on Sept. 13 at the Westin Galleria hotel in Dallas to address this topic and other emerging trends in the apartment sector, most of which center on ways of improving amenity packages for tenants. The move toward developing apart- ment communities with office spaces — not business centers — stems from landlords' need to differentiate their amenity packages from the competi- tion. These new office elements within multifamily properties are taking a va- riety of forms in their infancy, ranging from large co-working spaces and con- ference rooms to individualized desks and cubicles. "Having amenities like a knockout pool and an awesome fitness center doesn't really set you apart anymore," said panelist Greg Coutant, director of development at StreetLights Residen- tial. We're working to provide what we call 'makers' spaces,' which are open spaces with desks where tenants can work. We've found that if you provide a cool working atmosphere with con- nectivity, people will work there." Coutant noted that residents are drawn to the live/work/play environ- ment that these office spaces provide. His firm, which undertakes projects in metros with thriving office sectors, is even considering putting bars in some of these spaces to further bolster their appeal. Panelist Rick Cavenaugh, president of Illinois-based multifamily devel- oper Stoneleigh Cos., said his firm has also seen success from the inclusion of office components at its properties, specifically co-working areas that al- low employees from different compa- nies to occupy the same workspace. "Integrating co-working facilities into the living environment and offer- ing them to tenants is different from what we've seen with the likes of We- Work," said Cavenaugh. "We did this with a property in Chicago, and it's brought vibrancy, traffic and new ten- ancy to the building." Cavenaugh stated that his firm sees the trend as particularly appealing to consumers in submarkets with steep office rents, such as Frisco and Plano. "In those submarkets, there's just not that option for people to have an office for a few hours a day, three days a week, and then to be able to walk down the hall to their apartment," he said. "It's a different working environ- ment, but one that definitely promotes flexibility. We've seen that millennials like that flexibility." Panel moderator Drew Kile, direc- tor of Institutional Property Advisors, a multifamily brokerage division of Marcus & Millichap, noted that the trend also seems to have legs in Austin, where office rents have been rising for the past five-plus years. "There's a growing percentage of people in urban Austin who work from home," said Kile. "The more workspaces you put into a building, the more they get used. Not so much a business center, but a place where they can bring their own laptops and have their own meetings." Tom Lamberth, regional partner of Dallas-based CF Real Estate Services and another conference panelist, sees as much monetary potential in these features as the other panelists see in their ability to generate positive word- of-mouth for the properties. "We're working on making the office component more than just an amenity, but something you can monetize," said Lamberth. "We have a property in At- lanta where inside the amenities center we built about 12 office cubicles that people can rent for a few hundred dol- lars a month. And we've had demand for these spaces from people who don't even live in the building." While firms haven't yet figured out all the details of integrating office spac- es into their multifamily projects, they have little doubt as to their ability to heighten the appeal of the property. n California loans will be made pursuant to Finance Lenders License #603H310 / BRE Broker #01982999. To fund your vision, visit WalkerDunlop.com POW ERING YOUR PROSPERIT Y MICHAEL ROCKS ALLEN & RO CKS , INC . Avid Outdoorsman Walker & Dunlop borrower since 2012 From left to right: Drew Kile, Institutional Property Advisors; Matt Brendel, JPI; Katy Slade, Gables Residential; Rick Cavenaugh, Stoneleigh Cos.; Greg Coutant, StreetLights Residential; Tom Lamberth, CF Real Estate Services. MULTIFAMILY DEVELOPERS EYE OFFICE SPACES The integration of office spaces into multifamily projects is taking off in Texas, says InterFace panel. By Taylor Williams

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