Creating community connection through shared space utilization, cohesive tenant mix, and more increases your property value while creating a place tenants want to commute to.
Landlords and Employers have faced the same question over the last few years: “How do we get people back in the office?” We’ve seen significant pushback on blanket Return to Office policies and historically high vacancy rates.
Employees don’t want to return to the way work was. Yet we know that we need butts in seats to make a productive company and, in turn, a profitable building.
So, how do we accomplish that in 2025?
The third space, a sociological concept introduced by Ray Oldenburg, is any space outside the workplace and home (the two major spaces in which we spend most of our time). Also on the rise since the pandemic is the craving for community, a longing for a more profound connection to those around us.
Thanks to remote and hybrid work, our traditional workers have become accustomed to not commuting as far to meet their social needs (or they don’t get them at all). This leaves us with a new problem: RTO and office work are seen as enemies, keeping them from their community.
Today, we’ll discuss how to set up your building and workplace so they’re positioned to facilitate authentic connections among tenants and increase your profitability effectively.
Vacancies have risen across all building classes in Austin over the last three years. Class B buildings must work hard to stay competitive with newly designed Class A offerings.
Despite the challenging environment, there have been success stories among class B buildings. Look at Hartland Plaza, which is currently 93.6% leased. They created “Hartland City Club,” a unique take on branding the building’s shared amenity space. Complete with a speakeasy and golf simulators, they went beyond just the check-the-box amenity offering, which shows. For a building built in 1984, they can stay competitive and in line with market deals despite being 40 years old.
Hartland City Club Amenity Space
Historic buildings are taking a unique approach to doing the same. While limited on actual amenity space, Hannig Row has achieved 100% leased status thanks partly to its lease-up approach. They filled their first floor with The Dead Rabbit and Neighborhood Cafe, a coffee and bar combo that provides tenants with the perfect third space to congregate before, during, or after work.
The Dead Rabbit In Hannig Row
Having your tenants fill the amenity gap for you is a double win. They make your space more attractive while also paying you rent. (We recently highlighted how The Bouldin project did this with Postino Wine Bar and Lifetime Fitness.)
Not all amenities are created equal. Here’s a look at what third-space-inspired amenities get you the most bang for your buck.
National Average
According to national rent analysis, outdoor spaces and full-service fitness centers yield the highest rent premiums. Notice the difference between basic fitness and full-service, coming in at 2%, and on-site cafes vs. curated food halls, coming in at just over 1%. If it’s worth doing, it’s worth doing well to yield a better premium.
Third spaces are nothing new; we’ve seen various iterations of them rise in popularity over the years (think organized religion and youth sports). Curating a community for your building doesn’t have to be expensive. Look at the ROI on a simple outdoor space compared to state-of-the-art conference centers. There’s no one way to go about it, but landlords who focus on their tenants more as a community will be the ones who win in this leasing environment.
Don’t overcomplicate it; create a natural space for your people to come together and connect. That’s what it all boils down to.