San Francisco Office Landlords Hope 'Flight To Experience' Lures New Tenants

“Flight to quality” has become the buzzword in office leasing in the four years since the pandemic began, but in high-vacancy San Francisco, landlords are now viewing quality as table stakes and shooting instead for what they call “flight to experience.”

“It’s really about that experience you feel as you walk in,” Harvest Properties Senior Director of Development Danielle Friend said at the Grand Hyatt San Francisco during Bisnow’s State of the Bay Area Office Market event. “We want it to feel like a hotel lobby. We want it to feel activated, so we are going to add a coffee bar we will operate. It’s going to be very cool with bespoke wood, grass and high-end finishes. We're going to have a lot more seating than typical lobbies.”

Since landlords have signed fewer leases over the past few years, they have plenty of time on their hands to add unique amenities and create unique experiences in their buildings. While it isn't cheap to execute these improvements, especially in today’s economy, landlords are reaping rewards in the hunt for tenants.

Walnut Creek-based WCI General Construction has been busy renovating and “amenitizing” common spaces, WCI Vice President Zephyr Snyder said.

Some “aggressive” landlords are willing to spend a significant amount of tenant improvement dollars to lure tenants, Snyder said. 

“We've done five or six floors in the East Bay recently, and 75% to 80% of those floors are now fully leased,” he said.

Landlords are getting creative with their additions, including podcasting studios, indoor gardens, arcades and golf simulators to serve as a draw to tenants and their workers. 

Landlords are also going big on gaming and fitness, Friend said. Weight training machines and high-intensity training or spin classes have taken the place of the ordinary office gym and their run-down treadmills.

And, of course, there has been a surge in pickleball courts as an office amenity as the sport has risen in popularity. 

“Last year, if you had a pickleball court, your building was leased,” Skanska Executive Vice President Gordon Childress said.

The loss of many restaurants in the ground-floor spaces of office buildings has opened up new areas of the building that landlords can use to build out their new amenities.

“We are amenitizing space where retail used to be,” Childress said. “We're offering more amenities to tenants to come back to work and reasons for them to come back.”

But it isn’t just amenities that are needed to keep tenants happy, panelists said. The building experience should be more comfortable than working from home, Kilroy Realty Senior Vice President of Asset Management Eileen Kong said.

The ease of commuting, entering a building and parking a car in the garage should be seamless, she said. A smartphone app that enables tenants to pay for parking can achieve this efficiency. 

Some building owners sign contracts with third-party vendors to give them some variety during the day and provide a community-building experience.

A San Francisco-based company called The Story of Ramen hosts team-building experiences to boost the morale of local companies, according to a spokesperson.

At tech companies where layoffs have been consistent, “Not only does this lead to a feeling of unease among the employees that kept their jobs, but it also means that companies are hiring more junior workers” who have much lower salaries, the spokesperson said. 

“The idea of flight to experience really comes back to the idea of community,” Skyline Construction Project Executive Dan Drake said. “When you think about why individuals choose the places they live, a lot of it comes down to the community that you've surrounded yourself with.”