JLL promotes balanced office upgrade guidelines


Brokers in the Spokane office of Chicago-based commercial real estate firm Jones Lang LaSalle Inc. said Spokane’s growth, current labor market and fluctuating commercial vacancy rates make it a good time for employers to modernize their workplaces.

Jared Smith, senior partner at JLL in Spokane, said employers who have invested in their workspaces are more attractive to potential employees.

According to JLL, 41% of job seekers base their decision on a company’s physical space.

“There’s such a war for talent right now, and (tenants are) so concerned about the cost of rent,” Smith said. “But if you look at it holistically, tenants who have a cool, fun office culture build are going to win over top talent, because they’re going to walk in, they’re going to see the space, and that’s going to be a proud thing.

Smith said one way to show companies the impact of their space costs on their bottom line is the 3-30-300 rule, which Smith says JLL introduced about six years ago.

For every square foot of space occupied, Smith said a business typically spends about $3 a year on utilities, $30 on rent — that’s closer to $25 in today’s Spokane market, a said Smith — and $300 for payroll.

Using the 3-30-300 rule can help employers decide where to cut costs and where to invest in their spaces, Smith said.

For example, a 10% increase in productivity saves about $30 per square foot, while a 10% increase in energy efficiency saves a business 30 cents per square foot.

Smith said JLL typically uses the 3-30-300 rule for large clients, such as Morgan Stanley, The Travelers Companies Inc. and Engie Insight Services Inc.

“I also lead the process for prospects and small clients, so they understand how important and impactful a real estate decision can be, outside of the impact rent has on the bottom line,” Smith said.

For a company leasing 20,000 square feet of space for about 100 employees, about $6.2 million of its total annual occupancy cost goes to employees, Smith said.

Maintaining their comfort and well-being can boost morale and decrease attrition.

According to a 2013 report by the World Green Building Council, employers who provided spaces with more natural light experienced a 23% increase in productivity, while those who focused on improving ventilation saw productivity increase employees increase by 11%.

JLL uses the 3-30-300 rule for its own corporate spaces, Smith said, but it’s harder to do for offices with just two employees, as is the case with JLL’s Spokane office. .

Smith said JLL occupies about 500 square feet above the Indaba Cafe at 510 W. Riverside Ave.

Smith said JLL’s Spokane operations are expected to generate about $1.8 million in revenue this year.

That’s an increase of about $800,000 from 2020, he said.

Michael Sharapata, general manager of JLL’s Spokane office, said some commercial landlords are reluctant to create space that rents above the average local rate.

When he established a JLL office here in 2017, Sharapata said he heard local real estate professionals say commercial rents hadn’t increased in decades.

“That means there’s margin consolidation and owners won’t be able to reinvest in their buildings and improve them,” Sharapata said.

Sharapata cites the Wonder Building as an example of commercial space bucking the trend in commercial lease prices.

At the time construction began, Sharapata said the average commercial lease in Spokane was $18 per square foot.

“With Wonder, we took the approach of, we don’t have to compete with our neighbors,” Sharapata said. “We will know what the tenant wants, we will build it and we will tell him what it will cost. The first deal we did there was over $26 a square foot. It was higher than anything else downtown.

JLL continues to receive at least one phone call a week about the Wonder Building.

“If I had four wonders, I would fill them all,” Sharapata said of the request for the building.

Most buildings run by JLL in the city center are full, Sharapata says.

As previously reported by the Journal, fall 2021 market research compiled by the Spokane Valley office of Valbridge Property Advisors Inc. showed downtown office space was 17.3% vacant.

This survey covers 70 buildings with a total of 2.9 million square feet of floor space.

Finding enough space for businesses that need larger offices is difficult in Spokane, Sharapata said.

For example, finding an existing building suitable for a growing life sciences company can be difficult, but finding land on which to develop a building can be just as tricky.

“Where are you developing it? And at the airport? Well, the airport has a lot of land, but they have a lot of conditions,” Sharapata said. “You have all these little packages that have a bunch of different contingencies.

“Kendall Yards, for example, you’re going to spend $6 million for an acre there. These are the things that keep us up at night.


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