The Return To Office Solution: Turning Your Building Into a "Third Space"

Opening Bell 🔔: Landlords and Employers have been faced with the same question the last few years: “How do we get people back in office?” We’ve seen major push back on blanket Return to Office policies coupled with historically high vacancy rates.

It’s clear that employees don’t want to go back 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?

Creating a desirable “Third Space.”

The third space, a sociological concept introduced by Ray Oldenburg, is any space that exists outside of the workplace and home (the two major spaces we spend most of our time). Also on the rise since the pandemic? The craving for community, a longing for a deeper sense of connection to those around us.

Thanks to remote and hybrid work, our traditional worker has become accustomed to not commuting as far to meet their social needs (or they just don’t get them at all). Which leaves us with a new problem on our hands, RTO and office work is seen as the enemy keeping them from their community.

Today we dive into how to set up your building and workplace so it’s positioned to effectively facilitate true connection among tenants and increase your profitability in the process.

Market Snapshot 📸: Vacancy has been on the rise across all building classes in Austin the last three years. Class B buildings have their work cut out for them to stay competitive with newly designed Class A offerings.

Dive Deeper 🤿: Despite the challenging environment, there have been success stories among class B buildings. Look at Hartland Plaza, currently at 93.6% leased. They chose to create “Hartland City Club”, a unique take on branding the buildings shared amenity space. Complete with a speakeasy and golf simulators, they went well beyond just the check-the-box amenity offering and it shows. For a building built in 1984, they’re able to stay competitive and in line with market deals despite being 40 years old.

Historic buildings are taking a unique approach to do the same. While limited on true amenity space, Hannig Row has been able to achieve 100% leased status thanks in part to it’s lease up approach. They filled their first floor with The Dead Rabbit and Neighborhood Cafe, a coffee and bar combo that provides tenants the perfect third space to congregate before, during, or after work.

Having your tenants fill the amenity gap for you is a double win as they make your space more attractive while also paying you rent (We highlighted how The Bouldin project did this with Postino Wine Bar and Lifetime Fitness recently as well).

Pro Insight 🧑‍🏫 : Not all amenities are created equal. Here’s a look at what third space inspired amenities get you the most bang for your buck.

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 cafe vs curated food halls at just over a 1%. If it’s worth doing, it’s worth doing well to yield a better premium.

Final Buzzer 🚨: Third spaces are nothing new, we’ve seen various iterations of them over the years rise in popularity (think organized religion and youth sports). Curating a community for your building doesn’t have to be expensive, just 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 it’s clear that landlords that focus on their tenants more as a community will be the ones that win in this leasing environment.

Don’t overcomplicate it, just create a space that it’s natural for your people to come together and connect. That’s what it all boils down to.

See you next week,

Cory