Report: Buildings With Better Internet Connectivity Have Higher Rental Rates

With the rapid adoption of cloud storage, SaaS products, and hot desking, it’s become more apparent that quality internet connectivity is key to enabling the modern office worker, according to new report by CoStar Portfolio Strategy.

“Because of this, the modern tenant has a far more complex list of requirements when seeking out office space than ever before,” CoStar said.

The CoStar report has found there are multiple factors beyond location that now determine an office building’s rental value. Internet connectivity is one.

Here are other highlights:

  • Buildings with Wired Certification receive higher rent than peer buildings – up to $7.50/ SF in extra rent compared to non-Wired Certified properties.
  • As a means of competing for top talent, technology, advertising,

media, and information (TAMI) tenants are more highly concentrated in buildings with Wired Certification.

  • Owners should think about improving internet connectivity as a way of raising rental revenue, particularly in Class B buildings.

“Owners should think about improving internet connectivity as a way of raising rental revenue, particularly in Class B buildings. In the study, we found that Wired Certified Class B properties (awarded 3 out of a possible 5 Stars on CoStar’s Building Rating System) generated up to $7.50/ SF in extra rent compared to non-Wired Certified properties, controlling for closeness to subway and building rating,” the report said.

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