Riopel Real Estate Roundup: Can Pickleball Save Offices?

Welcome back to the Riopel Real Estate Roundup! In this edition, we delve into the intriguing question: can pickleball, the fastest-growing sport in the US, and other amenities revitalize struggling offices?

The Post-Pandemic Landscape: A Shifting Paradigm

The post-pandemic landscape has left many office buildings challenged, prompting landlords to seek creative solutions. Downtown office buildings in many cities have dropped in value with shifts in work behavior. Values of office buildings already have fallen an estimated 35% since peak pandemic levels. Fears of rising defaults on loans tied to the properties are also rising, causing stress on banks. Nonetheless, MarketWatch reported experts on a panel at the National Association for Business Economics (NABE) conference in Washington, D.C., stopped short of saying this would result in a systemic financial crisis, or even a “doom loop” that makes it difficult for neighborhoods to overcome.

So, where do we go from here? What are office landlords doing to overcome the current challenges in the market and set their product apart? Most notably, some are seeking to create unique and appealing spaces through innovative amenities. Let's explore some examples.

Landlords Seek Creative Solutions: Enter the Pickleball Phenomenon

Faced with this challenging landscape, landlords are actively seeking creative solutions to differentiate their properties and attract tenants. One such solution gaining traction is the incorporation of unconventional amenities like pickleball courts and golf simulators. This week, Josh Krsnak and his team at Hempel Real Estate shared renderings of renovations underway at LaSalle Plaza in Minneapolis, which include innovative amenities like pickleball courts and golf simulators. The planned improvements include a lobby renovation, an indoor pickleball court in the former Rock Bottom Brewery space (with room for potentially more courts), a concierge service that includes a pair of building-owned Cadillac Escalades, and the transformation of a fourth-floor amenity area.

This trend also extends beyond the US borders. In Canada, where the availability of pickleball courts has been limited, there's growing interest in repurposing vacant spaces like big-box stores for this rapidly growing sport.

A Case Study: Pickleball Courts at Toronto's Cloverdale Mall

An example can be found in Canada the redevelopment of Toronto's Cloverdale Mall. QuadReal Property Group is transforming the 32-acre site into a mixed-use community, incorporating new streets, retail spaces, community amenities, parkland, and, most notably, nine new pickleball courts. This project exemplifies the potential of pickleball courts to:

• Attract new demographics: Pickleball's broad appeal across age groups can help revitalize struggling areas and attract new residents and visitors to the redeveloped Cloverdale site.
• Offer a unique amenity: The courts provide a unique and attractive amenity for tenants and residents, potentially enhancing the overall appeal of the development.
• Repurpose vacant space: Utilizing the former Target space for pickleball courts demonstrates the cost-effective potential of adaptive reuse for underutilized commercial space.

Pickleball Courts: A Growing Trend in Office Amenities

The inclusion of pickleball courts as an office amenity is a recent development gaining momentum across the United States, but notably several examples are found in Dallas. Here are some notable examples:

• Fountain Place in Dallas: This skyscraper is constructing a tenant lounge and club featuring, among other amenities, a pickleball court. This addition aims to increase occupancy rates by offering a unique and attractive perk for potential tenants.
• Santander Tower in Dallas: This high-rise has installed a pickleball court on its 48th floor as an experimental initiative. The rentable court offers workers a chance to play and socialize while supporting charitable causes.
• Cypress Waters development near Dallas: This office complex is incorporating pickleball courts, volleyball courts, and a putting green to create a more engaging and dynamic work environment for its tenants.

Workplace Disengagement? Build a Pickleball Court in Your Office!

Another recent example from Room & Board , a Minneapolis-based furniture retailer, further illustrates the potential of pickleball courts to attract and engage employees. The company built an indoor pickleball court on its premises about 10 years ago, which became a significant factor in encouraging employees to return to the office after the pandemic. The convenience and social aspect of the court have contributed to its popularity among employees, fostering a sense of community and promoting physical activity during the workday.

Beyond the Pickleball Court: A Nuanced Look at the Potential

The question remains: can pickleball truly be the silver bullet for struggling offices? The answer, as with most things in real estate, is complex and multifaceted. While amenities like pickleball courts can undoubtedly attract employees seeking a dynamic and engaging work environment, several factors complicate the picture.

Challenges and Considerations: Beyond the Hype

The persistent work-from-home trend continues to pose a significant challenge. Solely relying on amenities to lure employees back to traditional offices may not be a sustainable solution. Additionally, economic realities like frozen capital markets might hinder large-scale development projects, limiting the widespread implementation of these amenities due to cost constraints or difficulty getting such projects off the ground in the first place.

Strategic Implementation: The Key to Success

The key to successfully integrating pickleball or other amenities lies in a strategic approach. Landlords must meticulously analyze their target audience, understand local demographics, and conduct thorough cost-benefit analyses. Sustainability should also be a top priority, with considerations for energy-efficient practices and responsible construction materials.

The Future of Workspaces: A Multifaceted Solution

Ultimately, the future of offices and downtowns is unlikely to hinge solely on the presence or absence of pickleball courts. A multifaceted solution is needed, one that acknowledges the evolving needs of tenants and prioritizes creating a holistic and attractive work environment that fosters collaboration, well-being, and a sense of community. Pickleball, in this context, serves as a symbol of the creative thinking and adaptability required to navigate the uncharted territory of post-pandemic commercial real estate.

This exploration is just the beginning of the conversation. As we grapple with the evolving workplace landscape, further insights and innovative solutions are necessary to ensure the vibrant future of our workspaces and the communities they anchor. Stay tuned for further insights in upcoming editions of the Riopel Real Estate Roundup!