Winning Tenants with Turn Key Offices: Expert Insights on the Competitive Edge of Turn Key Solutions

Companies have been investing in providing ready-to-use, customized spaces for future tenants.
A Turn Key offering in a property in the Paulista region has boosted the occupancy rate from 17% in Q2 2022 to 89% in Q2 2024

Lourenço Chohfi Neto, Director at CH3, leading Turn Key projects at Bravo! Paulista

By: SiiLA News

08/01/2024

As office vacancy rates remain high, companies in the corporate sector are innovating to attract and retain tenants. One notable trend is the Turn Key solution. This approach involves offering tenants not only the office space but also comprehensive furniture and architectural services.

In essence, a Turn Key lease ensures that the tenant receives not just the physical office but also a complete setup, including design, decor, and necessary furnishings such as chairs, desks, cabinets, and equipment.

The primary advantage for tenants is convenience: companies can quickly move into a space tailored to their needs, with the costs of construction, installation, and relocation often spread out over the lease term.

CH3 has been providing Turn Key services to new tenants at the Bravo! Paulista building, working closely with the property owners.

According to Lourenço Chohfi Neto and Bruno Chohfi, directors at CH3, the Turn Key concept is based on understanding the culture and profile of the company that will occupy the space. The partnership between CH3 and Bravo! Paulista involved a Turn Key implementation on the floors to present solutions to potential tenants.

“Rio Bravo Investimentos hired us at the end of 2022 to create a model floor on the 5th floor. The main goal was to transform the floor into an impressive showroom so that visitors could be captivated by the space and the building, and envision their company in the space,” they explain.

Bravo! Paulista

The executives report that, as the construction progressed, the floor was leased in less than a month. They note that this was the initial success that led to 17 contracts being signed under this strategy.

Bravo! Paulista is a Class B asset of 5,700 m² owned by the RCRB11 fund. The property's occupancy rate has surged since 2022. In Q3 2022, Market Analytics data indicated a 17% occupancy rate. Today, it boasts 89% occupancy, and its market value exceeds the average for the Paulista region. The building's market value is R$ 90/m², compared to R$ 76/m² for similar properties in the area.

Bravo! Paulista

For CH3, the demand for Turn Key solutions is growing as companies prefer to focus on their core business and leave infrastructure to specialists.

Turn Key Model: A More Cost-Effective Approach to Office Solutions

Chairs, desks, acoustic booths, countertops, and cabinets are among the items that make up modern workspaces. One of the benefits of Turn Key solutions is the ease of moving into a space designed to meet the company’s needs, with the only concern being to plug in the computer and start working.

In line with this, Riccó, a company specializing in corporate furniture for over 100 years, is also embracing the Turn Key office rental trend. With their Oppy solution, the company has made significant strides. “We refer to this as Built-to-Suit for interiors,” says Fabio Riccó, CEO of the Riccó group, in an interview with REsource.

Throughout the discussion, financial terms such as CAPEX and OPEX were frequently mentioned. While this may seem unusual given the context, it makes sense as the office is considered an investment.

CAPEX refers to capital expenditures, while OPEX relates to operational expenses. Riccó is particularly focused on capital goods—desks, equipment, and infrastructure.

“We work on a medium- to long-term basis rather than on a deal-by-deal approach. Our business model is to make a CAPEX investment and convert it into OPEX over time. If a client prefers not to use Built-to-Suit, we won’t proceed with the deal,” explains the CEO.

Riccó notes that there is no standard client or project. He also highlights that another major benefit for tenants is the flexibility and adaptability of spaces. If a client opts for additional collaborative space under a traditional contract, repurposing that space can be challenging. However, “with Built-to-Suit, I can adjust the space for other uses,” he concludes.

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