How Architecture Impacts Lease Value in Commercial Real Estate
- franchesca166
- Jul 8
- 13 min read
Key Takeaways
A building’s architecture, beyond aesthetics, shapes how tenants perceive value. Smart, sustainable and functional design can justify premium rents.
Features like curved façades and podiums have been linked to up to 12% higher property prices, according to urban design studies.
Durable materials and resilient structures lower maintenance costs, improve tenant retention and ensure better performance over time.
LEED and BCA Green Mark-certified buildings enjoy higher rents (up to 9% more), longer leases and lower operating costs.
Natural light, clean air, ergonomic layouts and wellness zones improve occupant well-being, leading to higher satisfaction and productivity.
Flexible layouts and modular construction allow buildings to evolve with market needs, enhancing long-term viability.
IoT-enabled buildings optimise energy, space usage and comfort, giving owners real-time data to make informed operational decisions.
Involving architects early allows better alignment of design and business goals, reducing costly revisions and improving ROI.
When we think about what drives lease value in commercial real estate, location, amenities and floor space usually come to mind first. But there’s another important factor that can make or break a property's desirability: architecture.
Take Marina One in Singapore’s Marina Bay district. Designed by Christoph Ingenhoven, it is backed by a commitment to sustainable green heart architecture. It features lush biodiversity, naturally ventilated atria, an energy-efficient system and water-efficient features.
This, in turn, allows the building to command rents above the CBD average. According to CommercialGuru, Marina One office leases run around S$13 to S$15 psf, placing them at the upper echelon of the market.
In this guide, we’ll explore how architecture and real estate development directly influence lease value in commercial real estate. What are the key architectural features that tenants look for? What role does architecture play in branding, employee satisfaction, workplace productivity and higher tenant retention?
And why are some buildings able to demand higher rents despite having similar locations or amenities? Read on to learn more.
Physical Building Characteristics
In commercial real estate, a building’s physical features—such as its façade and construction quality—are key drivers of lease value. Let’s take a look at them below:
Façades
First impressions matter. And in commercial real estate, they often start with the façade.
According to a 2022 study published in MDPI’s Buildings journal, certain architectural design features can add real economic value. The researchers wanted to study whether specific building shapes and features affect how much commercial office buildings in New York City sell or rent for.
They focused on four external architectural features:
Diagonal streets (buildings at a slanted intersection)
Curvature (rounded façades)
Setbacks (step-backs in steps up the building)
Podiums (a broader base or lower ‘platform’ with a narrower tower above)
They used NYC’s 3D city model to classify thousands of buildings by whether they had these features or not. Then, they ran statistical models (hedonic pricing models) to compare buildings with these design features against similar buildings without them. They looked at both transaction (sales) prices and rental prices, controlling for age, size, location, building class and whether the architect was award-winning.
Here’s what they found:
Architectural feature | Description | Impact on transaction price |
Diagonal Streets | Buildings located at slanted or diagonal intersections | +12.4% |
Podiums | A wide base or platform with a narrower tower above | +9.7% |
Curvature | Rounded or curved façades | Not specifically quantified |
Setbacks | Step-like recessions as the building rises vertically | –10% |
These findings suggest that innovative design features can tangibly enhance property values in dense urban markets. It reinforces the importance of design in commercial property valuation methods.
Construction Quality
High construction quality contributes to lower maintenance costs, fewer structural issues and better tenant retention. Buildings made with durable materials, earthquake-resilient designs and smart building systems tend to outperform over time.
Well-built properties typically see:
Lower maintenance costs: Quality construction materials and techniques reduce the frequency of repairs and the need for premature replacements.
Better tenant retention: Fewer building issues lead to greater tenant satisfaction and longer lease terms.
Stronger performance over time: Durable buildings weather market cycles better and require less capital expenditure over their lifecycle.
Moreover, resilience to natural disasters is a growing consideration for tenants and insurers alike. For instance, properties built with earthquake-resistant engineering in seismic zones like Japan tend to secure better insurance premiums and faster lease-up rates.
Sustainability & Green Certifications
As companies place greater emphasis on ESG (Environmental, Social, and Governance) commitments, they increasingly seek workspaces that reflect those values. Certifications like LEED (Leadership in Energy and Environmental Design) now serve as trusted indicators of building performance, health and efficiency.
But the appeal of green buildings goes beyond values, it’s also financial. Certified sustainable buildings have been shown to command higher rents, attract longer leases, reduce operating costs and outperform traditional buildings in both occupancy and tenant satisfaction.
LEED Certifications
LEED-certified buildings consistently outpace conventional buildings in energy performance.
According to the Pacific Northwest National Laboratory (PNNL), buildings with LEED certification produce 34% less carbon dioxide, use 25% less energy and consume 11% less water compared to conventional buildings. They’ve also helped divert over 80 million tons of waste away from landfills.
These buildings also experience nearly 20% lower maintenance costs compared to standard commercial buildings, while green retrofit projects typically reduce operating expenses by around 10% within the first year.
Let’s take a look at Marina Bay Sands as an example. In March 2024, it earned the prestigious LEED Platinum certification for its ArtScience Museum.
The museum’s sustainability features include the use of natural daylight to brighten its interiors and the integration of the Rain Oculus, a rainwater harvesting system built into the structure. This system recycles nearly 400,000 litres of rainwater annually, which is then reused for landscaping, maintaining water features and flushing toilets.
Solar films were also installed on the lobby windows to reduce heat absorption. As a result, the museum had energy savings of 26,000 kWh by lowering the need for air-conditioning.
BCA Green Mark
The BCA Green Mark is the national standard for green buildings. Managed by the Building and Construction Authority (BCA), it measures how energy-efficient, water-saving and environmentally friendly a building is.
Interestingly, JLL Thailand reports that companies are willing to pay higher rents for space in environmentally certified buildings across Asia.
In Singapore alone, where 90% of Grade A office spaces are green-certified, rental premiums range from 4% to 9%. The highest premiums are seen in buildings awarded BCA Green Mark certifications at the Gold, Gold Plus or Platinum levels.
Green-certified buildings are also commanding premium prices in other markets. According to JLL’s Turning Green to Gold report:
In New Zealand, Green Star–certified buildings sold for 3.7% to 7.5% more than non-certified equivalents.
When paired with a 5-star NABERS energy rating, these buildings achieved an even greater premium, up to 9.8% higher in sale prices.
User Experience & Occupant Wellness
User experience and occupant wellness are also central to a building’s value proposition.
Consider the longitudinal study by the International WELL Building Institute: after tenants moved into WELL-certified office spaces, overall workspace satisfaction soared from 42% to 70%, while well-being improved by 26%. Mental health climbed by 10% and productivity scores jumped by 10 points on a 100-point scale.
Buildings that support wellness attract more tenants, command higher rents, and reduce turnover. In short, when you design for people, you design for performance.
Daylight & Natural Light
Can you imagine working in a closed-off space, buried in a cubicle with nothing but a single fluorescent lamp above you?
Several studies have shown that daylight exposure improves sleep quality, boosts mood and enhances productivity. It’s mentally exhausting. Poor lighting environments contribute to fatigue, low mood, and even disrupted sleep patterns.
Natural daylight, on the other hand, aligns with our body’s circadian rhythm, helping us stay alert, focused and well-rested. It’s one of the simplest yet most powerful ways to enhance workplace well-being.
Studies confirm this. In a research poll of 1,614 North American employees conducted by HR advisory firm Future Workplace, access to natural light and views of the outdoors ranked as the most desired workplace feature, outranking on-site cafeterias, fitness centres and even high-end perks like on-site childcare—offered by only 4–8% of Fortune 100 companies.
It also revealed that 47% of employees reported feeling tired due to the lack of natural light, while 43% said the absence of light made them feel gloomy and less motivated.
Air Quality
It’s easy to overlook the air we breathe until it starts affecting how we feel and function. Poor indoor air quality has been linked to headaches, fatigue, difficulty concentrating and respiratory problems. For employers and building owners, this translates to reduced productivity, higher absenteeism and even long-term health costs.
In a study published in EHP Publishing, researchers from the Harvard T.H. Chan School of Public Health found that better air quality directly improves cognitive performance.
The study required 24 office workers to spend 6 full workdays in a controlled office environment.
Each day had a different air setup:
Conventional: typical office air with higher VOCs (pollutants).
Green: low VOCs with standard ventilation.
Green+: low VOCs plus extra fresh air.
Two additional days tested the effect of higher CO₂ levels (around 950 ppm and 1400 ppm) while ventilation stayed the same.
They used a computer-based test measuring 9 types of thinking skills, including crisis response, information use and multitasking.
Participants who worked in environments with low levels of indoor air pollutants (VOCs) and higher ventilation scored 61% higher on cognitive tests compared to conventional office conditions. When additional fresh air was added, scores rose by 101%.
Even modest increases in carbon dioxide (CO₂) levels—commonly found in poorly ventilated offices—led to a 15% to 50% decline in cognitive performance, depending on concentration.
This is why WELL and BCA Green Mark-certified buildings prioritise air filtration, VOC reduction and demand-controlled ventilation as part of their core health strategies.
Ergonomics
When we talk about occupant wellness, we can’t ignore the physical environment people interact with all day. Desks, chairs, computer screens, flooring. Ergonomics is the science of designing workspaces that fit the people using them, rather than forcing people to adapt to uncomfortable or harmful setups.
Poor ergonomics can lead to musculoskeletal disorders (MSDs) such as back pain, neck strain, carpal tunnel syndrome and chronic joint issues.
In Singapore, work-related musculoskeletal disorders (WRMSDs) made up 60%—or 1,000 cases—of all confirmed occupational disease cases between 2019 and 2021. Among these, back injuries caused by poor ergonomic conditions were the most frequently reported.
This is why workplaces should adopt ergonomic principles. These include:
Adjustable desks and chairs that support a neutral spine position and proper leg placement.
Monitor arms to ensure screens are at eye level, reducing neck strain.
Footrests to support circulation, especially for shorter users.
Keyboard trays and mouse positioning to prevent wrist strain and encourage natural hand movement.
Sit-stand desks to break long periods of sedentary work, reducing risks related to both posture and inactivity.
Ergonomic strategies for retail spaces should also be considered, such as:
Cashier and Service Counters: Should be designed at appropriate heights to reduce bending or shoulder strain. Adjustable POS systems and anti-fatigue mats can help reduce repetitive stress and discomfort from prolonged standing.
Product Displays and Shelving: Heavy items should be placed between knee and shoulder height to reduce lifting injuries. Frequently accessed items should not require deep reaching or squatting.
Storage and Stock Rooms: Shelving should be stable and accessible, and ladders or step stools should be provided to prevent overreaching. Adequate lighting and clear walkways reduce the risk of trips and falls.
Customer Pathways: Wide, uncluttered aisles ensure that both employees and customers can move safely and efficiently, improving both experience and safety.
Break Areas: Employees benefit from well-designed break rooms with proper seating and space to recover during shifts, which directly supports long-term health and morale.
When workers are physically comfortable, they are more attentive, less prone to errors and less likely to take sick leave.
Wellness Spaces
According to Automatic Data Processing (ADP), 68% of employees in Singapore feel stressed at least once a week. Of those surveyed, 28% reported feeling stressed two to three times a week, and 12% said they experience stress daily.
This is why the need for dedicated wellness spaces is more important than ever. Whether in offices, retail centres or mixed-use developments, designated areas for rest and recovery can have a profound impact on employee well-being, engagement and performance.
Wellness spaces need to be intentional. Quiet rooms with soundproofing and soft lighting can offer refuge from a noisy office or sales floor. Green spaces, such as rooftop gardens or courtyard lounges, allow workers to step outside and mentally reset.
In some buildings, wellness zones are outfitted with yoga mats, stretching equipment or nap pods, helping people decompress during high-stress days.
Adaptability & Future-Proofing
Design for tomorrow. Commercial spaces that thrive over time are the ones that can adapt. Markets shift, businesses grow or downsize, work models evolve — and buildings that can’t keep up get left behind.
That’s where adaptable architecture comes in. In an era where agility is everything, the ability to transform a space with minimal cost and disruption is one of the biggest competitive advantages in real estate.
Flexible Layouts
While façades draw tenants in, interior layouts are what keep them. Optimised floor plans reduce wasted space, allow flexibility and directly translate into higher rental income.
As hybrid work models evolve, flexible layouts are becoming increasingly important for real estate decisions. Tenants are no longer just looking for more space; they want smarter space. This includes open-plan areas that promote collaboration, segmented zones for focused work and infrastructure that supports flexible desk arrangements.
Tenants are valuing modular layouts that can adapt as their workforce needs shift, especially in post-pandemic times. A study by the British Council for Offices (BCO) emphasises this shift. They recommend that landlords and office designers adopt a ‘customer experience’ mindset, treating employees as end-users of the space.
The BCO report stresses that layouts should be flexible enough to allow organisations to continually reshape spaces based on how employees actually use them, not just how they’re expected to.
Technology Integration & Smart Spaces
Smart building technologies enable property owners and tenants to adapt their spaces in real-time, enhance operational efficiency, and respond to changing business demands without the need for costly retrofits.
Take, for instance, the use of Internet of Things (IoT) sensors. These devices monitor occupancy levels, indoor air quality, energy consumption and movement patterns. By collecting and analysing data, property managers can dynamically adjust lighting, HVAC systems and workspace configurations to improve user comfort and reduce operating costs.
One of the most promising uses of IoT in architecture is how it works with parametric design. Data collected through sensors can help shape how buildings are designed, making spaces that respond in real time to how people use them and to changes in the environment.
For example, façades can adjust to let in more daylight or improve ventilation, while public areas can change layout based on how they're being used. In short, IoT helps align a building’s design with how it performs in daily life.
Practical Tips for Developers
Creating well-designed, future-ready commercial spaces is no longer just about location and square footage. Today’s tenants are looking for sustainability, adaptability and smart functionality.
This means making strategic decisions early in the planning and design process. Here’s how developers can build spaces that deliver long-term value:
Collaborate Early with Architects
Many costly design revisions and inefficiencies stem from a lack of early coordination. Developers set the business objectives—cost control, timeline, ROI—while architects translate those into form, function and compliance. Early collaboration aligns both visions and helps prevent costly downstream changes.
When both parties are brought together early, ideally even before land acquisition, key decisions around site layout, orientation and future adaptability can be made with maximum efficiency.
Invest in Green & Smart Design
Green and smart buildings are no longer optional; they are essential for market competitiveness. Studies have shown that green-certified buildings can command higher rental rates and occupancy levels.
Here, the developer’s role is to set clear sustainability and technology benchmarks from the outset. This includes budgeting for long-term savings rather than just short-term costs and prioritising certifications such as Singapore’s BCA Green Mark or international standards like LEED.
Architects, meanwhile, are responsible for integrating these goals into the physical structure. They apply passive design strategies like natural ventilation and daylighting, select sustainable materials and coordinate with engineers to implement automation and energy-efficient systems.
Focus on Adaptive Reuse & Flexibility
Market demands evolve quickly, and buildings that cannot adapt risk becoming obsolete. Flexibility and adaptive reuse are key to long-term viability.
Developers can future-proof assets by choosing structures that allow reconfiguration and budgeting for versatility or repurposing. Architects support this by designing modular layouts, movable elements and flexible infrastructure that can adapt to different uses. In reuse projects, they preserve key features while upgrading for modern needs.
Developers benefit from shorter project timelines and reduced carbon footprints, while tenants enjoy spaces that respond to their evolving business models.
Final Thoughts
Across the globe, well-designed buildings command more than attention. They command higher rents, better occupancy rates and longer tenant retention. Architecture influences everything from operational efficiency and flexibility to how tenants feel within a space. Design decisions impact desirability, and in commercial real estate, desirability translates to profit.
For developers, investors and property owners, there is one simple truth: great architecture is great business.
At Archtur, we understand the business of design. As a multi-disciplinary practice rooted in both architectural excellence and commercial insight, we help developers and property owners create spaces that meet today’s standards and shape tomorrow’s market. Our team works with you to unlock the full value of your investment through architecture that works: today and into the future.
Schedule an appointment today and be the Archtur of your dreams.
FAQs
What architectural features do tenants value most in commercial spaces?
Modern tenants look for flexible layouts, natural lighting, energy efficiency and amenities that support wellness and productivity. These features not only attract tenants but also justify higher rental rates and longer lease terms.
Does investing in architecture lead to better ROI for developers?
Yes. Strategic design decisions can reduce operating costs, increase building efficiency and elevate perceived value. Developers who invest in quality architecture often see higher lease rates, faster tenant uptake and increased long-term asset value.
Can sustainable architecture affect lease value?
Absolutely. Green certifications (e.g., LEED, BCA Green Mark) and energy-efficient systems are increasingly important to tenants. Sustainable architecture not only lowers operating costs but also enhances a property’s image, both of which can command higher lease premiums.
What’s the ROI on hiring an architect versus going with a standard build?
While architectural services involve upfront investment, the ROI often comes in the form of higher lease rates, fewer vacancies, operational efficiency and increased long-term property value. A standard build may save costs initially, but can limit income potential and flexibility.
Which among the real estate valuation approaches is most common for commercial real estate?
The Income Approach is the most commonly used method for valuing commercial real estate. This approach estimates a property's value based on the income it generates, typically through rent. Investors and appraisers analyse factors such as net operating income (NOI), capitalisation rate and potential cash flow to determine value.
How do you estimate the cost of a commercial building?
To estimate the cost of a commercial building, appraisers typically use the Cost Approach. This involves calculating the cost to construct a similar new building (using current material and labour prices), then subtracting depreciation (physical wear and tear, functional obsolescence, etc.). The result is added to the value of the land to get the total estimated cost.
Comments