Chief Product and Technology Officer, essensys
Verdantix Senior Analyst, Smart Buildings Practice
Over the last year and a half, the advent of working from home has accelerated complete change in what tenants want from their office space. The smart landlord must act fast.
Even before the pandemic struck, the world of work, with its traditional office-based structure, had been in flux. With the onset of COVID-19, existing trends have been accelerated, with the result that flexible working means that landlords are having to adjust to tenants’ new expectations – and fast.
“The impact of working from anywhere means that to keep enterprise customers happy, there is a demand on landlords to adopt a lot more flexibility,” says James Shannon, Chief Product and Technology Officer, essensys, which in association with Verdantix Research published a paper on the future of workplaces in May 2021. “They will have to provide flexibility not only commercially, but in how the space is deployed. Smaller HQs mean there will be less commuting and flexibility within the building means landlords are being transformed from asset owners to providers of flexibility.”
“The office is changing now,” says Ibrahim Yate, Verdantix Senior Analyst, Smart Buildings Practice. “Most clients have experienced working from home and it works. Now we have to think about what an office needs to be: it can offer space for collaboration and if its heavily serviced it can offer amenities you can’t get at home.”
Period of transition
This period of transition has inevitably created a disconnection between what landlords can provide and what tenants expect and the successful landlord is working hard to narrow the gap. “One big area of disparity is in IT requirements,” says Yate. “According to our research, where the tenants are asking for flexibility, the majority are not satisfied. When it comes to businesses like a bank or financial service, if IT requirements are not right, it’s a deal breaker.”
Landlords need to know their new place is customised for employees and tenants do not want to be committed to a 10-year contract anymore.Ibrahim Yate
Flexibility is key. “It is now used more as a tool than a co-working lifestyle,” says Shannon. “Tenants look for seamless physical security, the right type of flexible technology, engagement and community and a consumer grade experience. They have larger and more sophisticated expectations than previously and will want to be able to range across a portfolio of properties in deciding what facilities they want to use on any particular day. Will they want a space to collaborate? Or a quieter space for intensive work?”
This is changing the face of property management completely. Landlords may be providing very different spaces for tenants, managing expectations while not overburdening them with technology. The successful ones will be measuring how tenants use their space: which services and amenities are the most popular? Does the location and time of day make a difference? “This is a big opportunity for landlords,” says Shannon. “Monetising services and technology are so important that tenants will be prepared to pay a premium for the right product. It will also have an impact on staff retention, while tech enabled spaces will add value to the business.”
Paying a premium
The research confirms that tenants are prepared to pay a premium for the right space. “It takes a huge burden off their shoulders,” says Yate. “Tenants want to consolidate the portfolios they rent and opt for flexible space instead. Landlords need to know their new place is customised for employees and tenants do not want to be committed to a 10-year contract anymore.”
Currently only between 20 to 30% of landlords are aware of tenants’ new needs, but as the vaccine roll-out means that more people will be returning to the office, it will be those landlords who are set to do best.