Office landlords are utilizing new strategies to adapt and win in this post-pandemic era. While maintaining and renewing tenants remains at the top of the list, investing in new amenities, services, and technologies to entice tenants back to the office has gained incremental steam.
Top business priorities identified by landlords in 2022 are maintaining and renewing tenants across their portfolios, leasing up vacant space within their buildings, and investing in new amenities and services to entice their tenants back to the office, according to a report by VTS.
The top technology investments for landlords this year are tenant experience software, marketing software, leasing management software and data and reporting software.
Managing tenant relationships and the return to office is much easier said than done, the VTS report explained.
“Today’s landlords overwhelmingly say that tenant retention and insight into amenity usage are top priorities for 2022, yet very few respondents say that they have full clarity into the current state of those relationships or what tenants need from their office spaces in this new era,” according to the report. It found that:
94 percent of landlords say that it is important to understand how tenants are utilizing their facilities and amenities, but only 23 percent are sure they have good visibility into that.
Only 12 percent of landlords are sure that they have adequate insight into what investments and features tenants require in order to safely return to work.
Tenants, Landlords Seek Full Clarity
Michael Casolo, Chief Revenue Officer at Unispace, a global workplace strategy, design and construction firm, tells GlobeSt.com that it’s not only landlords who don’t have full clarity into what tenants need from their office spaces, it’s the tenants as well.
“The vast majority of companies are taking a ‘wait-and-see’ approach before instituting major design changes to their offices,” Casolo said. “Company leaders recognize that the office has undergone a fundamental shift in the past two years—going from a place that you go as a matter of routine to a place that you go to for a specific purpose.
“As employees return and experience being back in the office environment, companies are opting to start with small flexible design changes that will have a big impact. For example, to smooth the transition between working from home and being back in the office, workplace designers are creating more intimate settings so that the space functions like an office but feels like a living room.
He said the days of rows and rows of desks lined up are gone. “Instead, companies are intentionally breaking up workstations with biophilia and clustering them in smaller groups,” Casolo said. “We expect that companies will begin instituting major renovations in the next few months as they not only get a better understanding of how employees are experiencing the office, but also as they get feedback from employees and begin to incorporate it into their hybrid work strategy.”
Alleviating Friction Makes a Difference
Petra Durnin, head of market analytics, Raise Commercial Real Estate, tells GlobeSt.com that in order to entice tenants into the office, the space and the building must alleviate friction. “Amazing communal spaces and conference rooms equipped with state-of-the-art tech as well as dedicated seating for heads down work serves both collaborative teams and fulfills solo work needs.”
She said that operational windows, natural light, indoor gardens, and outdoor spaces were once nice-to-haves but are now crucial to the employee experience and engagement.
“Onsite amenities such as child daycare, valet parking, fitness/yoga classes, and even medical/dental offices can go a long way to helping employees manage their work/life balance,” Durnin said. “Additionally, concierge services can expand on what cannot be provided onsite and further reduce the friction that can prevent employees from being in the office.”
Health and Safety Remains a Priority
Perhaps not surprisingly, the most notable change in the last two years has been a focus on cleaning processes, touchless systems and air filtration, Amy Moyer, managing partner, Stan Johnson Company, tells GlobeSt.com.
“In the aftermath of COVID-19, landlords have been eager to show off building improvements that illustrate their commitment to providing a safe workplace,” Moyer said. “But with many employers continuing to evaluate their long-term office space needs, landlords are needing to differentiate themselves and their properties in order to entice tenants to stay, as well as attract new occupiers.
“While traditional tactics like increased tenant improvement dollars and rent abatement continue to be used, landlords are getting creative and trying to appeal directly to employees, not just upper management.
“Wellness amenities have become one of the most popular offerings, providing tenants access to state-of-the-art fitness centers, discounts on gym memberships, partnerships with home equipment brands like Peloton, and much more.”
Trend Toward Partnering with Tenants
Andrew J. Eichberg, Managing Director of Stream in Washington, D.C., tells GlobeSt.com that even before the pandemic, sophisticated owners were investing considerably in conference centers, private lounges, and high-end rooftop terraces in trophy buildings.
“Those same owners are now re-evaluating how to further enhance their amenity offerings, with an eye toward more direct connections with their tenants,” Eichberg said. “Owners now recognize that engaging and partnering with their tenants to create a more welcoming and enjoyable work environment will help with efforts to attract employees back to the office.
“The activation of the amenity spaces to engage tenants throughout the day—think rooftop yoga classes, wine-tasting in the lounge, art classes in the conference center—will set some buildings apart, especially those that can tie the use of such spaces to a building app that makes it all easy on the user.”
Firms Still Want a ‘Landing Pad’
And even as companies move to hybrid work schedules, the need for these amenities will remain high, especially for collaborative and creative knowledge workers, Rob Naso, head of asset management, BentallGreenOak, tells GlobeSt.com.
“Firms will want to have a landing pad for these teams but won’t require these workers to always be there,” Naso said. “Lifestyle amenities, a focus on health, wellness and sustainability, and highly functional/efficient space will be the expectation of these workers and their employers.
“We’ve learned a lot about the evolving needs of tenants during this experience with COVID and there are some unique opportunities to bring the best of work-from-home elements to an office environment that is cognizant of the changing nature of work today. Here’s where owners and tenants have a unique opportunity to cooperate on the future of work space and become partners in each other’s success.”