SPONSORED: The latest report from essensys highlights the disparity between flex space services required by tenants and those offered by landlords. The study, published in May 2021 and underpinned by new research from independent research firm Verdantix, involves in-depth interviews with global landlords that have a combined portfolio in excess of 2.5bn sq ft. It also includes perspectives from major enterprise occupiers that are present in over 3,600 offices globally.
You can download a copy of the study here.
With the country’s vaccination program in full swing and restrictions continuing to lift, companies are focussing more than ever on their workplace strategies and how to support staff most effectively. Whilst the eventual shape of new working practices is yet to be decided, there are several trends appearing. Primary among those trends is a desire for flexible real estate that offers premium in-building experiences. This is a desire accelerated by the pandemic, rather than one caused by it.
When we talk about flexible real estate, we’re not just talking commercial flexibility, but also about how the space is deployed. With most companies now having experience of working from home, tenants are re-thinking what an office needs to be, what purpose it serves and why people should want to go there. Offices are far from dead, but they aren’t being thought of as a place people have to go to 5 days a week. Instead, offices are now thought of as places people go to collaborate, to get inspired from feeling part of a common purpose and to build relationships with similarly ambitious individuals. Tenants want offices to become hotbeds for productive collaboration.
Research shows large opportunity exists for landlords who deliver upon tenants’ flex ambitions
New research from Verdantix highlights how important great office space is to tenants and how much they value it. In the study, over two thirds (67%) of tenants revealed that they would be willing to pay a premium of between 15-25% on a square foot basis for tech-enabled flexible space. They believe flexible real estate, when delivered effectively, reduces workplace friction dramatically.
According to the research they’re willing to pay a premium for two clear reasons; firstly, they believe premium flexible real estate helps them attract and retain top talent. Secondly, tenants believe it helps them support employee productivity through better in-building experiences. Consequently, tenants are looking for commercial real estate that meets their heightened needs for flexibility – this presents a powerful growth opportunity for landlords willing to invest in flex.
Work to be done in meeting tenant requirements: The growing importance of software and technology in delivering on the promise of flexibility
The research revealed only 13% of tenants felt landlords were strongly positioned to meet their flex space requirements.
But why is that the case?
A large disparity between tenant requirements and current landlord offerings concerns digital infrastructure. Only one-third of respondents considered themselves “fully satisfied” with the data security they had seen offered with flexible spaces. Part of this problem is that digital security was not often regarded as a priority in the flexible workspace world until recently. As flex becomes a larger part of an enterprise company’s real estate strategy, tenants will expect data security to be at the same standard as it would be in a traditional office environment.
The action for landlords is to ensure when offering flexible spaces, they approach security in a detailed and thorough way. Physical access, network security and digital security must all be considered.
Beyond security, tenants are looking for seamless experiences. This requires the right type of flexible technology, that delivers engagement, collaboration and a consumer grade experience. Tenants have larger and more sophisticated expectations than before and want to have the option to access a portfolio of properties so they can empower staff to select what facilities they want to use on any given day.
Tenants also felt that, if delivered effectively, flexible real estate would provide the operational benefit of reducing the time associated to moving into new space. Interestingly, by contrast, only a quarter of landlords perceived “minimal move-in requirements” to be very important to tenants.
The time is right for landlords to provide flexible real estate
While some disparities exist between landlord offerings and tenant requirements regarding flex space, the positive is that there’s a vast opportunity for landlords willing to adapt. As hybrid models of work become the norm and new working practices take shape, offering flexible space with the amenities and technology that tenants require will be a big competitive advantage for landlords.
Forward thinking landlords are seeing these changes as an opportunity and recognise their role is shifting from asset owner to provider of flexibility along with the services and products associated with it. Successful landlords will infuse their portfolio with the software and technology that enables them to adapt their space and react quickly to tenants’ evolving requirements. As the vaccine rollout continues and more companies adopt hybrid models of work, more people will be returning to the office; it will be those landlords that have adapted to market demands and needs who will benefit most when it comes to attracting and retaining tenants.
You can download a copy of the Verdantix research, here.
About essensys:
Established in 2006, essensys is the world’s leading provider of software-as-a-service and technology to the flexible real estate industry. We empower ambitious workspace providers to meet the growing demand for flexible workspace solutions. Our secure, all-in-one platform delivers digital infrastructure, effective space setup, seamless operations, and mobile-first occupier interactions. It enables friction-free in-building experiences, instant control over processes, technology, and occupier services, as well as clear visibility into space and service utilisation.
