Landlords must refine flexible real estate strategies to survive a rapidly changing real estate market
Independent market research firm, Verdantix, have discovered disconnect between what landlords offer in the flex space market, and what tenants expect, especially when it comes to technology.
Newly published research (which you can now download, here), commissioned by essensys and conducted by Verdantix, not only outlines what these disparities are, it also provides an indication of what the return for landlords will be if they design office propositions that meet tenant expectations.
Landlords that participated in the research have over 2.5 billion square foot of office space within their combined portfolios.
Real Estate needs to do more to support hybrid working models
With the pandemic accelerating interest in hybrid and agile working models, real estate offerings have plenty of catching up to do if tenant expectations are to be met. In fact, the research shows that
only 13% of tenants felt landlords were strongly positioned currently to meet their requirements.
Despite this general dissatisfaction, almost two thirds of tenants said that flex will play a role in their real estate strategy moving forward regardless of whether they plan to shrink, expand or maintain their office portfolio.
With only half of landlords surveyed (53%) currently offering premium serviced flexible space, there’s an argument to be had that first–mover advantage is attainable for landlords who get flexible offerings right.
Where could landlords improve?
There were many disparities discovered in the research but four key themes emerged;
- Contract Flexibility
- Amenities and Services
- Space Design
The report delves into these misalignments and expands on why they exist as well as alluding to how they can be rectified.
Rewards await for Landlords who meet tenant expectations.
Tenants don’t expect their requirements to be met by landlords for free; they are willing to pay for it.
Almost 70% of tenants would pay a premium, on a square foot basis, of between 15-25% for real estate that met their new expectations. With demand there, landlords that meet tenant expectations will have the greatest chance of successfully driving occupancy.
The topics covered in this research:
- What market trends are driving demand for flex space?
- How does flex space feature in landlord and occupier real estate strategies?
- How satisfied are occupiers with the flex space products they see on the market?
- What are the key areas of concern occupiers have with flex space products?
- What are the financial benefits on offer for landlords that effectively provide flex space?
The research has now been published, you can download a copy here.
About the research
The research draws on unique perspectives from real estate decision makers at 36 global, leading landlords and 15 corporate tenants. In-depth research interviews were undertaken with executives at landlords such as Bedrock Detroit, Landsec and Morguard. Uniquely, this research also includes in-depth interviews with executives from large corporate tenants such as American Express, Unilever and Honeywell. Executives reveal their real estate strategies as well as their views on flex space as an investment choice. This multi-perspective research process enabled us to discover the disparities between what landlords offer in the flex space market and what tenants expect.