A Verdantix Study: Surviving a Rapidly Changing Real Estate Market

Discover the disconnect between landlords and tenant expectations

This research, commissioned by essensys and conducted by independent market research firm, Verdantix, highlights significant misalignment between landlords and enterprise tenants regarding the role of flexible workspaces. The consequence of these disparities is that only 13% of tenants believe landlords are strongly positioned to serve their flexibility requirements. This research sheds light on what these disparities are and outlines the opportunities that await landlords who respond effectively. Uniquely, this research includes in-depth interviews with both landlords and globally known corporate tenants.

Landlords that participated in the research have over 2.5 billion square foot of office space within their combined portfolios.

Below is an overview of the research. You can access the full copy here.

Tenants top priorities; Experience, Technology and Lease Flexibility

When reviewing real estate strategies, tenants focus on office space delivering on three things. Technology that improves convenience through frictionless access to both the building and amenities. Appealing design and office layout that boosts productivity. Contractual terms that offer shorter durations, the ability to shrink or expand at will and options to extend. 60% of tenants will utilise office space that meets this criteria regardless of whether they plan to expand, maintain or shrink portfolio size.

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Disconnect in both supply and perceived quality of offering

Despite 53% of landlords stating they currently offer premium serviced flexible space options, only 13% of tenants think landlords have a strong flex offering. This is a clear indication of the disconnect between what landlords are currently offering and what tenants expect and pre-empts a gap in supply and demand.

Amenity-Rich and frictionless experiences are key but far from omnipresent

Frictionless set-up and configuration of space is a key requirement for tenants, but the research shows landlords are underestimating the importance of this. Furthermore, almost 90% felt that access to amenities was a critical part of the in-building experience however one Head of Real Estate said as part of the research, “many of the flex spaces I have seen are not yet fit for the future needs of my workforce…particularly around amenities”.

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70% of tenants say data security standards not being met

An overwhelming majority of tenants were not completely satisfied with the quality of data security in the flex spaces they had seen; the level of satisfaction in the market is uneven with some landlords outperforming others. Overall, the research shows that landlords must up their game on digital enablement – software, on-demand services and digital infrastructure.

Rewards await for landlords who meet tenant expectations

Tenants know what they want and they’re willing to pay for it. Half of tenants are willing to pay a premium of 20% or above for flexible office space that meets their expectations. This also shows that landlords who adapt effectively will have the best chance of achieving higher levels of occupancy.

A co-working space in use