Are you prepared to manage vacant space?

5 min read
16/08/2023
By Lily Bennett

Here’s what you need to know

Landlords across the globe are being forced to face the potential scenario they have been witnessing play out in slow motion for years – what happens if space becomes unexpectedly available? What do you do with a fitted-out office, without a tenant? How do you then pivot to attract and retain an occupier with your newly available space… without disruption.

While the primary concern is losing the tenant or operator who was contracted to pay rent on a space that went through an expensive fit out, there are also top-of-mind concerns over how to retain tenants and avoid disruptions of services to the space.

Regardless of what phase an owner may be in with their tenant space, it pays to have a plan. For owners where (tenants want to remain in occupation) coworking represented a majority of the building, halted operations in the space proved to be ruinous to the asset. If properly prepared, building owners can find themselves well-positioned in repurposing this once sovereign space, now as an asset-wide amenity that is more in line with the expectations of today’s modern tenants.

So what options are available for a landlord? There are two primary scenarios at hand including taking on and managing the space themselves or potentially finding a flex operating partner.

Bringing a flex operating business in-house presents a unique opportunity for landlords to create new revenue streams and meet the rising demand for flexible working. Owners who are faced with a lease event, rent review or lease expiry, and plan to take on the space themselves must have an answer to many fundamental questions, such as, “How do I manage the space?”, “How do I bill the tenants?” and most importantly, “How do I ensure continuity of service?”

Running a tenant workspace comes with a variety of operational challenges, but with the right partners, it can be a frictionless transition.

Keeping the lights on

Being prepared for a space to be given back starts with making sure everything is in place to keep the services running. This primarily involves a secure internet offering for tenants and preventing any loss of connectivity within the space.

Day-to-day operations of the space

While there are limited options for a landlord when faced with vacant space, keeping the operations running is vital to avoid other tenants from leaving. Initially, there may be an increase in vacancy and if so preparation to operate on a day-to-day basis with barely any people coming to the space needs to be considered.

From how tenants are billed and onboarded to how they are accessing shared amenity spaces and conference rooms – keeping a seamless experience in place for tenants means that their ability to be productive and collaborative remains unphased. Taking on the technology that powers the workspace is a large piece in ensuring that operations are running smoothly and the tenant experience continues.

Shaping strategy around the asset

Landlords now have an opportunity to revitalize their whole building strategy. Delivering a flex space has proven to be a successful strategy to implement – especially as it applies to increased leasing deals and overall increased adoption from tenants across all industries..

How essensys can help

We’ve helped many landlords take on coworking spaces and create successful flexible workspaces of their own. See how we’ve helped The Mark launch their forward-looking flex brand from giveback spaces with speed and operational efficiency.

The essensys team is here to guide and support landlords when preparing to reposition their asset – with over 16 years in the flexible workspace market we can provide the tools landlords need to compete and win in today’s environment. Ultimately, becoming cash generative quicker.

essensys can re-position existing fibre provisions and install new network connectivity into the building to a variety of in-house capabilities and resources. This may include enterprise fibre relationships, project management, instant access to available hardware and a learning management software to quickly train employees. We can help landlords keep the day-to-day operations flowing smoothly and reimagine the way they do leasing.

To discover what to do in the event of a flex space giveback, read our eBook which provides more detail on the types of things to consider in this situation.

FAQs

1. What are the potential financial implications for landlords if they are unable to quickly repurpose vacant space in their buildings?

The article highlights the importance for landlords to have a plan in place for managing vacant spaces in their buildings, but it doesn’t delve deeply into the potential financial implications of failing to do so. Factors such as loss of rental income, costs associated with maintaining the space, and potential devaluation of the property could all impact landlords financially.

2. How do landlords balance the need to maintain operational continuity in vacant spaces with the potential increase in costs associated with managing these spaces themselves?

There are many ways that landlords can manage the potential increase in management costs associated with this effort. This could include expenses related to utilities, maintenance, security, and other operational aspects that may not be fully offset by the revenue from remaining tenants.

3. What are the potential financial implications for landlords if they are unable to quickly repurpose vacant space in their buildings?

A key strategy for landlords to employ to efficiently manage their office space(s) is tracking data and occupancy insights. Through technology, operators of a building or portfolio can understand how their spaces are being used by tenants which is useful in understanding the best way to optimise and manage the different areas throughout one building or many. For more insight on managing a space/portfolio more efficiently and maximising revenue potential, watch our giveback webinar here.

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In this article

  • Here’s what you need to know
  • Keeping the lights on
  • Day-to-day operations of the space
  • Shaping strategy around the asset
  • How essensys can help
  • FAQs

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