A recently released survey of corporate office users bears good news for commercial real estate managers. Late last year, the Building Owners and Managers Association International (BOMA) surveyed more than 3000 corporate decision-makers to gauge their office strategies as a result of the pandemic.
As the results confirm, the office is alive and well and critical to corporate mission. In fact, 75% of surveyed decision-makers stated that the “in-person office” remains vital to their successful operations. What’s more, real estate managers partnered well with their tenants and staff throughout the COVID-19 pandemic, with 77% of respondents giving their building teams rousing thumbs up on their response to the crisis. The survey was sponsored by Yardi and conducted by Brightline Strategies.
COVID as an inflection point
But the survey also revealed a disconnect of sorts between satisfaction with the property team and tenant renewal plans, although it was clear that this decision was more a function of internal business drivers than operational performance. Seventy-nine percent noted that their building managers communicated “just the right amount” through the 2020 phase of the pandemic, yet less than half--47%-- plan to renew their leases.
Despite the ongoing importance of the office’s role in tenant success, 65% of the survey respondents agreed with the statement that the virus “is a tremendous inflection point for transformation in workplaces, and the way our company does business in its workplace will not be the same for some time to come.”
For more than half of those tenants (54% to be exact), space reductions are in the future. And where would they cut? Listing the top five in descending order of choice, cuts would come in:
- Common areas (36%)
- Private office size (28%)
- Private office and number of conference rooms (tied at 27%)
- Adding hoteling or flexible space for teleworkers (25%)
For the record, 24% said they’d keep their current footprint, and only 9% are actually planning expansions.
It should be noted here that the real estate questions are not the only focus of cuts in tenant business expenses. Layoffs, furloughs and reductions in compensation have been another release valve of the pandemic-induced economic pressures for 60% of the participants.
Just as commercial property managers have addressed through the pandemic so far, they can contribute as well to the future perception of office value by addressing services on which corporate users put a premium. On the one hand, while tenants feel that “infrastructure/facilities upgrades, constant disinfecting and extra staffing” are a property manager’s cost of doing business, they would pay extra for such services as:
- Full utilization of 100% fresh air in HVAC systems (47%)
- Large, prominent disinfecting stations with extra sanitizers, ultraviolet wands, gloves and other essentials (45%)
- Twice-daily, full office disinfecting with chemicals and ultraviolet wand lights (42%)
- Additional staffing at front desks to check in guests and ensure compliance with mask and other safety policies (35%)
- An on-site health/wellness advisor with information about the coronavirus, testing facilities, and ways to make the workplace a safe environment (33%)
Such provisions would go a long way to keeping tenants in place, and 66% said they’d renew if those features were available. And, it would seem that in many cases, they are. Fully 65% of corporate space users stated that their building managers are making ”significant investments in physical features and infrastructure to keep tenants and their employees safe.”
As everyone knows, keeping tenants apprised of the work being done, especially behind the scenes, is key to building and maintaining relationships. And clearly, tenants don’t need fancy communication methods. While such tools as signage and video messaging are great, most tenants (64%) stated they’re satisfied with simple email blasts.
If the goal of such messaging is to remind tenants of the work being done by their property management team, both publicly and behind the scenes, then a little reminder can go a long way. Witness the last, rather interesting question posed in the survey. Participants were asked if the survey made them more or less positive “towards landlords / property management companies,” or if it made no difference. More than half said the survey made them see their property teams in a more positive light.