To say that 2020 has been a challenging year so far is an understatement. Many businesses have been quick to adapt to the new norm, embracing different ways of working and online communication tools. As they do so, many find themselves shifting their mindset, from ‘survival’ to ‘opportunity’. As these new opportunities begin to present themselves, they will no doubt leave an impact on our commercial property landscape.
Today, BRM is addressing some questions about change and opportunity for both landlords and tenants.
Is there value in large expensive floor space in prime CBD locations?
No doubt, for many professional services, proximity to courts, clients and access to public transport will still remain as relevant as ever and continue to drive demand for well positioned, quality commercial office space. On the other hand, there will be those prudent, budget conscious businesses who , due to the COVID19 situation, will have started to question their real need to be positioned where they are.
Will tenants in lower grade buildings seek more value in newer, increased amenities in higher grade buildings?
With significant incentives luring tenants to buildings, and vacancy set to increase, more tenants from B grade buildings will be starting to consider options for a more affordable, higher grade, better ammenities and well located space. Tenants with a long term, steady business model who can maintain strong future prospects may be well positioned to grow in the current climate and can start to re-think their current space.
Should tenants relocate to inner city fringe suburbs to take advantage of affordable rates per square meter?
Whilst it's very early days, we have clients who are jumping on the front foot and are currently in the process of looking to significantly reducing their operational costs by up to 40%! They are not restricted by location or proximity to clients and are looking to tighten their current space requirements by 20%. This can be achieved through flexible working from home arrangements, relocating out of the CBD, negotiating significant incentives, or finding a property with an existing fitout that requires minimal upgrades.
*Note: It’s important to review your current makegood obligations outlined in the lease on the existing tenancy as these costs can be significant.
Will commercial landlords need to “sharpen the saw” to retain existing tenants and entice potential new tenants to their buildings as the market shifts?
These days tenants are looking to their property for ways to attract and retain staff. During this massive shakeup, landlords will be forced to look at what their property has to offer, relative to its neighbours. How will they keep their building relevant and attractive in the face of increased vacancy and the offer of higher grade buildings with greater amenities? Employers/tenants focused and driven to support and retain their staff may be well placed to take advantage of these buildings that may have been out of reach even just 12 months ago.
The change is happening quickly and in a tenant driven market, how can tenants prepare themselves to jump on these opportunities?
The need to plan is more important than ever. Planning a way to trade out of this crisis is the first step to embracing change. Start to build an impact strategy plan so you can forecast where you will be in 3-6 months time. Which aspects of working from home suit your business, and which aspects of the physical office space are still relevant to your organisation? Look at your people and how they are working, assess your financials, see how your existing space was both serving and hindering your business. Then prepare for the opportunities that will arise from answering these key questions.
BRM is here to help. We can answer questions specific to your leasing situation during the current crisis. If you would like a phone chat with one of our expert property consultants, please contact us or send us your top 3 questions about your situation and we'll be in touch to workshop the next step with you.
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