The commercial real estate industry has emerged from the past two years having learned some valuable lessons. One such lesson is the need for open and trusting relationships between landlords and tenants. Landlords were forced to listen to their tenants throughout lockdowns and this has continued into 2022, where tenants’ needs are shaping new trends in the commercial property market.
BRM has helped our clients through some difficult dilemmas and tough decisions regarding their office space. From early on in the pandemic, right through to opening up and returning to work, we have observed, surveyed and listened to the needs of these tenants, what they expect from their buildings, their space and their landlords.
This is what they want from their offices in 2022:
Flexibility was a growing trend before the pandemic. In 2022 we know firsthand how important flexibility is during periods of sudden change and high risk situations. Tenants expect flexibility not only through office design (i.e., adapt to daily staff numbers, online meetings and acoustics), but through their lease terms as well. Most property strategies in 2022 will account for change and flexibility and companies will want their lease to allow for growth, downsizing and general changes in circumstance. While leases are typically a fixed amount of square metres for a fixed term, many companies occupy their space differently. Working from home means that the amount of space used will change from day to day so issues like this should be carefully considered. Landlords can assist by providing supplementary meeting spaces, inviting roof top communal areas (that are protected from the rain, sun and wind), ground level cafes and co-working facilities.
2. Health and Safety
Wellness was another growing trend that emerged in the early to mid 2010s. Before COVID, End of Trip Facilities, yoga and gyms were attractive drawcards for a building. Now, however, health and safety measures are front of mind. As the current flu season grips Melbourne, tenants are aware of how much, or how little their building supports the health of their people. They want access to fresh air, balconies and rooftop terraces, upgraded base-building technology, touch free access and reduced density in the common areas so their staff can feel safe and their health prioritised.
3. Higher Quality Buildings in the right locations
Supply and demand is favouring employees and the preferences of workers are changing. This challenges organisations to offer more in order to attract and retain talent. It also challenges developers, property managers and landlords to deliver greater tenant experiences. Features like better parking, access for cyclists, club-like fitouts and smart building technology (i.e., touch-free entry) are on companies’ hotlists right now. Buildings that offer such amenities ensure that they retain a competitive edge within the market. Building location is important, to entice workers to access the office either by road or rail. Many of BRM’s clients are not yet comfortable with density or perceived risk of the CBD, but want close proximity to major train stations and the higher parking ratios of the inner Melbourne hubs.
4. Smaller Footprint
Many tenants are comfortable increasing their rental costs to attract staff. They can achieve this by taking a better quality space that has a smaller footprint. Tenants are opting for smaller spaces that work harder (i.e., flexible spaces and using landlord facilities for the higher density days in the middle of the week). To further this flexibility, some buildings use a 3rd party space like a co-working provider or café) which can attract tenants looking for like-minded companies to work alongside.
5. Faster Timelines
Tenants want things to happen sooner. The pandemic forced decision making on projects into a holding pattern and tenants now want to make up for lost time. They expect Heads of Agreements, leases, design, fitout and the relocation to all happen faster than the standard timeline. In most cases, trade shortages, irregular material supply and builder uncertainty can make speculative fitouts offered by landlords appealing. Similarly, existing quality fitouts are being preferenced, with the leasing incentive taken as rental abatement. Some tenants are choosing to make upgrades to existing fitouts, but the challenge is assessing and selecting the right existing fitout to avoid spending large amounts making someone else’s design suitable.
These are the top five things that our clients are asking for this year as we help them create and deliver their property strategies.
Most of these organisations are struggling to attract and retain quality talent. Their chosen building’s quality, location and fitout will certainly affect this. As the pressure to improve the tenant experience grows, it is more important than ever to hear what tenants want.
Do you want to know more about BRM's Property Advisory services and how we can help you out with your current leasing situation?
Contact us today for a chat.
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