What Top Tenants Want in 2022 (and Beyond)
This year, vacancy has risen, desired leasing terms have dropped, and the commercial real estate market is more competitive than ever. But perhaps the biggest change over the past two years has beenthe drastic shift in tenant expectations. This has significantly influenced a closely watched trend: the return to the office. Key players are asking if returning to an office space is essential, how to prepare for in-person work, and — most importantly — how to navigate tenant’s expectations.
Here’s how you can meet tenant expectations today and as they continue to evolve.
Provide more than just amenities
Amenity-rich buildings are highly effective in capturing the attention of prospective tenants, but providing the amenities tenants actually want is what sets a property above the rest.
The VTS Global Landlord Report states that in 2022, a top priority for landlords is to invest in amenities and services that entice tenants back to the office. However, what amenities mean to a tenant in 2022 has been called into question, especially when only 12% of landlords are sure they have adequate insight into what investments tenants require to return to work safely.
A desirable office is about both convenience and safety. Anthony Cammarata, Managing Director at Goldman Sachs, based out of New York City, said tenants now “need a healthy workspace with abundant amenities. [We got] feedback that people didn’t feel safe on their commute, but when they got to the building, they did feel safe and wanted to stay there.”
Landlords can respond to tenants’ needs by providing digital access as part of their building experience. Requiring that same access for building amenities can help further tenants’ sense of security.
But even though safety is a priority for tenants, convenience is still a huge factor. Like everything else in their lives, tenants expect that technology will connect them to everything a building offers. Leveraging a platform that can meet this need is the first step toward removing return-to-office barriers.
Mix comfort with the corporate office
While lockdowns may be behind us, tenants haven’t forgotten what it’s like to be cooped up. For many, the workplace became a sanctuary to focus without distractions and re-engage in their community.
Jonathan Newman, CEO and Co-Founder of Sweetgreen, says that “when people do come into the office, they want to come in together at the same time. They want to work from home but also want a sense of community — to go see people and feel human.” Yet, tenants have not entirely let go of the comforts of home. Now, landlords have a new challenge to make the office more like home.
Cammarata says that it’s about adding work-from-home flexibility into the office environment. “We need more flexibility in terms of the use of space. Working from the cafeteria, and openly going to the gym in the afternoon.”
These things inject flexibility into the traditional workplace and make it feel homier. Technology can be a huge proponent of enabling flexibility and community with functionality to book flexible workspaces, group meetings, or an event — all streamlined through a mobile app.
Amy Kotulski, Director of North Ameria Operations at BGC, says that versatility is key. “We are doubling down on the office experience being frictionless and collaborative. All choices need to be flexible and compete with the comforts of home.”
Leverage data to tailor experiences
Understanding how your building is being used, how it should be used, and how to take action across your portfolio has become increasingly important.This knowledge helps landlords optimize space to meet tenant needs.
94% of landlords agree that having insight into how tenants use facilities and amenities is important. Still, far fewer are confident in their visibility into this kind of data — only 23%. With occupancy steadily rising to pre-pandemic numbers, the importance of data-driven experiences will only increase.
For Kotulski, data on office culture and lifestyle helped dictate offerings for tenants. “We wanted to provide a good pantry option. And where there might have been a treadmill room, there might now be a Peleton room.”
Every data point collected in a building can have a lasting impact on operations. 91% of landlords surveyed in the global landlord report stated that seamless occupancy management is essential to both enticing tenants to return to the office and sustaining the number of those who return. Technology that measures usage, engagement, and changing expectations is the key to unlocking these actionable insights.
Employ tech for a modern tenant experience
COVID-19 only accelerated the changes in tenant expectations — needs that had already started changing. As tenants become more digitally native, they have less patience for an offering that won’t meet their level of digital expectations.
Especially in the research phase of finding a new building, tenants have little patience in touring multiple properties to find the one that meets their needs. Features that were once a competitive differentiator — microsites, virtual tours, videos of a space — are now table stakes for being in the game. “If you don’t have a good digital strategy, potential tenants will throw you out immediately, says Kerri Thomas, Senior Vice President of Leasing at AREP. “They’re looking for any reason not to tour 20 spaces.”
Top tenants also recognize that digital tools are perfect for how leasing decisions are now made. Today, more stakeholders are involved in leasing evaluations, and the end decision is no longer up to one person.
Digital marketing collateral can help mitigate busy schedules and be easily shared among a decision-making panel and updated as new listings of interest become available. Improved accuracy with tech-enabled marketing reduces friction between a listing coming to market and a tenant signing the least. The right solution will help your business capture the attention of today’s tech-savvy, convenience-focused tenants.
Be mindful of environmental expectations
In commercial real estate, sustainability has been a recent buzzword. Whether it's healthier food options or environmentally-friendly properties, data shows that tenants hold sustainability top of mind.
Cammarata praises data for supporting meaningful, sustainable improvements to buildings. “We can do some redevelopment after listening to our employees and tenants, see what’s the flavor of the day, see how it fits with how [tenants] are thinking about the future of their space.”
Newman also sees the value of sustainable, healthy amenities. “We designed our business around food as fuel and want to move away from food that makes people unhealthy and less productive,” Newman says. “Companies love [working with Sweetgreen] because [our food] improves productivity, reduces the burden on insurance, and also helps their employees be healthier.”
Data informs in-office services and what tenants expect from the physical building, like switching to solar power or adding rooftop greenspace. “We do a survey and really listen to our tenants. This is a good place to start when transforming your building,” Cammarata says. “I’d stress the importance of a healthy building, the younger generation finds it especially important.”
Top executives are exploring the certifications that tenants consider when evaluating properties. Jotulski says that “we have a new level of employee understanding” regarding sustainable building practices. “They’re asking questions about HVAC and LEED, where it once was only a consideration for the VP levels.” And Cammarata agrees, saying, "we are focused on LEED and Well certification because it’s so important to our employees.”
This sustainability focus has top players making improvements, including Goldman Sachs adding outdoor space conducive to collaboration to their offices; BGC using data to plan their areas better to account for these new sustainable expectations; and Sweetgreen committing to becoming carbon neutral by 2024, tracking every possible emission including how team members commute to and from the office.
Newman says that “tracking emissions is important because what we measure is what we manage. This will be a great first step in looking for the right offset projects that have a good ROI, and that isn’t just something ‘with lipstick on it.’”
Conclusion
While leaders in commercial real estate may be focusing on making changes that meet today’s tenant expectations, the work is not over. Expectations are always in flux, and it takes robust data, analysis, and execution to stay on top of tenant trends. Employing the right tools that open opportunities to meet expectations in all areas is the best way to ensure you can provide what top tenants want.
VTS is laser-focused on providing CRE stakeholders with solutions that help meet and exceed tenant expectations. Register now for VTS Platform week to see what the ecosystem of technologies can do for your business as it strives to support tenants as their needs continue to evolve.
