2023 may well be be the year we see corporate occupiers crystalising their place as key stakeholders in the real estate industry. Far gone are the days where the occupants of a building are an afterthought.
Forbes have named this trend "the tenant experience", whilst Deloitte have referred to the underlying business model as "Real-Estate-as-a-Service". In simple terms, buildings which offer an enhanced tenant experience (bespoke services, additional lifestyle amenities, top of the range technology and high sustainability ratings) are likely to attract higher rents and unlock additional value for real estate investors.
So what enhancements are worthwhile investments? For offices, flexible leasing models such as revenue sharing and flexible management contracts are key offerings, closely followed by dynamic building designs which are easily reconfigurable and adaptable to fit a tenant's bespoke requirements. Sustainability and environmentally friendly buildings are a must now that ESG obligations are taking centre stage for most companies. Look out for proptech offerings such as tenant experience platforms, climatetech, greentech, artificial intelligence and the use of the internet of things. Tenant experience platforms and the use of the internet of things in building systems are emerging as a way to connect a building and its landlord with the people working in it, leading to more transparency, efficient building operations and a friction free workspace.
So what do we take from this? Price and location are no longer the only considerations for corporate occupiers seeking new office space. Investors and landlords are starting to recognise that spaces which meet and/or exceed employee satisfaction and enhance human experiences are key to unlocking higher rents and to attracting the "modern" tenant.
No longer will the focus be so much on the building, but on how the building impacts the productivity of people working or living in it. By building I mean the physical space itself and people working behind to bring it to market, i.e., real estate brokers, property managers, contactors, etc.