Getting ahead of tenants' stay or go decisions
Businesses across the UK have been speculating about future real estate requirements for the past eight months. For those with lease events coming up within the next 6-12 months, the time has come to make a decision if they should stay in their current office or move into new space. It’s not an easy decision in any case, but especially in 2020.
The long-term impacts of Covid-19, the declining world economy and Brexit, have started to come into focus but the net effect and scale of its impact is not yet certain . Furthermore, since 23rd March, businesses and the workplace design industry have been constantly creating better ways to work from anywhere while understanding what the office will look like in the near and foreseeable future. What does this mean for these commercial office tenants?
Determining real estate strategy
At ThirdWay, we’re working with clients to establish whether or not they should maintain their current workplace or seek change. We are a consultancy passionate about making better spaces for employees, and creating the best property solutions for employers.
Through Thirdway Workplace, we develop customised HybridWorking strategies for tenants that determine how their business should work so that they can achieve the outcomes they need now, tomorrow and in the future. We look at key business activities, roles and responsibilities of employees, forecasted growth, human needs, and the flexibility to respond to social distancing measures should they need to. This thorough evaluation determines the office-worker:home-worker ratio that is optimal for all stakeholders; the business, employees, customers and shareholders.
Once that ratio is determined, our team reviews the client’s space to see if it’s fit for their future working with the Thirdway family such as Thirdway Interiors to determine if the space can afford the designs needed, and Tribe to ensure furniture exists and can be with time and estimated cost requirements.
For some, their existing office can be retained and optimised with a new layout, new safety measures or repurposing of redundant space. Others might require additional real estate or may be able to reduce their footprint. In either case we help define their building brief and location strategy to find new premises to fit their needs.
As one example, we recently supported a modern merchant bank in defining their real estate needs. They used to occupy three central London workspaces and now only occupy two. They aren’t downsizing, taking on a massive amount of floor space, or cramming people in like sardines. They are redefining how they work to provide the best experience for their employees, customers and clients. As a result, our client was able to confidently move forward on their project and save £1.3m a year in rent in the process. Why does this matter to landlords?
Understanding what tenant’s want can prevent or offload grey stock.
By looking at the tenants that exist in a landlord’s portfolio, understanding what those businesses do and who their people are, landlords can forecast with some degree of accuracy the risk of their tenants choosing to leave their current property. Additionally, if a landlord is able to understand how their tenant is making decisions, they may be better positioned to retain the tenant by providing flexible solutions within the existing space or elsewhere in their portfolio.
However, should a landlord not be able to retain that tenant, they should have measures in place to return the space to market as cost-effectively as possible either by refreshing grey stock, or by providing Cat A+ space that meets the need of hybrid working tenants. Additionally, the right marketing, such as TX, the company that leverages technology to allow prospective tenants to design their office in their first viewing, will offload landlord’s grey space sooner as it reduces the time, cost and risk planning prospective tenants will need before they can commit to a space.