Pre-pandemic, office tenant experience (TeX) for commercial offices was all about using technology to promote and manage investments made in physical amenities. This included things like gym facilities, bike storage, conference rooms that could be reserved for meetings, shared community spaces, in-building food and retail options, outdoor spaces, and daycare.
It was about adding and promoting events like ice cream socials and yoga classes. Or offering discounts and promotions from in-building and local retailers to building occupants.
But that definition has now expanded. TeX is now about making tenants comfortable and confident about returning to the office. It’s about flexible and effective communications and inspiring confidence in building safety.
Therefore, a more holistic approach to TeX must also factor in building inspections, maintenance, and building operations. These areas profoundly affect a building’s safety and how a tenant experiences it.
(One thing that hasn’t changed is the importance of using the data from TeX apps such as amenities bookings to better understand how tenants interact with a building.)
When something goes wrong, the first thing a tenant in a commercial building does is place a work order. A building’s system for managing work orders (or lack thereof) has a significant impact on how quickly and effectively an issue is resolved.
And the engineers who are responsible for fixing a problem—and interacting with a tenant—can be the difference between a positive and negative experience for the tenant.
So building operations are integral to increasing tenant satisfaction, from building communications to efficient and effective property maintenance.
The sum total of all tenant interactions with a building add up to the difference between a tenant who is happy in their place of work, happy to renew their lease, and happy to pay a premium price for it—and a tenant who is not.
A New Era for Commercial Real Estate
Looking back, commercial building owners had it relatively easy for most of the last century. If a building had four walls, a roof, and functioning HVAC, most tenants would keep renewing for 10 years at a time. Throw in perks like a fitness center or a beer fridge, and tenants would generally be happy to accept the terms building owners offered them.
That era has passed.
The COVID Effect on Work
Partly this is in response to the COVID-19 pandemic. The global onset of an airborne infectious disease in 2020 forced the entire planet to largely stop interacting in indoor public places. The pandemic compelled office workers to abandon the office and work from home.
This global remote work experiment has forced a fundamental reexamination of what workers need from office space. With over a year’s worth of data about the effectiveness of remote, home office working, business leaders have realized the traditional 9-5 workday, five days a week in an office wasn’t actually necessary for most workers to achieve their peak productivity.
In fact, given the effectiveness of remote collaboration tools powered by broadband internet, peak worker productivity now seems to be best enabled by a combination of working paradigms. Most office workers now prefer a mix of working at home and in the office, also known as a hybrid work model. Colliers’ New Global Workplace Study finds four out of five office employees around the world want to work from home at least one day a week after the pandemic ends. Property teams must adapt to accommodate this change in work paradigms.
For the time being, commercial building vacancy rates remain high, although they are improving slowly. The average office occupancy in the United States as of August 2021 is about 30%. So to stand out, landlords must compete on price, the package they offer, and on the overall experience their building offers tenants and workers.
The Millennial Effect on Tenant Expectations
Partly the new era in CRE is driven by millennials, who as of 2019, comprise the largest cohort in the US labor force. Born roughly between 1982 and 2000, most millennials don’t remember a world without the internet. Their values and expectations are in part defined by this technological context.
According to Pew Research, millennials are the best educated generation in history, and the most diverse. They have an intuitive knowledge of technology, are open to and adaptive to change, and are free-thinking and creative.
Millennials are also deeply committed to environmental, social, and governance (ESG) goals such as equality, climate change, peace, justice, poverty, and prosperity. Climate change and healthcare/disease prevention are their number one concerns.
In short, millennials value a building’s community, technology—particularly mobile functionality—communications, and sustainability. Buildings that position themselves as leading in these areas will enjoy a competitive advantage.
The Glassdoor Effect on Tenant Expectations
User-generated review websites like Yelp and Glassdoor have also had an influence on what tenants and employees expect from a commercial building. Such sites allow anyone to post a review of anything from a restaurant to a plumber to a multinational company. Responding to feedback on such sites requires demonstrating a company’s ability to listen, its responsiveness, and its values.
These sites have shifted consumer expectations around corporate responsiveness, which have in turn impacted tenant expectations. It’s now much more important to demonstrate the ability to listen and respond quickly and constructively to tenant concerns.
Responsiveness and communication should be integral to any property’s brand today. And building a brand for each building is more important than ever to attract and retain tenants.
Prioritize Operational Excellence Before Amenities for Optimal Office Tenant Experience
To reiterate, employees must feel comfortable and safe in order to be productive at work. They must have access to a clean and functional space, and have quick and clear communication with property management teams when they need it. To create a high-quality office tenant experience, property teams must focus on:
- Temperature and Air Quality Control—Poor air quality can reduce productivity by 33 percent.
- Safety—Well-lit exteriors. Well-maintained and functioning entryways, elevators, and stairs. Secure, ideally touchless processes for allowing access to visitors and vendors. Detailed fire and life safety policies plans and procedures. Tenants need these to feel safe and secure at work. If they don’t exist, will tenants really care about bike storage or discount manicures?
- Building Appearance—Maintenance, inspections, and upkeep matters. The quality and cleanliness of our surroundings reflect on employees, tenants, and property teams.
- Responsiveness and Communication—Can tenants easily request service, report an incident, reach management personnel, and get the information they need when they need it? Is it simple, intuitive, and quick? Is the management team in touch quickly when entrances are closed, or maintenance is happening?
Operational excellence is not optional. It must be achieved before anything else to create and deliver an optimal tenant experience. Consider this hierarchy when thinking about attracting and retaining happy tenants.
The Office Worker Hierarchy of Needs
Building Engines’ 2018 report on The Tenant Experience Gap found respondents in the pre-pandemic era thought these were some of the more over-rated amenities and services:
- Nap pods
- Electric car chargers
- Car washes
- Concierge service
- Dry cleaning pick-up and drop off
- Cell phone charging station
- Personal package pick-up
Flex Your Space for Better TeX
COVID-19 has made clear that offices are not the best for work that requires consistently applied focus. Especially with the prevalence of open plan workplaces and all the distraction they entail. But what offices are great for is in-person collaboration. The Colliers study finds 58 percent of respondents “believe they are better able to collaborate at the office rather than from home.”
Enter flex space. First appearing around 2010 with WeWork and the coworking model, flex space now refers to any ‘ready to use’ office configuration that functions as a community resource. Buildings offering shared amenities like coworking spaces and private suites let tenants collaborate where they work, rather than offsite. Flex space empowers tenants and their employees to choose how, when, and where they work.
As PropTech company HqO notes in its “Flex Forward” eBook, flex space offers a lower risk return to office in a post-pandemic world, “… compared to longer-term leases. With rolling contracts, flexible terms, and even the ability to pause a contract with certain providers, it can support companies facing uncertainty in the CRE landscape and allot the freedom to adapt to upcoming needs at a moment’s notice … The value of flex space resides in its ability to provide hospitality driven, tech-enabled workplace experiences.”
All this adds up to huge growth, with worldwide coworking spaces projected to jump from 20,000 in 2020 to 40,000 by 2024. Crucially, flex space allows property teams to create additional sources of revenue in a high-vacancy environment.
It’s Time to Optimize Your Office Tenant Experience
Office workers’ expectations for what constitutes a great office tenant experience were already changing before the pandemic. The impact of user generated review sites has changed consumers’ expectations around company responsiveness and communication. This has flowed through to tenants’ expectations of buildings.
With millennials the largest workforce cohort, property teams must adapt to their values and priorities to optimize the tenant experience. This means focusing on community, mobile functionality, communications, and sustainability.
COVID-19 has also changed what tenants expect from an office space. Flex space is now an area of significant growth potential given the move to hybrid work models. Most saliently, COVID-19 has refocused the importance of operational excellence in a building—particularly maintenance and air quality.
If you’d like to discover more about optimizing your office tenant experience, check out the Building Engines cheat sheet: Provide a Better Building Amenity Experience with CRE Technology.