Property managers have been at the forefront of multiple crises in recent months, with the impact of COVID-19 compounded by a period of civil unrest in the United States. The experiences of 2020 are reshaping the relationship between landlords and tenants, with far-reaching implications for the future of real estate management.
With the media scrutinizing levels of rent arrears and governments legislating to prevent landlords evicting tenants in default, you could be forgiven for thinking that the owners and occupiers of real estate have spent the year at war with each other. In fact, property managers have generally been working closely with their tenants on the front line of dealing with the crises and helping businesses operate as normally as possible.
Closing buildings is far from straightforward, and partially closing them is even more complex. While some could be put into mothballs, the majority remained at least partially open. Multi-let buildings were especially problematic, as landlords attempted to balance the needs of different occupiers. Every aspect of operation from security, access management and postal services through to cleaning and emergency procedures had to be forensically examined and, in many cases, completely redesigned. The logistics involved are immense, made harder by the need to communicate on every issue with tenants individually – and maintain an audit trail of actions taken.
From Day 1, lessons learned continue to resonate through the profession. First, communication is essential – understanding the needs and objectives of all parties, then communicating clearly and effectively to everyone involved. A common approach across public areas and tenant-controlled spaces is critical, so people understand and can comply with the policies being implemented. Second, property management is about people, not faceless companies. Property managers have invested huge time in dealing with tenants individually, working to understand how their business is being affected and how the landlord can help. Third, data and technology are fundamental. Landlords and occupiers need high quality, real time information on the building, its systems and how it is being used to effectively manage their real estate.
Underpinning everything has been the realization that landlord and tenant interests are more closely aligned than ever. Tenants faced with a sharp reduction on revenues have reached out to landlords in search of rent reductions or payment deferrals. The best landlords have tried to be sympathetic, recognizing that it’s in everyone’s interests to get tenants back on their feet as quickly as possible; failed businesses don’t pay any rent. At the same time, they must assess the situation case by case. Landlords are happy to support viable businesses through tough times, but they also have their own stakeholders to consider. An open and transparent relationship on both sides, particularly when established prior to the crisis hitting, has paid dividends. Tenants who have shared more information about their circumstances and plans have generally been viewed more favourably than those who have approached the situation in a more adversarial manner.
Lessons learned continue to resonate through the property management profession.
An open and transparent relationship on both sides has paid dividends.
Some of the biggest implications for the future are being seen in the office sector. We explore elsewhere why many employees are seeking greater flexibility.44 Companies are going to have to work harder in delivering an office experience which makes it attractive and worthwhile for staff to be in the office. In many ways, COVID-19 is the office sector equivalent of online shopping. Retailers and shopping centre owners have long recognized their common interest in luring consumers into shops. In the office sector this is driving a similar blurring of traditional boundaries. Delivering true employee experience requires a coming together of the managers of a landlord’s “property” and an occupier’s “facility.”
Technology providers are seeing a significant uptick in enquiries as owners and occupiers look to install technology to maximize a building’s effectiveness. Integrated workplace management systems (IWMS) provide a variety of solutions for workplace, facility and space management, project management, asset and maintenance management, and sustainability. Sensors enable monitoring of occupancy levels, temperature and air quality, minimizing costs as well as carbon footprints. Access control systems using smartphones and apps can both simplify and enhance the occupier and visitor experience, aiding route-finding through the building. They can also reassure staff about environmental quality, support social distancing monitoring and help target overnight cleaning to areas of the office that have been used that day.
As occupiers assess the crises that have impacted their business premises in 2020, they are asking searching questions about the role that real estate plays in their operations. Many of them are likely to diversify their occupational portfolio, bringing added complexity to the challenge of monitoring and managing their property needs. With occupiers fixated on delivering the highest quality working environment for their employees, and landlords working harder than ever to attract rent-paying tenants, closer collaboration in delivering workplace experience at the building level is now more important than ever.
