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The Importance of Tenant Engagement and Landlords Delivering More Value

…. is now a Risk Management Strategy in Commercial Real Estate

Why ? Because of increasing issues between landlords and tenants due to –

  1. Reduced tenant income and the changing business environment
  2. Health concerns and potential liability when re-occupying office space
  3. With many people working from home, tenants are reviewing their need for office space
  4. Landlords struggling to
    • collect rents
    • increase property appeal and returns with 
      – new services to tenants 
      – greater operational efficiencies
    • deliver greater value and expand revenue streams from innovation
    • evolve the business model
  5. Challenges associated with many unknowns and uncertainties, changing habits and attitudes, what the future holds, etc.

For example, Great Portland Estates received 74 % of rent from office tenants in June, while Retail Properties of America collected just 65 % from its retail-focused portfolio. In conjunction with this, some disagreements have resulted in parties suing the other. In one case, business service firm Jenner & Block is taking its landlord to court seeking usage-based rent payments for their space in a Chicago skyscraper.

To get past the challenges, it’s increasingly recognized more services are needed and that landlords need to deliver more value. Because of this, many landlords are launching new programmes to expand services to tenants and improve the User experience. While tenant engagement programmes were emerging prior to COVID-19, the economic downturn is forcing landlords to be proactive to retain their tenants and rental income. An example of this in the retail sector is landlords are offering tenants the option to restructure lease terms to help them ride out difficult conditions. With this, the owner of London’s Covent Garden has provided sales-linked rent agreements to help cash-strapped tenants survive.

In the office sector, with rapidly shrinking demand, some landlords are deploying Tenant Engagement Apps to improve communications and expand services. For example, Divco West Real Estate Services has deployed a Tenant Experience App at a property in Washington with around 700 occupants. The landlord can use the app to communicate with tenants, control access and as a data source should contact tracing be needed.

With the economic downturn expected to last into 2021, being passive is risky – for both landlords and tenants. Now is the time for landlords to work more closely with their tenants to adapt because of the COVID-19 downturn and meet the rising demands for a safer workplace and the delivery of new services. For more insights, see Beyond COVID-19: Emerging Best Practices For Occupant Health And Wellbeing and articles at ,

Aug 11, 2020 – by CAIL / Verdantix                   Smart Buildings Commentary