Commercial properties are struggling to attract and keep tenants, according to a new report – But the majority of building operators and asset managers are planning drastic steps without first collecting and making use of the vast amounts of insightful data available to them.
The report, from workplace access, experience, and analytics platform, Accessia, surveyed 200 UK asset managers. Titled Adapt to Survive: the Flex Space Revolution, it reveals that the vast majority of traditional office buildings are struggling to adapt to the changing demands of tenants, with a resounding 99% of asset managers reporting difficulty generating revenue post-pandemic.
This is in part due to the rise of hybrid working as well as the turbulent economic conditions of the last few years. As a result, the needs of SMEs are changing and diversifying rapidly. The report finds that 44 per cent of building operators would like to offer leases of five or more years, while a significant portion of SMEs would prefer shorter, more flexible leases of around one to two years.
In response, a third of operators (33%) are considering offering flexible contracts as a means of earning extra revenue, many of the rest have already begun doing so. But there are quick wins being missed, as a stunning 84% are failing to gather and analyse data generated by tenants to improve their offering.
Key findings include:-
- 99% of building operators say it’s harder to make money from commercial buildings post-pandemic
- 18% are grappling to maintain occupancy rates in their buildings
- 33% see transitioning to a flex model as an opportunity for commercialisation
- But 15% don’t understand what tenants want
- And 84% are failing to analyse things like meeting room data to understand how their spaces are being used
Mark Loney, CEO of Accessia, said: “Tenant churn, low occupancy rates, rising costs, falling revenue, and sustainability targets are all formidable challenges for building operators. The rise of the flex space model has compounded their problems, making the fight for tenants more competitive than ever before.
“Operators are being forced to adopt a flexible approach themselves just to compete, but the concept is still in its infancy and the path from struggling traditional office building to profitable coworking-style flex space is not well trodden.
“To make this transition a success, operators need to use everything they have to optimise their offerings. As a workplace access, experience and analytics platform, we at Accessia know what kind of data is available to building operators and just how valuable it can be for informed decision making. It’s a little alarming, then, that 84% are leaving these insights on the table by not collecting or analysing such data. At best, they’re missing quick wins to boost revenue. At worst, they’re stumbling towards a flex-space model with their eyes closed, which is a big mistake in what is an unbelievably competitive market.
“This report is essential reading for anyone across the office and commercial building sector, from those considering transitioning from a traditional multi-let model to coworking, to those with an established flex space offering.”
