Webinar takeaways: 'Maximising Tenant Satisfaction'

April 27, 2023

Commercial tenant satisfaction is a key driver of asset performance, given its direct bearing on loyalty, acquisition, renewal, and rent premiums. As such, it is business-critical for owners and managers of commercial real estate to go all-in on maintaining happy tenants.

In this instalment of our webinar series on ‘The Future of Property Operations,’ our expert panel discussed the keys to tracking and maximising tenant satisfaction in an era of rapidly evolving tenant needs. Recaps of the first four webinars in this series can be found at the following links:  ‘Embracing Data and Digitisation’, ‘The Role of Operations in Achieving Net Zero’, ‘The Evolution of Facilities Management’, and ‘The Role of Operations in Driving Superior Asset Performance.’

In the latest webinar, our expert panellists explored the following topics:

  • Tracking and measuring tenant satisfaction
  • How tenant focus areas have evolved
  • Minimising tenant disruptions stemming from poor thermal comfort and equipment downtime
  • Supporting your tenants’ sustainability objectives

Participating panellists included:

  • Lisa Atkins, Head of Asset Management Services at Knight Frank
  • Chris Greenall, Head of National Operations at QIC
  • David Wright, Executive Chairman at CIM

Read on for the panel’s core insights, or watch the full conversation here.

Tracking tenant satisfaction

All of our panellists agreed that tenant satisfaction is one of the rare leading indicators of a building’s long-term financial performance. More traditional KPIs such as NOI, safety and risk metrics, and ESG performance are all lagging indicators, making a focus on tenant satisfaction even more important to building owners. “There’s an increasing focus on getting any evidence that we can out of pulse surveys from all of the occupiers of a building,” Lisa said.

David concurred, sharing that CIM’s data collection around temperature and humidity may seem targeted to indoor comfort—and they are—but they are also all contributing factors to an overall tenant experience. “We are all aligned with creating the best environment for a person who’s in that facility to have the best possible time working, shopping, whatever it might be,” he said.

David also spoke about the increasing importance of comparative data. Tenants don’t just want to know if their indoor air quality is good; they want to know if it’s better. This emphasis on ‘best performance’ as opposed to ‘minimum performance’ standards contributes directly to tenant satisfaction data. “That notion of having to earn a person coming back to an office is driving significant data around ‘what is best performance?’ rather than ‘what is minimum performance?’, and how are those types of things happening?” he said.

Tenant satisfaction has a direct bearing on financial metrics such as NOI. Lisa noted the escalating sense of competition between employers in the current ‘war for talent’ and its impact on building occupancy. “No one will stick around where people aren’t happy and don’t want to come to work,” she said. “As businesses change their requirements … there’s a lot of ways in which it’s easier to move. We need to make it harder for them to move. One way to do that is to get people really attached to the place and make them feel like it’s their second home, that they really want to be there, they’re proud to be there, and they feel connected to the place.”

The evolution of tenant focus areas

It’s no secret that tenant expectations have changed dramatically in recent years. Hybrid or remote working environments are now the norm, and business leaders have had to make compromises to retain and attract top talent. “It’s a broader weekly question of, where will I be more productive and more comfortable: at home or in the office?” Lisa said.

Panellists noted the shift away from a pre-COVID focus on workplace convenience and a repositioning around flexibility instead. Employees tend to duck out early or leave late, which means a renewed emphasis on maximising the productivity of in-office time.

In competition with the home office, what can commercial spaces offer to compete? Our panel emphasised the sense of community that cannot be felt at your kitchen table. “The thing they can’t get at home is to be gathered around by others who are rowing in the same direction,” Lisa said. Meeting rooms must provide tech that connects in-office teams with remote workers. Commercial offices must include flexible, collaborative spaces that foster a group working environment. David called the new use of space “dynamic movement within buildings,” now visible at scale.

David noted that this collaboration shouldn’t be limited to tenant teams, but should occur between operational teams and tenants as well. “You don’t want your Facilities Managers spending all their time in meetings trying to work out what’s going wrong,” David said. “You want them spending time with tenants saying, ‘How can we improve?’ So you’ve got to use technology to free up time to allow that activity to happen.”

Providing the data that enables tenants to tout their space as a selling point is increasingly critical for building owners and operators. For example, David said, tenants will pay premium rates for 6-star NABERS ratings. “They are doing that because they want people to come back to the office, and they want to be able to feel good, that you’re in a place you want to be and that you’re doing the right thing,” David said.

Sustainability and its impact on the tenant experience

In keeping with David’s point about the importance of ethical standards for commercial space, the conversation moved to sustainability initiatives and the path to Net Zero. Chris described QIC’s ‘Connected Centre’ initiatives and the data collection required to intensively manage them. He cited smart water meters as one example of a data collection tool that aids building owners in several ways: improving cost recovery and efficiency within an asset, and also driving down tenant usage. “If you can’t measure it, you can’t manage it,” said Chris. “It becomes in the tenants’ interest to reduce or change their habits.”

David noted that sustainability ratings like NABERS have become a useful common language for comparing progress and working toward the same sustainability levels. In many ways, Australia’s NABERS rating system is proof that tenants will take ESG metrics into their leasing requirements if they have the tools to do so. Very often, tenants care about a building’s NABERS rating because they are reporting up the chain on their own ESG goals, for which they need data about their energy consumption and building performance over time.

As Chris mentioned, investors are also driving the sustainability push by putting real capital behind an intense focus on ESG—not just with energy use, but also water, fair labour, and other community-minded initiatives.

Balancing outgoings with tenant conditions

When asked about balancing outgoing sustainability costs with optimised thermal comfort levels, Lisa said that she doesn’t necessarily see the two as balancing, but as complimentary. “Yes, some of the ESG objectives involve substantial capex investments, but not all of them do,” she said. “A lot of it is about optimisation. Optimisation is where you get operational excellence, and that’s what you need in order to have a comfortable environment.”

Communication and perception were core themes of the hour, with all panellists agreeing on the power of an FM who offers to see what can be done, even if the problem is a tenant piece of kit. “Perception is 9/10 of reality,” as Lisa noted, and education is often a better solution for resolving issues than capex. From educating tenants on the rationale behind the ‘trauma’ of removing under-desk bins to an FM assisting with a rattling fan, communication can make or break the tenant experience.

But, as Lisa noted, this is not a ‘one-and-done’ conversation. “You’re never done, no matter how new the building is, no matter how fancy the kit is, no matter how great a team you’ve put together. There’s still always partnership and collaboration that’s required to keep it from dropping back over time,” she said.

From a technical perspective, David spoke about the importance of granular detail versus high-level measurements. For example, CIM collects data on over individually tracked zones within a building rather than measuring tenant comfort across floors, so teams can easily pinpoint exactly where trouble spots lie. “We bring the same data to new buildings as old buildings,” he said.

The key is in proactively providing tenants with information. David continued, “We try to enable and empower people to remove a complaint before it ever happens; but if it happens, we can go to them and say, ‘We know there’s a problem in this corner. We’re already dealing with it.’” Even if there’s a reason why the issue can’t be immediately resolved, the data still empowers operations teams to deliver customer satisfaction regardless of the circumstances.

Successfully navigating economic headwinds

Finally, our panellists tackled the tricky topic of ever-troubling economic headwinds. In a whirlwind of extreme outgoing cost increases, Chris tagged tech innovation as the “uncontrollable controllable cost” that building managers are now orienting budgets around. Tech offers a clear path toward managing some of the costs (such as the cost of energy) that have risen significantly in recent years. Chris cited key partnerships with tech providers like CIM as a core tenant of QIC’s long-term solution.

David noted that better data enables better decision-making and targeted application of pressure on vendors to streamline their services. When driving longer-term efficiencies, he warned that tenants shouldn’t rob Peter to pay Paul. If you save 10% on operating costs but lose big tenants as a result, you’re at a net loss. “You’ve got to be able to do both at the same time,” David said.  

Lisa echoed the other panellists’ realistic views, noting that competitive outgoings budgets aren’t likely to disappear any time soon but that necessity is driving innovation. “We need to be replacing raw expenditure with innovative solutions,” she said. Finding ways to have conversations that “blow tenants away” with proactive sharing of data and next steps will be a key differentiator moving forward.

CIM Team
April 27, 2023