Managing occupant expectations

Green programs are becoming increasingly significant in attracting and retaining tenants
Monday, December 21, 2015
By Rebecca Melnyk

While it’s been more than two years since BOMA released its 2013 study What Office Tenants Want: 2013 BOMA Global Office Tenant Survey Results, key findings, such as the importance of green space, are becoming increasingly more pertinent in conversations regarding tenant retention.

While 56 per cent of international tenants stated that green programs are important or very important, in Canada, 82 per cent affirmed this, while Toronto led the way with 100 per cent in agreement. When asked if green occupancy creates a favourable impression on clients, 53 per cent in Canada believed this to be true, with 10 per cent in Toronto and 55 per cent internationally.

Findings such as these made their way into a conversation at the 2015 Buildings Show during a seminar on managing occupant expectations.

According to Patricia Murray, director of office facilities at Home Trust Company, accessibility to transit is a key retention and selling factor. Neil Lacheur, vice-president of property management at Bentall Kennedy, noted that there is a difference in what tenants want in different markets. He notices that financial core tenants, such as law firms and banks, are more interested in PATH connection, LEED quality buildings and accessibility to Union Station, rather than those on the periphery.

“What we’re seeing in the periphery is more of an HR driven decision; we’re trying to attract the vast 25-year-old talent coming out of the University of Waterloo and the University of Toronto [asking] what does that person want?”

This is a group who wants to live and work in the same area, says Lacheur, rather than go west of Simcoe (in Toronto) where it’s “not cool.”

Gordon Oughton, director of leasing for Central and Western Canada at Allied Properties REIT, focuses mainly on exposed brick-and-beam historical buildings where office tenants are looking for a “character” feel, along with access to amenities and cost.

“But as you get to the 40,000 square foot mark, many tenants need presence,” he adds. “They want to know their name is going to be a brand in the building.”

Yet, along with these occupant needs, Oughton stresses how integral green programs are to tenant retention.

“We have to start to adopt green programs. While the vast majority of assets that Allied owns are historical buildings, it doesn’t exclude us from still employing these different recycling programs and [making] less of a carbon footprint. It’s coming, and if you don’t do it now, you better start doing it; tenants want it.”

From a somewhat different perspective, Lacheur says, on the leasing side, prospective tenants have never asked if the building was LEED certified.

“From what I’ve seen, it’s something that becomes a part of their life after they are in the building,” he notes.

While large banks like RBC and TD have such needs on their checklist before they relocate to buildings, Lacheur finds that small and medium sized companies are not putting green programs at the forefront in their decision-making process.

Discussion moderator, Michael Scace, partner at Ashlar Urban Realty, pointed out what tenants in the BOMA survey believed to be the most important factors in a renewal decision, with location at 61 per cent and green building at 17 per cent, showing that green issues remain an important topic, but are not the main reason for renewal.

As the conversation turned to what property managers can do to enhance services, Oughton suggested that the wellness aspect play a larger role with issues such as a building’s air quality, employees taking less sick days and wanting to stay longer in a building due to feeling refreshed.

Great communication is also key, adds Oughton who says his tenants value responsiveness and presence, where they want to physically see a building operator in the building on a daily basis so issues can be dealt with in a timely manner.

“It is my job to make sure everyone in the company can do their job and the building operators help me do that,” said Murray. “I look to the building operators as part of my team.”

On the leasing side, notes Lacheur, communication between building operators and tenants is a critical relationship he sees upon a renewals process.

“You can tell the difference between a good and bad building operator because you’ll hear complaints on ill service or [tenants] have no complaints and it’s a pure negotiation on lease terms.”

From a strategic standpoint on the leasing side, Oughton makes sure to engage with a property manager before the renewals happen to make absolute certain they deal with any background problems that could be taken care of.

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