To Invest In The Right Amenities, Landlords Need To Collect Data On Office Use

In August, the amount of vacant office space in Central London was at its highest level since 2007 at 31M SF. However, high demand remained for grade-A space. In H1 2022, 90% of space taken up was of grade-A standard, a third as pre-let space.

All this points to a host of occupiers who are seeking sustainability-focused and amenity-rich modern office space that meets their needs today, software company VTS principal Sebastian Abigail said. This poses a real challenge for landlords. It’s often not physically or financially feasible to offer meeting spaces, cafés, gyms, libraries and food halls given the typical size of UK offices. 

“Getting the appropriate provision or mix right that is tailored to a building’s target market is therefore crucial,” he said. “With the soaring cost of development debt and construction costs, every investment in improving office space needs to be considered carefully to deliver target returns. This is only possible if landlords and property owners use the tools available to understand what amenities are most appropriate.”

The way people work has been evolving for years. The birth of coworking spaces introduced flexible working, while technology made it easier to collaborate with teams in many locations. The pandemic created new challenges for both occupiers and landlords.

“Pre-pandemic, the question of where people worked wasn’t a question,” Abigail said. “Now, it’s an issue to deal with. The question of whether people come into an office or not can be quite polarising even within an organisation because different people want to be in the office in the way it suits them.”

During national lockdowns, people became accustomed to working from home and are now looking for more hospitality-driven workspaces, Abigail said. In response, landlords are refurbishing offices to facilitate new ways of working to create environments that bring people through the door — collaboration spaces, phone booths for private video calls and, increasingly, purpose-built conference spaces large enough to bring entire teams together. 

“Landlords are deploying more capital to the common parts than ever before as expectations of offices have changed,” Abigail said. “Creating amenities requires deploying capital expenditure in a new way. Typically this requires approval from joint venture partners, capital partners or even internal investment committees, all of whom are asking how they can minimise the risk of inefficient capital expenditure deployment.”

At the moment, many property owners are creating amenities without any knowledge of whether they will work or not, Abigail said. Some thrive, but you don’t need to look very far to find underutilised meditation rooms, basketball courts or running tracks being used for alternative purposes. In other sectors, this level of capex would not be committed without a business case supported by data.

“If you were to start an e-commerce website selling items online, you couldn’t do that without data about dwell time, customer journeys and so on,” Abigail said. “For years we’ve been building offices without operational data to influence how their features will be tailored to fit their target audiences.”

Today, a host of technology solutions can provide data about how people are using an office. Sensors can deliver information about how people are using space. Customer management software will detail how often people check in to a building, use a meeting room or visit the gym. To a landlord looking to create an attractive space, this information is valuable.

“Landlords are experimenting on a small portion of their portfolio, using sensors and a data-driven approach to understand which amenities work well,” Abigail said. “That will make the necessary capex across the rest of their portfolio less risky. In hotels, rooms are laid out in a certain way and amenities delivered because operators have trialed them, tested them and know they work. Landlords haven’t historically had that data.”

Using technology is also a way to give people more control over their office experience. VTS gives tenants an app that allows them to carry out essential activities such as accessing the building, checking visitors in, booking a meeting room or ordering food. While this is valuable to people using the office, who have perhaps grown accustomed to managing space at home, it also benefits landlords.

“Occupiers get a great experience and landlords get loads of user data,” Abigail said. “The landlord can use information about how satisfied an occupier is during lease renewal conversations, evidenced by how often they are coming to the office, for example.”

Where a landlord isn’t able to offer an amenity due to space or the age of a building, collecting data can still help shape what a landlord offers to businesses. An app can collate the best retail and leisure opportunities around an office, effectively delivering amenities for minimal capital expenditure. Overall, it gives all landlords the ability to look ahead to the discussions that might arise when an occupier is considering its options.

“Even if a landlord can’t affect a business’s decision to reduce office space, they can plan for it,” Abigail said. “Too often, landlords are caught by surprise when an occupier has been having a bad time in a building but they didn’t know. Collecting data about behaviour and making the experience as smooth as possible is the best way to keep a workspace occupied.” 

This article was produced in collaboration between VTS and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.