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In light of WeWork's potential collapse, landlords across the commercial real estate landscape are reevaluating their role in the next chapter of the incredible story. WeWork has shed light on critical aspects that landlords need to consider in redefining their approach to office spaces. It's not just about reacting to the fallout, but understanding the crucial elements that determine the success of their properties in the first place. Understanding your mission is key to this, and, moreover, understanding your tenants.
Adopting trends without a clear understanding of how it relates to fundamental shifts in behaviour is a risky strategy. Landlords who follow the herd and hope for the best could find themselves left with a reactive portfolio of underutilised spaces and discontented tenants.
The key lies in cultivating relationships and understanding the diverse, long-term needs of people. Merely providing a stylish setup doesn't guarantee tenant retention or satisfaction. Tenants may love the building, but ultimately feel disconnected from the landlord. They may occupy a tiny space within a larger co-working setup, but lack a genuine sense of belonging.
By engaging with tenants, understanding their space requirements, and fostering a community-oriented environment within the building, landlords can create a compelling reason for tenants to stay, regardless of the wider office space dynamic.
WeWork wouldn’t just leave behind vacant spaces; it would also present an opportunity for landlords to address an audience that seeks smaller, affordable workspaces. This demographic may lack the financial means for significant office fit outs or to occupy substantial square footage. Landlords facing vacant spaces or seeking to address their portfolio's 'why' can pivot by catering to this niche segment. Recognising the demand for smaller office spaces, landlords can reconfigure their offerings to accommodate various requirements.
While the immediate profitability from smaller spaces might seem limited, it's an opportunity to foster long-term relationships. Offering tailored solutions, flexible lease terms and value-added services adapted to smaller tenants can result in higher occupancy rates and prolonged tenancy.
The aftermath of WeWork emphasises the significance of establishing a clear purpose for office spaces within a building . Landlords need to reassess and redefine their office spaces, moving beyond a standardised model. Fundamentally, WeWork sells security in the temporary for tenants and peace of mind to landlords by handling the relationship between the two. Where WeWork have managed said relationship, landlords have less insight into what their building and its inhabitants need. They don’t know who their asset attracts, and don’t provide those people with a connection to their home or lay down its purpose once they move in.
By taking control of your asset and reassessing the space available, landlords solve this problem. Focus on crafting unique identities that resonate with the target tenant base. Is the space designed to promote collaboration, innovation, or cater to remote and hybrid workers seeking a community-driven environment? By aligning the design, amenities, and services with the envisioned purpose, landlords can create distinct, attractive spaces that stand out in a competitive market.
The current state of the market serves as a catalyst for landlords to rethink their strategies. Rather than solely reacting, it's an opportunity to pivot, reassess, and redefine their approach to office spaces. How an asset is let ultimately needs to change to gain an invested clientele and pivot towards a gap in the market that may continue to grow. It's about rethinking how empty buildings can attract a surge of smaller occupiers, filling the void left by larger businesses and ensuring a more connected and invested tenant-landlord relationship.
By focusing on tenant relationships, understanding diverse needs, adapting to smaller space requirements, and defining a clear purpose for their properties, landlords can create thriving, community-driven environments that resonate with tenants. This shift isn't just about addressing the fallout of WeWork; it's about future-proofing real estate strategies in an evolving landscape, ensuring sustained tenant satisfaction and long-term success.