A Growing (Positive) Relationship Between Owners and Occupiers
The relationship between property owners and occupiers has largely been transactional. In some cases, that relationship has been more fractious, and even adversarial.
But according to a recent article published by JLL, flight to quality is putting landlords and tenants on the same page. “Quality,” in this case, refers to buildings that meet green specifications. It can also mean places where companies want to be and employees want to work.
From a tenant standpoint, JLL’s Andy Poppink, who is CEO of the company’s EMEA Markets, indicated that tenants want people back in the office, where they can collaborate and innovate. Because of that, and the still-tight labor market, tenants want “flexible, amenity rich, quality workspaces,” as well as a location to attract and retail high-caliber employees, Poppink said.
Other drivers on the occupier side are the desire to meet ESG requirements (due to regulatory requirements and customer demand) and concerns over the bottom line, Poppink added.
On the landlord side of the coin, Beverly Kilbride, COO of LaSalle Investment Management, pointed out that ESG is a main driver. But the intent is morphing into what she called “a measurable ESG journey.” The reason? “Their tenants are now asking about the carbon footprint of the actual building and how that will translate into operational performance,” Kilbride remarked.
But what does this mean for quality buildings and leasing? Poppink said that tenants are torn between the need for shorter, more flexible leases and space availability to meet expansion and other priorities. “It’s about finding balance and working in partnership with investors,” he added. “I don’t think you could write a rule today that says leases will necessarily become shorter.”
Kilbride agreed with this assessment, pointing out the need for closer investor/occupier relationships. “We’re now looking at closer partnerships and constant dialogue on how we adapt operations and investments to make sure both parties are achieving their objectives,” she said. “We need to continue to work as partners throughout the duration of leases.”