Note: this article refers to Least; now Kato
But just as important as the landlord’s bottom line, is their occupiers’ experience.
There are over 770,000 commercial tenants and roughly 20,000 leasing transactions per year in the UK. As their leasing journey begins, most occupiers have little knowledge of the archaic and opaque process they are about to embark on and frankly, why should they? Their attention is on their core business; it just so happens they need commercial space to support it - for their employees to work, to meet their customers, to show their products, or house their goods.
Even if these tenants do not have regular interaction with the commercial property process or an interest in it, we can be sure that they are likely to interact regularly with the world of technology. Everyone - no matter what industry they operate in - has seen the uptake of technology increasing at a rapid pace. This is particularly profound within the millennial community who reflect more than 50% of the UK’s workforce today. They’ve grown up online, are technology hungry and digitally savvy.
The expectation in this new cohort of occupiers is that technology will help solve their business challenges and streamline their processes. This should be no different when it comes to leasing commercial real estate.
These technology-first companies are looking for a digital experience to deliver efficiencies when it comes to engaging with landlords. There will always be space for relationships and the personal touch when leasing, but reporting and documentation flow should all be digital and efficient, because the modern occupier’s demands for commercial real estate are fundamentally different to those who come before them.
They expect flexibility - to grow or shrink their space within shorter timeframes as their business needs change; a higher level of customer care, as illustrated by the growth of hyper-flexible serviced work spaces; and above all a low-friction leasing experience.
While many building owners are taking note and reacting (deployment of tenant engagement apps is on the rise!) this is only one piece of the puzzle when it comes to a digital occupier experience. In fact, Deloitte recognised this in a 2020 report that found only 38% of real estate professionals considered a digital tenant experience as a core competency.
The tech-savvy entrepreneurs at WeWork, Fora and The Office Group (with their short form licences and smooth-as-silk user experience) carry a significant advantage over traditional landlords, who are looking to implement lease agreements.
At Least, we believe this needs to change. Digitising the preparation and HoT’s negotiation allows traditional landlords and their agents to conclude their leasing in a similar timeframe to the execution of a licence; giving them the competitive edge and excellent customer experience to continue thriving in this competitive market.
This fundamental shift in occupier requirements has forced building owners to think customer-first. Some landlords have moved towards seeing themselves as hospitality businesses and their portfolios as platforms for business growth - some even investing in their tenants.
The September 2022 report titled Survival of the Fitted found that traditional landlords are increasingly opting for “Cat A+” or fitted office space to cater for the rise in demand for quick, ‘oven-ready’ space. The report shows, that when landlords delivered Cat A+ space, marketing void periods typically halved in length when competing with Cat A - and the net effective rent achieved was around 31% higher! The majority of owners are certainly more alive to customer requirements and their appetite to embrace technology. But how does this work in practice?
So far, many parts of the customer experience have been technology-enabled, such as the search and marketplace for commercial property, and tenant engagement tools. However, there is a gap in the tenant’s digital journey and this gap is filled by Least.
By creating a digital negotiation and onboarding process for tenants, Least reduces the time it takes for parties to negotiate their HoTs and agree the lease. The result is a reduction in void costs for the landlord, fees being paid quicker to agents and deal certainty for all. Using Least, the landlord can provide a seamless onboarding experience and the occupier can focus on their core business.
Faster, better leasing means happier customers for landlords who are more willing to remain loyal as they grow and take space in the future. If you’re interested in learning how you can improve your occupier leasing experience, get in touch.