A MAJOR shift is under way in the traditional relationship between West Yorkshire office landlords and their tenants, according to research by international property consultants Jones Lang LaSalle.
More than three-quarters of property professionals believe occupiers are becoming more powerful and demanding more from their landlords, says the latest Offices 2020 research issued through the national office agency team at Jones Lang LaSalle in West Yorkshire.
Jeff Pearey, office agency director for the region, said: “West Yorkshire office occupiers recognise that the economic climate means that they are in a stronger negotiating position than ever before and are revisiting their property strategies to ensure their workplace is working harder for their overall business.
“This shift in the traditional balance of power between landlord and tenants will affect West Yorkshire’s property landscape, generating greater collaboration between landlords and occupiers. We expect the shift of power to occupiers will continue for a number of years, ahead of cyclical trends.”
Bill Page, director for research at Jones Lang LaSalle, said: “A steady shift is taking place in the office market, including in West Yorkshire, as it is now even more influenced by demand.
“Occupiers have a tremendous negotiating position and can influence what gets built. Their brief can become far more detailed – from location, capacity, density, sustainability, security and air conditioning right down to the sprinklers.
“Furthermore, flexible, long-term partnerships with developers and out-sourced service providers will lead to better outcomes for both parties, especially in the absence of debt funding.
“With careful upfront investment, all sides can benefit.
“The cutting edge lies in developers’ ability to build long-term partnerships with their clients and out-sourced service providers, anticipating their needs and locating and configuring space in a way which adds value.
“Besides, funding for office development is unlikely to return to pre-2007 volumes, so inventive collaborations with corporate clients will be required to fill the gap.”
Jones Lang LaSalle’s Offices 2020 research says that lease lengths are also declining as occupiers want more flexible workplace strategies which will increase occupier turnover as leases expire more quickly and more often – although the actual growth in occupied stock may fall as space is occupied more efficiently.
Mr Pearey said: “Occupiers need efficient workplaces and are not shy in asking for what they want. Developers need high-quality occupiers.
“Because property has risen up the corporate agenda, landlords and tenants need to foster a true partnership approach as this will benefit both parties.”
Offices 2020 covers the main issues and challenges that occupiers, investors and developers will need to consider over the next decade, including sustainability, location, asset management, building obsolescence, technology, working practices, fit-out and finance.
The 12-month campaign addresses the industry’s most significant issues and aims to help investors, developers and occupiers to better understand future trends and changes within the offices sector, consequently leading to better decision-making on future business opportunities.
Among its findings, the report said that 83% of real estate professionals think sustainability is the highest priority strategic issue facing office real estate decision-makers over the next 10 years while a combination of sustainability, technology and workplace practice will create a huge demand for refurbishment.
The report said future technological developments would have a significant impact on fit-out and space requirement – but not to the extent some think. Potential game changers are a shift to 12 volt rather than 240 volt electrical technology; cloud computing and an increasing use of mobile and collaborative technology.
Funding and finance will remain constrained and creative partnerships and alternative funding sources will be increasingly required, according to the report.
