Covid has brought landlords and tenants together like never before. Two parties who typically met only occasionally, have sat down together and had open and honest conversations about real estate. In many cases, they’ve moved past their usual transactional relationship to adopt a partnership approach to support one another through Covid. But as the end of the pandemic is in sight, is there a risk that the two sides will return to the opposite side of the ring, never to talk again?
At an event held at the end of June, CoreNet’s UK Chapter brought together representatives from landlords (Stuart Cranna/ Aviva Investors, Mark Tyson/ Legal and General Investment Management) occupiers (Keith Waterman/ PRA Health Sciences) and managing agents (Stephanie Moore/JLL) facilitated by Cathy Hayward from Magenta to agree the following recommendations to improve the future relationship between landlords and occupiers.
- Good communication and trust is at the heart of the solution. Covid brought landlords and tenants together but it shouldn’t just be a crisis which generates dialogue. Ongoing, open communication is key. Honest conversations should be the way forward.
- There needs to be more openness between landlords and occupiers with both talking about their long-term plans and goals. Some have previously used a ‘cloak and dagger’ approach of hiding their strategic business plans and then trying to negotiate hard at the eleventh hour. A more collegiate approach can ensure that plans are aligned.
- There needs to be more of a tripartite approach between landlords, occupiers and managing agents. The agent should not be seen, or act as, a barrier between the landlord and the tenant.
- Landlords should try to be more flexible and adaptable with lease lengths and conditions. This is not always going to be possible with every landlord – smaller family offices or private property companies may not have the adaptability of institutional landlords.
- Landlords should involve occupiers in discussions about new developments and not simply the architect and design community. That way developments will be created with occupier needs in mind and will be more successful.
- Senior people in both occupier and landlord organisations should spend more time together to ensure better long-term outcomes including quicker alignment to net zero carbon. While the relationship between the two sides is stronger at operational level thanks to Covid, there’s room for more strategic alignment at senior level.
- There needs to be more training on areas such as negotiation skills but with a focus on using emotional intelligence. Discussion will sometimes get back to price and people need to ensure they can negotiate well without damaging a strong relationship with the other side.
- There needs to be a recognition that mutually-beneficial developments such as enhanced service and net zero needs to be paid for by everyone who benefits throughout the life of the building.
While the panel recognised that everyone is at varying stages of the journey and has been affected differently by Covid, these recommendations provide a blueprint for future success for everyone. Stronger relationships between landlords and occupiers benefit all parties. Occupiers will enjoy higher-quality space and service while landlords will benefit from increased certainty and long-term income. Both groups will have greater success in achieving their broader corporate goals.
Many thanks to our panel for giving up their time and for our sponsors IWG, The Office Group, Savills and TP Bennett whose support allows us to put on these events.