In an article for IPE Magazine, RealService founder Howard Morgan and Dr Thomas Wiegelmann, managing director of Schroders Real Estate, argue landlords must have an in-depth understanding of their customers’ business models.
They present a coherent case that the interests of landlords and their occupiers have become increasingly intertwined – think of the road to net zero as probably the most prescient example – and that a partnership approach is most likely to succeed for both parties.
They say: “Real estate investment today now implies a ‘co-ownership’ of the operating risk of the business customer occupying the building. In-depth knowledge of customers’ business models, their success factors and their intended use of a building has increasingly become critical for real estate managers.
“Rather than viewing a property investment as a collection of rental contracts, real estate managers are advised to align their space offering and services optimally with their (existing or target) customers’ business models.
“Each property should be managed as an independent business to ensure longer-term income and value creation, limit emissions and waste, and to prevent obsolescence.”
We’ve asked the question 9,397 times
RealService Insight surveys have the following as a core question: “How well do you think your landlord understands your business needs?”
We have asked it on behalf of our clients 9,397 times since 2015 and the results give some indication of how far along the partnership/co-ownership road our clients and their customers seem to be.
During this period, those who believe their landlord does an ‘excellent’ or ‘good’ job of understanding their needs has remained static at around 60%. Peaking at 62% for 2017-18 and 2018-19, it dipped during the pandemic to 57% and recovered slightly to 59% in 2020-21.
If, as Morgan and Wiegelmann insist, landlords and their customers’ businesses are increasingly sharing an operating risk, that figure probably needs to increase.
The type of needs to which the question refers have changed since the pandemic. Prior to 2020, responses were predominately practical and operational: “They don’t understand I need access out of hours”, “I need better recycling,” “I need better security”.
The pandemic made clear how landlords were invested in their occupiers, especially when the answer to the question was: “I need a rent holiday.”
“There are some occupiers who feel they don’t need their landlords to understand their business,” said Louise Freethy, RealService’s chief operating officer and director of Insight.
‘Landlords want to minimise voids’
“However, the point now, in the post-pandemic world, is that if landlords want to minimise voids and keep premium customers, they need to know how best to support them.
“That comes from understanding their businesses and their business needs.
“And as Howard and Thomas go on to say in their article, they can best do that by adopting a hospitality mindset, creating a customer experience strategy and providing education and training which demonstrates how their staff can put the customer at the centre of their business.”
The Morgan/Wiegelmann article in IPE Magazine is available here, with a synopsis here.
There’s more about RealService’s Insight Surveys here.