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Commercial occupiers and landlords need to get more in step on the future of the office

A new report from MRI Software, a global leader in real estate solutions, shows while tenants expect changes in space usage post-pandemic, landlords don’t – but both see need for new technology adoption.

The research reveals that 71 per cent of commercial occupiers say the mass shift to remote working during the pandemic has fundamentally changed their long-term approach to space usage, and yet 69 per cent of landlords expect no lasting impact from Covid-19.

MRI partnered with CoreNet Global, the leading association for corporate real estate professionals, to survey 200 tenants and 50 landlords across a broad cross-section of industries worldwide. The findings offer insights into key post-pandemic views on the return to work and indicate critical differences in the expectations of commercial tenants and landlords.

The survey report, MRI Software Market Insights: Getting Back to the Office, shows that over half of business occupiers plan to lease less space after the pandemic, yet over half of landlords don’t see their tenants’ requirements changing:

  • Fifty-six per cent of occupiers say they will need less space, with the vast majority expecting fewer employees onsite at any one time; whereas 60 per cent of landlords see their tenants leasing the same amount of space, with only 33 per cent projecting a decline;
  • None of the tenants surveyed said they would seek more space to enable a lower workplace density, and just three per cent anticipate leasing extra capacity to allow for additional collaborative areas once remote workers start coming back to the office.

One area where both corporate occupiers and landlords are in clear agreement is on the need to adopt technologies to handle changing requirements as the pandemic abates, with even those confident in current capabilities planning to extend their existing set-ups and/or deploy new workplace management tools. The results show that 83 per cent of occupiers and 64 per cent of landlords plan to adopt new technologies, while 77 per cent of tenants and 68 per cent of building owners/operators intend to expand their current solutions.

Other significant findings include:

  • The report confirms the scale of remote working, with 72 per cent of occupiers having fewer than a quarter of their employees onsite during the crisis – and virtually all of those were deemed essential workers;
  • Remote working has grown in acceptance, with roughly a third more companies expecting to allow remote working (89 per cent) after the pandemic than before (66 per cent) – a 23-point uptick;
  • More remote working will mean different office set-ups for many employees, with 54 per cent of occupiers either converting to or expanding their use of hot-desking and just 20 per cent keeping assigned workstations;
  • The impact of these changes is that occupiers are altering their lease strategies, with landlords seeing their tenants: negotiating new terms (63 per cent), breaking leases (50 per cent), seeking shorter renewal periods (44 per cent), and/or letting leases lapse (29 per cent).

Commenting on the research findings, Brian Zrimsek, Industry Principal, MRI Software said: “Many of the findings were expected but the differences in outlook between commercial occupiers and their landlords were particularly surprising.

“The good news is that both tenants and real estate owners see the benefits of bringing the workforce back into the office. Together, they now have an opportunity to align their approaches and partner to ensure that employees work even more effectively and safely as their companies adapt to new standards, practices and configurations.”

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