Connectivity pushes up the agenda for office tenants post-pandemic

Digital connectivity is more important than location and even rental price for commercial tenants looking for new offices in the wake of Covid-19, according to research from Backbone Connect.

The new report, Connecting the dots: What office tenants want, found that 82 per cent of tenants rank connectivity, the infrastructure which enables internet and digital activity, as ‘very important’ when looking for a new space, compared with 67 per cent who ranked location as very important and 64 per cent who prioritised price.  The report also reveals that almost two-thirds of tenants would pay a three per cent premium on their leases for better digital infrastructure, and that 79 per cent of businesses have paid more for offices with improved connectivity in the past.

David McLeod, co-founder of Backbone Connect, commented: “Even before the pandemic, the growing digitisation of the world of work was pushing connectivity up the agenda for occupiers. The experience of the past year and the new ways of working ushered in by Covid-19 have only accelerated that trend. Landlords must put digital infrastructure front and centre of their leasing and investment strategies to make their assets stand out from the competition. Investing in IT infrastructure won’t just help to reduce voids – it could also equate to a three per cent rental premium.”

Concerns that demand for workspace would significantly fall following the pandemic also seem to be unfounded. Backbone Connect found that just three per cent of businesses plan to stop using office space altogether once lockdown eases, while 57 per cent say they will actually require more space in the coming years.

McLeod continued: “It’s clear that the physical workplace will remain a critical part of our working life to support employee productivity, creativity and team culture. But that doesn’t mean business as usual. Nearly all the tenants we spoke to said they need their office space to support flexible working patterns in future. Landlords have to make sure they can provide that adaptability, and also recognise that flexible working puts different demands on the tech too. It’s about offering the right set up to support people dialling in from anywhere, brainstorming, desk-sharing and collaboration across the office.”

The report also found that environmental considerations and employee wellness are becoming increasingly important factors in occupiers’ decision making for new workplaces. Of the businesses surveyed, 59 per cent are currently working towards net zero carbon goals, with a further 40 per cent intending to set a net zero strategy in the next few years. There is growing demand from tenants for landlords to help them achieve these goals. Four out of five tenants say they would like landlords to prioritise investment in smart technology to improve energy efficiency in their buildings, while 69 per cent would pay more for buildings with technology that helps them meet their ESG targets.

“Our research shows that the battle for the hearts, minds and pounds of office tenants will not be won with premium postcodes, but with strong digital connectivity and adaptability’, said McLeod. “Tenants are asking a lot of more of their landlords. They want support to meet important security, sustainability and health and wellbeing goals and that means property owners providing space that incorporates smart, holistic technology. Investing in the right digital infrastructure will help landlords retain and attract tenants in the months and years ahead.”