Report by MRI Software and CoreNet Global shows tenants expect changes in space usage post-pandemic while landlords don’t – but both see need for new technology adoption
Solon, Ohio – May 25, 2021 – New research from MRI Software, a global leader in real estate solutions, reveals that 71% 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% 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:
- 56% of occupiers say they will need less space, with the vast majority expecting fewer employees onsite at any one time; whereas 60% of landlords see their tenants leasing the same amount of space, with only 33% projecting a decline;
- None of the tenants surveyed said they would seek more space to enable a lower workplace density, and just 3% anticipate leasing extra capacity to allow for additional collaborative areas once remote workers start coming back to the office.
“Many of the findings were expected but the differences in outlook between commercial occupiers and their landlords were particularly surprising,” says Brian Zrimsek, Industry Principal, MRI Software. “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.”
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% of occupiers and 64% of landlords plan to adopt new technologies, while 77% of tenants and 68% of building owners/operators intend to expand their current solutions.
Other significant findings include:
- The report confirms the scale of remote working, with 72% 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%) after the pandemic than before (66%) – a 23-point uptick;
- More remote working will mean different office set-ups for many employees, with 54% of occupiers either converting to or expanding their use of hot-desking and just 20% 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%), breaking leases (50%), seeking shorter renewal periods (44%), and/or letting leases lapse (29%).
Zrimsek concludes: “The pandemic has accelerated technology adoption trends that were already taking place. As employees return to work, both commercial occupiers and landlords realize that PropTech tools will be essential in rethinking workplace management strategies, reassessing lease portfolios, and managing flexible office requirements.”