Tenant Engagement Is Now A Risk Management Strategy For Commercial Landlords
Tensions between landlords and tenants have been boiling over in recent months. Landlords have struggled to collect rents; Great Portland Estates received 74% of rent from office tenants in June, while Retail Properties of America collected just 65% from its retail-focused portfolio. Some frictions have also spilt over into the courtroom. Witness business service firm Jenner & Block taking its landlord to court seeking usage-based rent payments at the Windy City skyscraper in Chicago.
As relationships come under strain, many landlords are launching new programmes to improve tenant relations. While tenant engagement programmes were already emerging, the economic downturn is forcing landlords to act now to help retain their tenant base and income. In the retail sector, landlords have been offering tenants the option to restructure lease terms to help them ride out the challenging conditions. For example, the owner of London’s Covent Garden has provided a move to turnover-linked rent agreements until the end of this year to help cash-strapped tenants survive.
In the office sector, with rapidly shrinking demand, some landlords are deploying tenant engagement apps to improve communications. For example, Divco West Real Estate Services has deployed a tenant experience app from HqO at a property in Washington with around 700 occupants. The landlord can use the app to communicate with tenants, restrict access and as a data source should contact tracing be needed.
With the economic downturn set to last into 2021, being a passive landlord is a risky strategy. Now is the time for landlords to work more closely with their tenants to share the pain of the COVID-19 downturn and meet their changing expectations for a safer workplace. For more insights into this topic, see our recent report, Beyond COVID-19: Emerging Best Practices For Occupant Health And Wellbeing.