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26 Nov
ACORPP Market Voice - Timely landlord focus on building, amenity upgrades

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By Lisa Seun

The gradual softening of face rents in the Perth CBD toward the end of this year has been well-documented. 

Landlords have mounted a rearguard action for several months, offering increasing levels of incentives to ward off what they feared most.

In the end, as always, the market dictated that face rents would have to fall.

Vacancy rates, as we know, are at an all-time high of 16.6 per cent and I am on record with many other commentators in predicting this will rise to the low 20's before we see excess space begin to be absorbed. 

In the meantime, what can landlords do to get existing tenants to renew their leases – or to attract new tenants?

James schokman photography ADCO Legal aid 132

If they are committed to holding onto their assets, then it’s probably timely to consider improvements.

Competition for office space is fierce and apart from the best deals, tenants are also looking for amenities that reflect their perception of their position in their sector, and also the needs of their employees.

It makes sense: tenants want clients to gain the impression they are working with a successful business that values itself and its employees.

Never underestimate the value of the perception of success.   

Where you work is a highly visual interpretation of self-regard. Where you work and how you present yourself and what you offer to your employees, is also a package that can determine your ability to attract and retain the best talent. Even in rising unemployment, company culture is important.

Beyond kerb appeal, the attractiveness rating of external building presence, the lobby provides a critical first impression. This experience shapes the perception of the visitor and the tenant he or she might be visiting.

Landlords would do well to consult an interior designer or architect to ensure the first impression is a favorable one.

While in the lobby, one area that can impact a positive impression is the fit out and performance on lifts – even down to their smell. 

Other areas of amenity that are hot buttons at the moment are rest rooms and end-of-trip facilities including bike racks, lockers, change rooms and showers.  A room fitted out as a gym would is be an expectation. Access to gym facilities would also be an expectation. 

Trends that have gained momentum overseas include rooftop terraces, technology friendly lounges, cafes and playrooms, all created to increase the appeal of a building.  

 Amenity Collage

The way people work is changing and a building needs to be much more these days. It’s a space that houses a community and it needs to reflect that community’s needs and culture. 

A few years ago, this kind of thinking was strictly in the province of the Google’s and Apple’s of Silicon Valley. These days, it’s an expectation whether you’re in finance or mining, and with many companies making cuts to middle and upper management, leaving the more affordable labour of the Gen Y age the need to make the tenant and building space attractive to them will aid in staff and ultimately tenant retention. 

Sure, none of this comes cheap, but if you don’t invest and add value to your property then you will just be in a race to the bottom on price.

Right now, we are in uncharted territory in Perth. The market is in an unparalleled slump.  The tenant is king and demanding amenity levels that the property market has never before considered.

Landlords have to balance depressed rents and the need for building investment.

The outcome is likely to be Darwinian.

 

 

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