Historically, the tenant-landlord relationship has been fairly transactional: the tenant occupies a space and pays the landlord rent to use it, in a deal that often lasts years or even decades. With more and more companies growing rapidly and offering employees flexible work arrangements, tenants expect more from their landlords. Commercial property owners are now adopting a more tenant-centric mindset to stay competitive.
Naturally, this means that landlords are focused on how to provide more value to tenants. Just as tenants are becoming more adaptable and agile in order to attract and retain talent by offering new benefits, landlords too must adapt and consider how the additional services can make them a better partner to their tenants.
The key to transitioning to space-as-a-service is understanding that tenant experience can be an important differentiator between competitors. To improve tenant experience, some owners are turning to tenant engagement software. These services, like apps that connect to on-premise or nearby amenities, increase the feeling of community and instill a sense of belonging.
These tools are wonderful for creating loyal tenants who renew leases. However, they only optimize the experience of a tenant who is already in the space. But what about before that, when the tenant is considered a prospect? The tenant’s experience with a landlord begins long before they start working in their new space. And while relationships are generally in a good place when a letter of intent is signed, they hit an inherently tense, but crucial period immediately after: the lease negotiation process.
Negotiation, at its very essence, is filled with friction. In the leasing process, both parties are attempting to broker a deal that is favorable to them, which brings them into conflict. This makes for an awkward and uncomfortable process, where multiple rounds of edits are passed back and forth through various forms of communication. Unfortunately, due to the industry’s use of general-purpose software that is not designed with leasing workflows in mind, the process drags on for months, frustrating all of the stakeholders in the process.
The resulting negativity that emerges during the negotiation process sours the fledgling relationship before a tenant even gets into the space, creating a lot of ground for the property owner to make up. Incorporating value-added tenant experiences is one way a landlord can make up that ground, but it doesn’t address the root of the problem. Instead of accepting this status quo, the commercial real estate industry needs to adopt the right tools and technology necessary to ensure a smoother lease drafting and negotiation process.
While there’s no shortage of software applications that can be used in the leasing process, most of them—like the traditional word processors—are general-purpose applications and weren’t designed to address the specialized needs of commercial leasing. The industry sorely needs highly specialized platforms. These must be designed to increase transparency and collaboration through the entire leasing process—from the first draft through the negotiation phase, all the way through lease execution. As an industry, we must find better ways to improve the relationship between the property owner and commercial tenant earlier in the relationship.
For example, a property owner may consider how interactive and collaborative tools can bring both property owners and tenants together to edit and negotiate leases within one platform, meaning both sides can eliminate incessant calls, emails and endless versions of the document. A seamless editing process would enable landlords to be more responsive, speeding up the process for everyone involved. This also would benefit tenants, who could spend less time negotiating terms or marking up documents, and more time on their businesses. For property owners, an expedited process means that tenants are able to occupy the space sooner and they can start collecting rent.
Like the sales process, which has benefited greatly from CRM software integration, commercial real estate is just beginning to embrace technology to manage the tenant-owner relationship and provide better customer service. Highly specialized technology designed for commercial real estate will make every facet of the industry more efficient and better, for both owners and tenants. Time savings opens up the resources that commercial real estate employees need to focus on the value-added tasks that move the industry forward.