As revealed in our Q4 2012 Office Industry Trends analysis, office tenants reached new heights of satisfaction in 2012. The trend, though, is not limited to a single property type. Indeed, it has been happening across the entire commercial real estate industry, encompassing industrial, retail and medical office properties as well as traditional office buildings.
The chart below shows the four-year trend for overall satisfaction for the four property types tracked by Kingsley Associates. Though the trend patterns differ somewhat, tenant responses were more positive in 2012 than in any of the previous three years. And in fact, the same holds true for several other metrics, including satisfaction with property management, value for amount paid and renewal intent.
Overall Satisfaction Trend for Commercial Property Types
When it comes to tenant expectations of future space needs, however, there are some differences across property types. The percentage of retail and medical office tenants anticipating more space has remained fairly stable since 2009. And while more office tenants are expecting to grow than in 2009 or 2010, the proportion is virtually unchanged from 2011. On the other hand, the expectations of industrial tenants have moved up and down a great deal. As of the end of 2012, nearly 20% of industrial tenants are anticipating more space, by far the highest among the four property types.
Future Space Needs Trend
For a more detailed look at these trends, check out our Q4 2012 Commercial Property Trends.
Our survey results represent over 1 billion square feet of office space and an equally large amount of multifamily space (approximately 1.5 million apartment units), making our database the largest repository of customer service benchmarks available to the real estate industry. In Q3, we noted the following:
- Tenant satisfaction and renewal intent are hovering near 3-year highs
- Tenants are more loyal than they were a year ago in most (but not all) major US markets
- Tenant interest in green building practices may be beginning to rebound after a prolonged slide
- Click here for the full press release an office trends data set
For the first time in over 2 years, the percentage of office tenants saying that green building practices are “important” or “very important” to them registered an increase during the most recent quarter. Still, the proportion remains below where it was 12 months ago in most major markets, and anecdotal evidence suggests that tenants are especially interested in green retrofits that will lower their operating expenses.
For more, click here or on the graph below for our office industry trends from Q2 2012.
At BOMA’s recent Annual Convention in Seattle, Kingsley Associates’ Phil Mobley participated in an experimental new presentation called J.O.L.T. (Just Opportunities to Learn and Think). In this format, presenters speak for 5 minutes on a topic while slides advance automatically every 15 seconds. Thus, there’s a lot of information condensed into a very short amount of time. Check out the audio-visual presentation below to hear Phil’s presentation entitled “What are Tenants Thinking?”
Kingsley Associates tracks national and market trends in office tenant perceptions each quarter. This quarter’s results show that tenant loyalty – as measured by the percentage of tenants who told us they “probably” or “definitely” would renew their lease – is at its highest point in the last 3 years (see the chart below).
This quarter’s results reveal some interesting differences across markets as well:
- Atlanta office tenants are the most optimistic about hiring additional people and needing more space.
- Nowhere in America are office tenants less interested in environmentally sustainable building practices than in Dallas.
- San Francisco exceeds the national average in tenant satisfaction, loyalty and economic outlook.
- In New York, tenant satisfaction and loyalty dipped during Q4.
- Tenants in Chicago are among the happiest, most loyal and most optimistic in the nation.
- Interest in environmentally sustainable building practices fell sharply in Denver throughout 2011.
The full press release is available on our Website here. To download the data itself (in PDF format), click here.
According to Kingsley Associates’ latest research, office tenant loyalty is at its highest point in three years. Tenants are also seeing more value for what they pay in rent, and more of them anticipate needing additional space than at any point since before the 2008 financial crisis. Check out our Q3 2011 Office Industry Trends press release or go straight to the data.
Kingsley Associates and BOMA have released the Autumn 2011 edition of the BOMA-Kingsley Report, a semiannual paper that takes an in-depth look at big topics in the office building industry. An analysis of data from the 2011 Experience Exchange Report (EER) forms the centerpiece of this issue, with a key finding being that office building owners and managers were able to hold costs relatively stable last year. In fact, utility expenses and property taxes both fell by substantial margins over the prior year – at least in terms of the national average.
The current issue also includes several other features:
- “The Numbers Tell the Story” analyzes some major expense line items across building types and major markets.
- A panel of leading industry figures look toward the future of performance measurement in “The Next Generation of Benchmarking.”
- In “Deconstructing Density,” BOMA’s Laura Horsley investigates the acceleration of tradition-challenging methods of using office space.
Kingsley Associates has released its quarterly office trends for Q2 2011. Among the interesting findings:
- More tenants anticipate the need for additional space than at any point since before the 2008 financial crisis
- Tenants in Boston and San Francisco report greater need for additional space than those in other major markets
- Tenant satisfaction is at an all-time high
- Interest in green building practices is beginning to trail off ever so slightly
For more, see the full press release or download a PDF copy of Kingsley Associates’ Q2 2011 office industry trends.
On May 5, Kingsley Associates’ Phil Mobley was a panelist at the BOMA Medical Office Building Seminar in Dallas, Texas. Click on the image below to hear a brief snippet from the session about property management excellence.
The March/April issue of the BOMA Magazine includes the latest edition of the BOMA-Kingsley Report. This issue addresses deferred maintenance and capital expenditures, which present unique challenges in today’s market. Kingsley’s Phil Mobley has a sidebar about green building practices. Download the BKR here: Spring 2011 BOMA-Kingsley Report