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How are companies maintaining their relationships with their landlords and Property Managers?

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The Covid-19 health crisis has required companies and landlords to operate with humanity, pragmatism, and safety in mind. For many weeks, companies were forced to close down, leaving their premises unoccupied and as such seeing their turnover suffer. Many of them decided to call landlord associations and their Property Managers in an attempt to find short and long-term solutions to reduce the inherent risks of this period. The need for advice and support was felt by occupiers at all levels. One collaborator in particular was found to be a key player during this period, the Property Manager. In order to attempt to better understand these needs, BNP Paribas Real Estate conducted a one-off survey,’ Occupiers of business premises faced with the Covid-19 crisis’, made up of occupiers of business premises (70%), landlord occupiers (13%) and occupier and landlord occupiers (17%).

How do companies envisage the aftermath of Covid-19?

The Covid-19 health crisis has brought about new behaviours and new requirements for companies. These companies are, in turn, rethinking their priorities, or speeding up certain organisational features, whether that be because of comfort and well-being, conviction, or due to economic, financial and energy concerns. This situation has proven to be a real wake-up call. 


On the other hand, many don’t question the importance of the office building, as it is still felt to be essential. Special attention should nonetheless be paid to the choice of this space and the occupiers admit to preferring buildings which are ready to welcome new ways of interacting and behaving (80%). Employees’ health, safety and well-being have also been become the prime focus. 


Within the study, among the occupiers who own their premises, 81% of them stated that they expect little to no externalisation of operations (sale-leaseback). Considering that 20% of them do plan to sell and then leaseback, this highlights the importance for owners of business premises to generate cash flow and treasury. Real estate is becoming an asset capable of generating cash flows.
 

A revival of the existing model?

Companies have often relied on their landlords and Property Managers to manage their real estate assets. Despite the fact that not all landlords have implemented specific measures to support their tenants, some initiatives such as lease deferment, monthly lease installments and rental exemptions were mentioned by the surveyed occupiers.


In the short and medium-term, companies also plan to consolidate these measures with their landlords, and hope to renegotiate their lease (65%) as well as their lease agreement (62%). The flexibility of business lease agreements (duration, surface area, leases) is also anticipated by the occupiers. Consequently, 40% of occupiers of business premises expect to bring an end to their current lease agreement. The 3/6/9 contract is not perceived as adequately flexible (83%), too restrictive (66%) and obsolete (65%). In the aftermath of the crisis we should expect a reexamination of the lease contract issue.
 

BNP-Paribas-Real-Estate-Direction-Committee-csongor-csukas

Today landlords and occupiers are realising the extent to which we are committed to our clients: we have the data, but we also have an understanding of the building and the needs of the occupiers. We can provide real recommendations.

Csongor Csukas
Deputy Head of International Property Management at BNP Paribas Real Estate
Europe

The key role of the Property Manager

Among the occupiers who took part in the BNP Paribas Real Estate survey, 40% benefited from daily support from a Property Manager. A key role during the crisis, the Property Manager was highly valued by occupiers in many ways, proving to be the perfect mediator between all stakeholders. Consolidated service continuity, which was adapted to the situation, proved to be the most appreciated (68%) ahead of availability (63%), implementation of preventative measures (59%) and applied communication efforts (52%).


As Csongor Csukás, Deputy Head of International Property Management at BNP Paribas Real Estate says, “Today landlords and occupiers are realising the extent to which we are committed to our clients: we have the data, but we also have an understanding of the building and the needs of the occupiers.  We can provide real recommendations. We have been heavily solicited since the beginning of the health crisis because we are seen as a real reference point. The Property Manager enjoys a comprehensive view of the whole real estate value chain and its stakeholders.”


The main challenges within the profession, as experienced by the occupiers, remain in continuing to implement health guidelines (89%), thinking about the creation of new roles and the resulting services  - in the building itself (84%) its digitalisation (78%) the reduction of the occupiers’ carbon footprints (79%) and user experience enhancement within their buildings (81%). The office building is viewed as a flagship, a symbol of a company’s identity and a focal point in the occupiers’ expectations.
 

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METHODOLOGY

This particular study was carried out by BNP Paribas Real Estate with a sample of 1557 occupiers during the period of the 12th to the 26th of May 2020. These companies, business premises occupiers were mostly asked about the layout of their offices, their real estate projects and their relationships with landlords and property managers. Out of the 157 people who took the online questionnaire, 45 were CEOs/Directors, 30 were Managers, 20 were Building Managers and 15 were Administrative and Financial Directors. The rest were Communication Directors, Logistics Directors, General Service Managers, Human Resources Managers, Purchasing Directors, Consultants, Commercial/Director Assistants and some Asset Managers.