How landlords can upgrade office premises to attract tenants
Landlords are seeking new ways to attract tenants to their assets.
With record levels of new supply set to deliver over the next two years, landlords are seeking new ways to attract tenants to their assets.
Traditionally, incentives predominantly came as a rent-free period upon commencement of a lease to off-set a tenant's fit-out period. Due to the increase in competition and limited demand however, some landlords are now doing more. In addition to more varied financial & commercial incentives, landlords are improving amenities and upgrading common areas; these range from better food & beverage options, health & wellness areas, tenant lounges to flexible & co-working spaces.
A notable example would be Swire Properties’ investment in Taikoo Place, where they provide a wide range of new food & beverage offerings such as KIN Food Halls, The Sixteenth, and CATCH at differing price points. For Pacific Place, Swire is expanding its dining options at grade level in the adjacent precinct on Star Street. On flexible working spaces, Hongkong Land is offering a premium office solution – Centricity Flex - in the heart of Central that prioritises wellbeing. These amenities not only benefit tenants, but also create a stronger sense of community among the portfolio-wide workforce.
As for more direct incentives, several landlords are offering capital contributions to incoming tenants, on a case-by-case basis, to reduce the upfront financial burden of relocating. Whilst these contributions are often paid back to the landlords through a “rentalised model,” each may structure the offering differently.
The current market conditions present a window of opportunity for tenants to seek immediate savings in situ ahead of their lease expiry. A particular way to achieve this is through an early lease restructuring – a “blend and extend” - where upfront reduced rent is exchanged for a longer lease term.