Rethinking asset value proposition.

Almost every business sector has a clear idea as to who its customer is. But does the commercial property landlord?

The commercial property sector customer value proposition is desperately behind almost every other major business sector. Admittedly, it is a capital-intensive business making agile adaptation a challenge. However, for the most part that is an excuse. In other respects, the sector’s transformation is held back by many fund and asset managers with limited conviction to understand what customer-orientated transformations are feasible.

This observation may offend some - but most large landlords place a higher value on what investors think of them than what customers think.

In contrast, when we look at most substantial business sectors across the globe we see investors attribute significant value to those businesses whose brands are strongest within their addressable market – the customer.

Occupier finance teams share the blame. Research by Cushman and Wakefield shows that despite CEOs’ orientation to productivity, CFOs tend to make the property decisions and focus on property spend at the expense of the productivity. Focus of efficiency of property spend can also have adverse effects in this competitive market on attracting and retaining talent. Sobering when we consider that white collar businesses spend up to 300% more on salaries than real estate.

The days are numbered whereby a landlord measures its value solely by what it can get out of the tenant, and where maximising fixed tenure is the lense by which opportunities are assessed. In an increasingly dynamic and competitive landscape value will be measured by what the landlord does for its customers; how it helps them meet their business objectives and how it makes them feel.

This could look like providing a suite of services that supports the customer to rapidly expand, contact or pivot, anticipating and helping address the future needs of occupants, and developing initiatives that promote employee productivity and engagement.

Internationally, only a small number of landlords are committing a great deal of thought as to how to revolutionise their customer offering to maximise value. Those that execute early will redefine the sector to their benefit. Those that follow quickly and with operational excellence will also profit.