How do Auckland commercial property investors address the changes in office tenants’ requirements?
Permanent link to Research Bank record:http://hdl.handle.net/10652/1796
Office tenants’ requirements have changed over the last decade since they are looking for more flexible office environments in order to minimize their total occupancy costs. Office property investors need to understand the current tenant space requirements and accommodate these needs in their office portfolio investment strategies so that their return on investments can be maximized. This paper aims to explore the perceptions and strategies followed by large-scale property investors in order to address the recent changes in tenants’ requirements for office space and layouts, environmentally sustainable office buildings, and lease terms in the context of the prime office sector in the Auckland market. The research is exploratory in nature and a qualitative research approach has been adopted. Semi-structured in-depth interviews have been conducted with four large-scale listed property trusts who are active players in the Auckland office market. The data was collected using a carefully design interview protocol to obtain an in-depth understanding of the property investors’ perceptions and strategies of meeting their office tenants’ requirements as well as their interpretation of the future market trends. The findings of the study indicate that the main changes in office requirements encompass the needs of efficient and flexible office space and layouts, sustainability requirements, and preference for flexible lease terms. All the interviewed property investors perceived that short lease terms and efficient space usage are more frequently demanded by tenants. The green features of the office building are the least considered aspect, particularly under the current challenging market conditions. The strategies that all the property investors adopt are endeavouring to provide office premises which enable efficient usage of space, efficient operation and short lease term provisions. The property investors realize that the role of property investor is not only to provide physical premises but also services because the relationship between investors and tenants has been developed to a strategic partnership rather than the previous adversarial one.