Digital connectivity trumps location and even rental price for commercial tenants looking for new offices in the wake of Covid-19, according to research from digital firm Backbone Connect.
The report compiled by the company, Connecting the Dots: What Office Tenants Want, found that 82 per cent of tenants ranked connectivity, the infrastructure which enables internet and digital activity, as ‘very important’ when looking for a new space, compared with 67 per cent who ranked location as very important and 64 per cent who prioritised price. It also found that almost two-thirds of tenants would pay a 3 per cent premium on their leases for better digital infrastructure and 79 per cent of businesses have paid more for offices with improved connectivity in the past.
David McLeod, co-founder of Backbone Connect, said: “Even before the pandemic, the growing digitisation of the world of work was pushing connectivity up the agenda for occupiers. The experience of the past year and the new ways of working ushered in by Covid-19 have only accelerated that trend. Landlords must put digital infrastructure front and centre of their leasing and investment strategies to make their assets stand out from the competition. Investing in IT infrastructure won’t just help to reduce voids – it could also equate to a 3 per cent rental premium.”
Concerns that demand for workspace would significantly fall following the pandemic also seem to be unfounded. Backbone Connect found that just 3 per cent of businesses plan to stop using office space altogether once lockdown eases, while 57 per cent say they will actually require more space in the coming years.
McLeod added: “It’s clear that the physical workplace will remain a critical part of our working life to support employee productivity, creativity and team culture. But that doesn’t mean business as usual. Nearly all the tenants we spoke to said they need their office space to support flexible working patterns in future. Landlords have to make sure they can provide that adaptability, and also recognise that flexible working puts different demands on the tech too. It’s about offering the right set-up to support people dialling in from anywhere, brainstorming, desk-sharing and collaboration across the office.”
Environmental considerations and employee wellness are becoming increasingly important factors in occupiers’ decision-making for new workplaces. Of the businesses surveyed, 59 per cent are currently working towards net zero carbon goals, with another 40 per cent intending to set a net zero strategy in the next few years. There is growing demand from tenants for landlords to help them achieve these goals. Four out of five tenants say they would like landlords to prioritise investment in smart technology to improve energy efficiency in their buildings, and 69 per cent would pay more for buildings with technology that helps them meet their ESG targets.