Nearly a year into the pandemic, the world has changed. People have yoga studios in their living rooms, pick up curbside delivery rather than cruising the aisles, and cut back on plans to travel further than their own backyards.
Some changes will be short lived. But in the commercial real estate market, many of the pandemic’s impacts may require permanent adjustments.
At the end of 2020, demand for office leases was down 61 percent year over year. Even with recovery on the horizon, it is clear that tenant priorities are different. Increased health and safety concerns have shifted virtual tours from a perk to a necessity, and influenced the amenities potential tenants want to see.
“It’s almost like Covid was a forcing function,” said Nick Romito, CEO of commercial real technology company VTS. The drastic change in tenants’ wants and needs “made happen what should have probably happened ten years ago.”
VTS, a digital leasing, marketing, and asset management platform, is used by the industry’s top landlords, including Tishman Speyer, Brookfield Properties, and Oxford Properties Group as their system of record to manage their leasing and asset management activities online. VTS manages more than 60 percent of national Class A office space and 65 percent of the Manhattan office market.
The company conducted a national survey to gauge tenant expectations for the coming year. The vast majority—83 percent of respondents—said that they would prefer to take a virtual tour before doing a physical walkthrough of an office space, a significant shift for the historically hands-on real estate industry.
For many landlords, meeting these expectations will require an investment in new tech capabilities. Last year saw the launch of VTS Market & Marketplace, the digital marketing suite and broker-facing listing site that is fully integrated into VTS’ market-leading leasing platform that property owners already use every day.
VTS Market starts by creating a state-of-the-art virtual experience for every individual space and the buildings they’re in. The company’s team produces high-quality digital videos, photos, floor plans, and 3D renderings to give brokers and potential tenants a realistic idea of what it feels like to occupy a space.
Landlords can easily publish this content to their own websites and marketing materials like brochures and floor plans, and email listings to their own networks of tenant reps, directly from VTS. When new properties become available, VTS shares them directly with its extensive network of tenant rep brokers. Tenant rep brokers can search the VTS Marketplace for listings that meet their clients’ requirements, save them, and share them directly with clients, for free.
And more importantly for landlords, all of this content is trackable, so landlords can understand how their leasing and marketing strategies are actually working. Leasing teams can track real-time analytics, such as number of page and video views, giving them the insights they need to create the right strategies that minimize downtime. And if a listing isn’t getting views, it won’t take months to realize and pivot the strategy.
“You can really tie it back to a probability of conversion,” said Romito. “If a company tours a space digitally on a VTS video 25 times, that person is always converting into an in-person tour. Once you get over 50 views, they’re negotiating a transaction.”
The survey also found that updated HVAC systems, customizable open floor spaces, 24-hour security, COVID-19 safety measures, and parking garages were the top amenities influencing tenant decision-making.
Transparency was another “must-have” for the survey’s respondents. Across every city and industry, rent was the most important piece of information tenants wanted before visiting a space in person. More than 75 percent said they’d be more likely to tour a space that provided the rent in advance.
With VTS Market, landlords can deliver the information tenants and their brokers are asking for. Each listing contains comprehensive information about the space, including price, availability, size, space condition, and building amenities. And because it’s sourced directly from VTS’ core leasing software that landlords use every day to manage their inventory, tenant rep brokers can trust that every listing is accurate and up-to-date and don’t need to follow up with landlords to confirm key details.
“The real value in VTS for me is the centralized content, the consistency of the content, and the ease of use for everyone I share it with. Seldom do I have a broker call me or email me and say, ‘What you sent me doesn’t work,’” said Jeff Buslik, Executive Managing Director at Adams & Company Real Estate. “And at the click of a button I can track the number of inquiries, track if those inquiries are coming for a specific building relative to a certain neighborhood, if they’re coming for a certain size space. It’s really providing us tools to see what is working and what isn’t working.”
According to Deloitte’s 2021 Commercial Real Estate Outlook, investing in tech capabilities is imperative for building owners hoping to not just survive the next few months but thrive in the next upturn. Romito agrees. “This process now starts online, and that’s not going to go away,” he said. “Landlords who can shift their mindsets and make strategic investments to meet tenant expectations will be the ones who emerge from the pandemic as winners.”