July 10, 2015
Only 1 in 5 office occupiers rate their property management service as ‘good’ or ‘excellent’, according to new research by the British Council for Offices (BCO). While two thirds of occupiers are happy with the quality of their office and three quarters perceive the quality of office space to have improved over the past 10 years, less than one in three occupiers feel the industry understands their business needs. This clear gap between customer expectation and customer experience has led the BCO to call on the industry to develop a better understanding of what a well-performing building looks like from an occupier perspective. The BCO has developed a new definition of building performance, which sets out to frame a more sophisticated approach for property owners and managers to engage with occupiers, focusing upon value and quality creation, rather than simply cost reduction.
The report follows-up research published in 2002 that highlighted shortcomings in occupier satisfaction with the way their buildings are managed on their behalf. Based on new in-depth research with corporate occupiers, this latest research report shows that although satisfaction within the UK office industry is improving, it is not at a fast enough rate to satisfy the majority of occupiers.
In a period of increasing demand for office space and a limited supply, less than one in five (17 percent) of the office occupiers contributing to the study rated their property management service as ‘good’ or ‘excellent’. Although the customer service offering is lacking, satisfaction with the product itself is high, with two out of three occupiers happy with the quality of their office and three out of four perceiving this quality to have improved over the past 10 years.
Innovation and flexibility in the industry also rated highly with the occupiers interviewed, yet despite this, less than one in three occupiers feels that the industry understands their business needs. One of the ways that the expectation gap can be closed is by helping owners and managers better understand what a well-performing building looks like from an occupiers’ perspective. To achieve that, the BCO proposes that the industry adopts, and actively promotes, a new BCO definition of building performance as the way that a building supports the occupiers’ differing aims and needs, including:
- Driving quality and value
- Meeting sustainability objectives
- Providing environments that meet the needs of users, resulting in efficient and effective workplaces
This definition sets out to frame a more sophisticated approach for property owners and managers to engage with their customers, focusing upon value and quality creation, rather than simply cost-reduction. Occupiers are telling the property industry that those who understand this and are willing to respond to their fast changing needs stand to prosper in ‘the three Rs of real estate’ – revenue, retention and reputation
To provide a pragmatic way forward, the report details a ten-point action plan to improve alignment between owners, managers and occupiers:
- Adopt the new definition of ‘building performance
The BCO Occupier Group proposes that the industry adopt and actively promote the new BCO definition of building performance. The industry will require visible leadership and the use of a new language to describe the role of property owner and manager.
- Increase engagement on ‘quality and value’
Cost reduction matters but value addition matters even more to today’s major corporate occupiers. This report calls for owners and managers to engage occupiers to better understand how a well performing building can help the occupier to drive quality and value. This will require more ‘facetime’ with customers and better listening skills.
- Create a building performance scorecard
The BCO Occupier Group proposes that the BCO leads the way by developing a new performance scorecard which will help the industry to measure ‘building performance’ in an objective way. This scorecard will enable owners, managers and occupiers to rate how well a building is delivering its occupiers’ needs.
- Define service standards
The BCO has championed best practice and standards through the BCO Guide to Specification. Now is the time to create a new Guide to Office Service Standards. The process of compiling this guide will bring together all sides of the office industry and help to bring the concept of ‘building performance’ to life through practical checklists, specifications, standards and guidance.
- Encourage more transparency
The BCO Occupier Group recommends that the industry explores ways by which measures of service performance, such as occupier satisfaction and retention, could be standardised and benchmarked. This would provide valuable information for an office occupier looking to rent space by helping to differentiate a high performing building.
- Rethink role and basis of remuneration for property management
Property management is a vital conduit between the owner and the occupier customer. Yet most property managers have relatively little time available for meeting occupiers and finding out what their active needs might be. The BCO Occupier Group would see property managers being incentivised and rewarded for their ability to deliver ‘building performance’ as defined in this report.
- Make it easier for valuers
The valuation industry underpins owner and investor behaviour. The BCO Occupier Group believes that for valuers to be able to recognise and value customer loyalty and brand value, the office industry needs to provide credible data about service performance and that this needs to be gathered in a consistent way. In short, the UK property industry needs to make it easier for valuers to value loyalty and brand.
- Encourage use of ‘voluntary service commitments’
This research identified very little demand for formal service level agreements but identified a ‘middle-ground’ position shared by property owners, managers and occupiers. This middle ground, which the BCO Occupier Group suggests is captured in a ‘voluntary service commitment’, would provide reassurance to the occupier by setting out:
- what services the owner will provide
- what services the occupier can expect to receive
- how quickly the owner or manager will respond to a request or complaint
- what the redress would be for non-delivery
- what business information the occupier will provide the owner and manager (and vice versa)
- how the parties will work together and resolve disputes.
While not legally binding, it could help to avoid uncertainty and reduce the risk of disputes. The BCO argues it is well placed to develop this concept for the office industry given that its membership represents all sides of the industry. There are lessons to be learned from the way that owners, managers and occupiers have adopted the ‘memorandum of understanding’ as a way of progressing the sustainability agenda.
- Recognise and award outstanding property management
The BCO Occupier Group wants to see more office occupiers involved in the BCO Awards programme. Their perspective on ‘building performance’ can be a positive influence on the judging process.
- Promote the property-management profession and increase training
The BCO says it is well placed, working with others, including academic institutions and professional bodies, to promote and recognise customer-focused property management as a specialism and in particular to find ways to bring in more talent from outside the industry, for example from the hospitality sector.
Chris Richmond, Chairman of the BCO Occupier Group and Head of Real Estate, PwC said: “‘The customer is always right’ is a motto that exhorts business to give a high priority to customer satisfaction. While this may be true of many service sectors, UK office occupiers’ perceptions of real-estate suppliers continues to be one of disillusionment and frustration.
“This report sets out what we at the BCO see as an important course of action to impact a step-change in the industry, but only time will tell whether this will lead to prescriptive service-level commitments in line with other sectors.”