Office landlords make connection between tenants and Internet
It’s a challenging time for office landlords. Setting up connectivity in their buildings could help ease the pain.
Vacant office space in London has reached the equivalent of 60 Gherkin skyscrapers as the number of empty offices skyrocketed during the pandemic.
The amount of vacant space soared from 20 million square feet at the end of 2019 to more than 30 million square feet this summer. It’s estimated that around 40 per cent of employees now work at least some of their time at home.
There was a brief period of optimism for commercial landlords as the effects of the pandemic waned and the war in Ukraine had not yet begun. Investors returned to the commercial property market. London and other UK cities came back to life.
And it is not all doom and gloom. Signs that employees are returning to the office continue to provide hope that demand for office space will revive.
Businesses have been trying to entice employees back, citing good reasons such as mentoring young employees, collaborating on projects and strengthening corporate culture. Of course, another reason could be that employers have a lot of office space to fill.
Meanwhile, government figures released this autumn show the number of Tube passengers on Mondays hit a post-pandemic record. Of course, that doesn’t necessarily mean more people are going to be coming to the office more often in the longer term. It might be that facing a recession, staff want to raise their visibility with managers for a while to lessen their chances of redundancy.
Working from home isn’t about to become a thing of the past. Labour shortages mean that employers are forced to accommodate working-from-home lifestyles to attract and retain the best people.
All of this means commercial landlords now find themselves in a tenants’ market amid an economic downturn.
It seems certain the days of ‘let and forget’ are gone for the foreseeable future, so what should commercial landlords do now?
They could choose to exit the office market by selling up or repurposing their buildings. But office real estate prices are depressed while refitting for alternative uses such as residential is fraught with challenges.
Some of the best Grade A space in London still attracts tenants, but the real battle is between landlords letting the rest of the capital’s office footprint. With far more offices available than there are businesses to fill them, landlords are in a competition with each other to woo and retain tenants.
Every landlord with empty space needs to be doing everything they can to make their space more effective. The challenge for landlords is to ensure their space is as attractive as it can be in order to gain a marketing advantage, budgets permitting.
They can look at refitting communal areas and refurbishing building facades and the spaces to let, but there is one field that is often neglected that can have a huge impact – improving connectivity.
If a potential tenant is considering which of two properties to go for and one already has an internet connection, that is a huge advantage for the connected property.
It’s hard to imagine an office-based organisation that doesn’t need a secure internet connection.
But there are other kinds of connectivity that can add value for a tenant. For example, if you are looking to market a basement space where 4G cannot penetrate, you should consider putting in the technology to ensure your tenants can send and receive mobile phone calls and messages.
When it comes to internet connections, landlords need to think beyond the basics of “is it possible?” to ways that they can make it easier, and crucially quicker, for new tenants to get connected.
There are many office buildings in London with ten floors that could provide space for ten tenants, but the empty floors are not internet connected. We provide landlords with a service to connect all their floors with the ability to easily turn on and off connections as tenants move in and out.
It’s a fully managed service with the ability to flex bandwidth, increasing the capacity when a tenant moves in and future proofing for next one.
That kind of infrastructure involves an investment, of course, but the advantage is clear.
Most of London doesn’t have fibre broadband so the only option is a dedicated fibre optic landline.
For a tenant moving into an office that doesn’t already have a connection, the wait can be excruciating, anything from six weeks to six months. That’s certainly going to put off many potential tenants if they have the option of a fully connected space elsewhere.
And while the tenant would likely be paying full commercial rates from the ISP (Internet Service Provider), we can arrange better pricing for landlords, so the value to the tenant is greater than the investment of the landlord.
Compare that to a scenario where a tenant is desperate to move in and get connected.
In that situation, we can install a satellite-based system based on the WiMAX family of wireless broadcast connections standards in ten working days but the installation and running costs are far higher.
Much easier and less expensive for the landlord to have addressed the connectivity challenge sooner or for the potential tenant to find another location with everything already set up and far more affordable to run.
Beyond providing potential tenants with separate networks for their internet connections, there are other options to consider.
For flexible and serviced office providers, we would typically provide telephony hardware as well as the internet connection.
We can also add WiFi to the building for guests.
It’s worth remembering that many of these services not only help to make office space more attractive to potential tenants but also provide a potential additional income stream for the landlord.
In the past, it sometimes felt like there was no decent office space to let in London, but things have changed.
We are seeing that many landlords have got the message with a definite shift in behaviour. That translates into a higher proportion of our work being for landlords now than used to be the case.
The capital costs of equipment could be as little as £1,300 and the running costs from £325 a month. Is it worth the investment? Absolutely. Landlords and surveyors both tell us our technical solutions help them to win in the competition for tenants.
“We have worked with Fusion for a number of years and have always found them to be reliable and professional - the technical solutions they provide have undoubtedly assisted us with marketing vacant office space.”
- Charlie Browne, Partner, Daniel Watney
About the Author
Mark Castle has been Director of Fusion Voice and Data since 2016. He was previously managing director of an independent technology services provider and director of a cyber security and mobile device management company.
About Fusion
Fusion was established in 2016 with the objective of providing value enhancing
technology solutions to the commercial real estate sector.