Although property firms in the office sector believe they have shifted their focus towards the customer, occupiers’ perception of the service they receive is that not much has changed. Adam Tinworth reports
If you are an office agent, you’re no good at your job. If you develop your own offices, you are remote and unresponsive to your customers. If you’re working in the UK office industry, you’re way behind your colleagues in the US.
At least, these are the findings of the British Council for Offices’ research into the attitudes of office occupiers in the UK and the US to the property industry. The organisation commissioned Kingsley Lipsey Morgan to undertake detailed interviews with 11 UK property directors and 10 in the US.
“Everyone we spoke to was very generous with their time and really seemed to want to express their opinions,” says Howard Morgan, managing director of Kingsley Lipsey Morgan. The companies involved included American Express, Abbey National, Dixons, Oracle and Regus. Together, they deal with around 323m sq ft of space. The UK interviews were conducted face-to-face while those in the US were carried out by the firm’s US office.
Unflattering picture
The net results were a large body of very similar opinions – most of which are not flattering to the industry. Some familiar themes crop up in the report. Nine out of the 11 interviewees in the UK rate the industry as “poor” or “very poor” at delivering innovative services or creating flexible lease structures.
More worryingly, at a time when many businesses will be reviewing their budgets in all areas as economic conditions worsen, eight of the respondents perceived the industry to be giving “poor” value for money.
Despite many companies in the industry claiming to have become customer-centric in the past few years, the marketing jargon seems to have failed to translate into a palpable difference in the perception of the industry. Just three of the directors interviewed thought that service standards had improved in the past three years, and another two thought that they had actually declined in that period.
With more and more companies trading internationally, the fact that every UK property director perceived the US as providing better service than the UK indicates that the pressure for the industry to improve may well increase in the coming years.
However, the general thrust of the feedback was that the industry does not understand the needs of its customers. Specific points raised about companies in the office property industry include:
” Too remote
” Too conservative and reactive
” Failing to support the core businesses of its customers
” Too transaction-orientated
” Reluctant or unable to provide bespoke or turnkey solutions
” Slow to provide information that would ease decision-making
” Unwilling to offer a sufficient choice of lease lengths and terms
” Offering a narrow range of services and amenities
” Not focused on helping with wider business challenges such as environmental governance
That’s not to say that the report was all bad news. When it actually comes to the product itself – the fabric of the building – the UK gets a pretty good rating. Five of the UK property directors rated the buildings as “good” or “very good”, with the rest calling them “average”. However, the occupiers felt that it was time standards of service started to match the quality of product.
The views of US-based property directors were even harsher: “Landlords in the UK are very difficult. They are arrogant and I think service would be better if some of their power was taken away,” said one.
“Lease terms can be negotiated almost anywhere else, but in the UK leases are not even close to equitable,” said another.
The UK occupiers had much more positive experiences of working in the US than their US counterparts did of UK property.
“In the US we can work with a “space take” programme with a building owner. We can also trade space with other tenants at a fraction of the cost,” said one.
The US’s innovation came in for the praise that the UK industry so conspicuously lacked: “In the US people will bundle services together more,” was one comment. “In the UK, too many people say ‘we don’t do that’.”
The report found a strong link between an occupier’s satisfaction with the property management service it obtained and its overall satisfaction as an occupier (see middle table). Occupiers with a “high” level of satisfaction are 18% more likely to renew their leases.
Changing economy
The reasons why service has become such a strong issue for occupiers are also explored in the research. The changing economic climate is certainly one part of it. Many businesses are preparing to shed costs quickly, by moving location if need be, should global recession bite. Changing headcounts also mean that the ability to shed or gain space quickly is becoming increasingly important. Environmental and other regulatory pressures are another factor.
“The research shows that the gap between expectation and delivery is wide and that the industry has a long way to go,” says Morgan.
The chief executive of the BCO, Richard Kauntze, was expecting some of the results, but was surprised by the passion shown. “Service is hugely important,” he says. “The days of signing up a tenant for a long lease and then just forgetting about them are over.”
However, he denies that this report is necessarily a bad thing for the industry, or for his organisation’s members. “It sets a challenge for the industry that the better companies will rise to,” he says.
This report is the first in a series of research documents from the BCO. It will be followed in a few months by an analysis of lease lengths. In the meantime, the BCO intends to follow up the research with workshops and seminars discussing the issues raised.
“If I was the director of a property company, I’d be sitting down with my key staff and discussing what this means for our business,” says Kauntze.
|
Key findings ” The UK office industry is failing to meet the levels of service demanded by its customers. ” The UK office industry underperforms the US industry in service delivery. ” The US market is perceived to be more customer-focused and better able to offer the flexibility that occupiers require. ” Occupiers in the UK perceive the office industry to have improved the physical quality and design of office buildings in recent years. ” UK occupiers do not perceive the office industry to be listening and sufficiently responsive to its customers’ wider needs. ” UK occupiers remain frustrated by the adversarial nature of the property industry. ” UK occupiers are being forced to take the initiative and create their own innovative real estate solutions, as these are not perceived to be forthcoming from the industry. ” Office occupiers are frustrated by the lack of lease flexibility available in the UK market and say that this could affect their choice of international location. ” Occupiers are willing to pay for flexibility, and envision property being available “on tap” with a more extensive bundle of services included in the rental. ” Occupiers want more support with IT infrastructure, staff transport and environmental issues. ” Occupiers are keen to engage with the supply side of the industry to identify improved methods of delivering flexibility and service. ” Occupiers do not favour increased regulation as a means of safeguarding their interests. |
|
UK property directors’ satisfaction with the UKproperty industry |
|
Occupiers feel that the standards of service should start to match the quality of product |
|
Source: BCO/Kingsley Lipsey Morgan |
|
Correlation of occupier retention with customer satisfaction |
|
Occupiers with a high level of satisfaction are 18% more likely to renew their leases |
|
Source: BCO/Kingsley Lipsey Morgan |
|
Comparison of satisfaction between occupiers in the UKand the US |
|
The US was praised for innovation, such as bundling services together, that the UK industry seems to lack |
|
Source: BCO/Kingsley Lipsey Morgan |
