August 2012

‘Customer Service’

What do tenants want? - Insights from Jones Lang LaSalles’ annual Property Performance Survey

2 Advance

Executive Summary The annual Jones Lang LaSalle Property Performance Survey is a valuable tool that enables our clients and property management teams to gain insight to our tenants’ occupation experience within our properties. The experiences, drivers and satisfaction of our tenants are benchmarked across our managed portfolio.

With six years of survey results now available, we analyse and mine this rich and extensive base of data to closely examine trends of sentiment, issues of importance and satisfaction amongst this tenant base.

The key observations that we have drawn from the analysis of this data can be summarised as follows:

• Whilst the attributes and amenities available in a property have become increasingly important to tenants over time, the fundamental requirement of providing a clean, well-maintained and secure property to support a tenant’s business and aid its market image remains vitally important.

• The relationship with tenants is changing from the traditional ‘tenant – landlord’ model to that of ‘customer – service provider’. Thus, increasing importance is placed on customer service by tenants. Satisfaction in this regard has improved, as owners and managers respond with programs and initiatives with greater customer service focus.

• Tenant perceptions of ‘the things that matter most’tothemhaveheightened,reflectingtheirever-increasing expectations of a property, its amenities and the services provided by the extended property management and support team.

• Levels of tenant satisfaction have also increased over the period of the survey, providing a vindication of the process of seeking feedback on tenants’ experience of our properties and then following through in a tangible manner.

• On average, customer satisfaction across all issues on a portfolio basis was rated at 78% in 2011, increasing from 70% in 2006.

• Environmental sustainability has transitioned from being aspired to being expected over the period of the survey. Most tenants place great importance on sustainability, but are notpreparedtocontributefinanciallyastheyview sustainability as a property owner’s responsibility and an intrinsic amenity of the property.

Customer Service 3

IntroductionSetting the Scene…Jones Lang LaSalle is the dominant manager of prime-grade property in the outsourced management space with over 70% market share. Since 2006, Jones Lang LaSalle has undertaken an annual Property Performance Survey of tenants in our clients’ prime-grade properties across our Asset Management Services and Premium Asset Group portfolios.

The survey seeks feedback within the broad categories of building services, sustainability, amenities, facilities, customer service and building management.

This provides the opportunity to not only assess overall customer satisfaction, but also gain a valuable insight into the tenants’ experience, which can challenge and/or validate the management and ownership philosophies enacted within a property.

The Property Performance Survey is published as an online forum that is undertaken in the Q3 of each year, targeting a cross section of representatives from within each tenant organisation.

Across a range of criteria, respondents rate both the importance of various issues (Figure 1) and their degree of satisfaction (Figure 2) in relation to each issue. The gap between importance and satisfaction(Figure3)identifiesthepriorityareasof focus for clients and management teams.

Tenants also have the opportunity to provide free form comments that allow for greater detail for the context of their responses.

Respondents can complete the survey anonymously with respect to their property, but are encouraged to identify themselves for the opportunity to win a prize. Tenants also provide details of their size and tenure within the property, and their core business market segment.

Source: Jones Lang LaSalle

Source: Jones Lang LaSalle

Figure 2: Tenant Satisfaction Over Time

Figure 1: What is Important to tenants?

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Tenant survey responses are collated for each specificproperty.Theseareanalysedandassessed in comparison to the aggregated portfolio performance results. Reports are prepared and issued to the client and the Property Management team for each property, and these include an assessment against the portfolio as a whole and the detail of all individual tenant responses.

Following the detailed review of the property survey results, the Property Management team develops a targeted action plan, which, with client endorsement, will be enacted to drive continuous improvement in the tenant experience.

The gaps between a tenant’s rating of importance of an issue and their satisfaction clearly identify the areas of focus for the client and the Property Management teams. The gaps are not indicators of dissatisfaction, but rather, are opportunities for improvement. The bigger the gap, the greater the opportunity to improve. As Figure 3 depicts, the greatest opportunities for improvement have traditionally been:

• the provision of cleaning services;• the working conditions (air quality/conditioning,

natural light, health and safety);• the quality of amenities and property

presentation; and• the sustainable performance of a property.In our experience, participation rates have varied between properties depending on property age, location and facilities, yet participation levels exceeding 70% have been consistently achieved. This fact, coupled with anecdotal tenant feedback, confirmsthevaluetenantsplaceinthisannualsurvey process.

Sustainability CredentialsThe good sustainable performance of a property has transitioned from once being an aspiration in considering accommodation to now being an expectation. Tenant sentiment, as represented through our survey results, supports the view ofpropertyvaluersthatthereisnosignificantevidence of a ‘Green Premium’ for high-performing properties,butthereisadefinite‘BrownDiscount’for poor-performing properties.

Figure 3: Importance vs. Satisfaction

Source: Jones Lang LaSalle

Average score out of 5 (where 5 is highest) - based on average scores between 2006 and 2011

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on branding #

Security SustainabilityBuildingMaintenance

Building quality and presentation

CustomerService

# New categories introduced in the 2010 survey

Importance Satisfaction

Customer Service 5

The importance of ‘green initiatives’ to tenants (Figure 4) has been consistent over time, but the expectations for delivery have increasingly shifted to the property owner. Consistently, over 85% of tenants have rated environmental sustainability as either important or very important, collectively equalling a peak of 94% in 2011.

Tenants are overwhelmingly unprepared to bear thefinancialburdenofpropertysustainabilityprograms and initiatives. Since 2008, less than 10% of tenants have been prepared annually to contributefinancially,viaoperatingexpenses,tosustainable programs.

As Figure 2 attests, the interest, involvement and investment of owners and property managers in sustainabilityhasprovidedadefiniteincreaseinsatisfaction over time.

Tenants themselves are also supporting these efforts with programs of their own (Figure 5). Anecdotal evidence of tenant sentiment, in support ofthesurveyresults,reflectstheimportanceofdrivinggreeninitiativestoaidafirm’sprojectionto its own personnel base. In the unrelenting ‘war fortalent’,firmsunderstandthattheirCorporateSocial Responsibility platform can be a vital aid to increase their appeal. Thus, within our tenant base:

• More than 70% have active waste management and recycling programs.

• Less than 30% have active water reduction programs.

• More than 50% have energy reduction programs.

• Carbon reduction programs are in place for 34% of tenants in 2011, increasing only slightly from 27% in 2009.

The focus on energy reduction is likely to be driven principally by cost considerations, more so than by pure environmental drivers.

Source: Jones Lang LaSalle

Figure 5: Tenant’s Sustainability Initiatives

Source: Jones Lang LaSalle

Figure 4: The Importance of Environmental Sustainability

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Insight to Tenant DemandThe survey has been used over time to prompt tenants for insights into demand for property amenities and features. This insight has enabled property owners to consider the re-allocation of limited resources between tenants; for example, storage space and car spaces as well as the demand for commuter amenities (bicycle spaces andshowers)andofficespace.

The trend in tenant demand, as shown in Figure 6, provides the following insights:

• Tenant sentiment, as indicated by demand, not surprisinglyreflectsbroadersentimentintheeconomy at large, rising and falling in line with confidenceintheeconomy.

• DuringtheperiodoftheGFC,tenant’sclearlysignalled that they did not require more space, yet nor did they indicate an intention to relinquish space. This accords with the view of the Jones Lang LaSalle Research team through thisperiod,withnosignificantincreaseinsublease activity.

• The demand for increased commuter amenities increased over time, peaking in 2010 and is nowsubsiding.Thismayreflectthewidespreadfocus on improving and increasing capacity of bicycles and shower facilities over recent years by property owners, thus meeting this demand.

• The demand for Childcare Facilities remains significant.Despitethis,itisanareainwhichowners are reluctant to invest given the volatility of this market and the failure of operators in this space.

Figure 6:TenantDemandOverTime

Source: Jones Lang LaSalle

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% (based on the proportion of tenants requiring more in the following catergories)

Office space

Motorcycle spaces

Secure bicycle areas

Childcare facilitiesCar space

Common area showers Storage space

Customer Service 7

From Tenant to CustomerPutting on a Show-stopping Performance…Longgonearethedaysoftheconventionalofficesimplybeingregardedas‘justtheplacewegotowork’. Times are changing, with a whole new era for the common workplace emerging.

Increasingly, occupiers of property are seen as our ‘customers’andnotjustourtenants.

The nature of the traditional tenant–landlord relationship is evolving and driving changes in tenant expectations. More and more, tenants are expecting great levels of customer service in all interactions within the property. This is setting new challenges for property teams and owners to meet the expectation of a superior customer service experience–the new norm.

Qualitycustomerservicebenefitsnotonlythetenants’ direct experience and that of their personnel,butalsoprojectsfurthertotheirownclients and customers, aiding and supporting the tenants’ business image.

Tenants want quality customer service starting at thepropertyfrontdoor,notjustattheirindividualreception area.

The Fluffy Stuff?Property owners and managers could traditionally be accused of undervaluing customer service and brushingitasideasthe‘fluffystuff’.Yetnow,thecollective pennies have dropped, and everyone is waking up to the realisation that creatively adding valueanddeliveringfirst-classcustomerservicecanbeasignificantpointofdifferenceintheproperty environment.

This now involves delivering an engaging and convenient experience at each touch point, across the entire work environment and property. The challenge for property owners and teams is to engage with each individual at a personal level, broadeningthefocusfromjustthekeydecisionmakers within the tenancy base.

Ratings of the importance of customer service have been tracked since our survey’s inception. As depicted in Figure 1, customer service has progressively increased since 2006. In response, greater focus has been placed by property owners and managers on the customer experience, and it is pleasing to see that satisfaction levels have improved markedly over time. However, this remains our challenge, and we believe we have onlyjuststartedscratchingthesurfacewiththepotential and the opportunity to deliver a new industry standard of Superior Customer Service.

But the Basics Really Matter Too!The most important issues to tenants have and continue to be those that directly affect their daily property experience.

Tenantshavetraditionallyremainedmostsatisfiedwith property management and the customer serviceofferings,whilstbeinglesssatisfiedwithcleaning that remains a perennial problem.

Across the scope of cleaning in which responses are sought, the lowest levels of satisfaction have alwaysbeenwiththeon-floorbathroomfacilities.These areas evoke the harshest criticism and emotive responses. They are also the area on most properties that are most harshly rated for the level of amenity they offer.

We note that increasingly, occupier decision-makers are considering not only the work space features, but also the professional and lifestyle needs of their people in making accommodation decisions. Whilst amenities, on-site food and beverage,fitnessandlifestyleservicesprovideanimportant edge, it’s still the basics that matter most andmustbesatisfiedfirst.

Also consistent in our survey results and feedback is the performance of lifts. It is always rated as highly important by tenants, with satisfaction harshly marked if performance does not meet expectations. Lift travel times, door opening and closing speeds and ride quality matter the most.

Tenants want to eliminate distractions for their people to ensure they can focus on business needs. The environment needs to support their business, not detract from their core mission.

As satisfaction trends in Figure 2 demonstrate, tenants want and expect a problem-free environment,beitintermsofofficespacetemperatures, speed of lifts or cleanliness of bathrooms.

First Impressions…Perceptions of issues like substandard cleanliness or lift performance drive highly emotive responses and are a huge distraction to people. As we all know, and as is reinforced to us constantly, we rarelygetasecondchancetomakeagoodfirstimpression!

For instance, whilst external areas and landscaping rarely appear on a must-have list of property needs, a potential property accommodation option can drop straight out of favour if the plants and gardens are poorly maintained and entry points are littered with cigarette butts. It’s these little things that may provide a valuable insight into the management priorities and standards of a property. A poor impression can be costly when a tenant is generally spoilt for accommodation choice.

Customer Service 9

So What’s Next for Customer Service?Whilst Figure 7 paints a positive and encouraging picture of satisfaction with on-site property management teams, we believe that the future of delivering great service, in fact, lies outside of these boundaries. Great customer service will only be produced by bringing together the extended property services team together as one.

It’s All About Everyone Working as One Team…Fromprovidingawarmwelcometotheoffice,morning newspapers in the lobby and greeting customers by name each day, to providing an efficientface-to-faceservice,webelievethisisthefutureoftheofficeenvironment–treatingtenantsas customers with a consistently positive and engaging experience every time.

Creating a culture of teamwork that extends throughout all service partners and contractors, makingoneunifiedteam,mayseemlikeanimpossibletask.Butoncefullyestablished,itproduces the very best end results.

Everyone has their role to play, as part of the team, to make our customers and guests feel special.Byembracingthiscommonsenseofpurpose with a true ‘One Team’ approach, an industry-leading customer service culture will flourishandgrow.

Just the same as a quality hotel environment, it is this strength of employee engagement and team spirit that makes the difference. Conversely, one bad isolated experience can tarnish the image of all.

Feel the Difference…A number of premium properties have sought to present a hotel-style concierge service in recent

years. The role of concierge has frequently been assumed as part of the property’s security deployment – with mixed results. In line with the rising expectations of the customer experience within our properties, and the owners’ focus on meeting this challenge, the deployment of bespoke concierge solutions is gaining momentum. ‘Security in a suit’ is no longer adequate and, instead, is replaced by hand-picked concierge professionals.

In addition to providing a true hotel-style concierge presence in property lobby spaces, the opportunity to deliver a personal concierge service offering to the occupants of our properties is now available. People are short of time nowadays, and even running simple errands can often be one of the hardest and most frustrating challenges we encounter on a daily basis.

The era of the property concierge helping to meet these personal needs is upon us.

Figure 7: Tenant Satisfaction With Their On-site Management Team

Source: Jones Lang LaSalle

Extremely Satisfied Extremely DissatisfiedDissatisfiedSatisfied

2010 2011

24%

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78% 73%

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ConclusionsThe annual Jones Lang LaSalle Property Performance Survey results are recognised by property owners and management teams as a valuable resource to help guide investment and management focus. The survey enables a property to be benchmarked across an extensive portfolio, as well as to develop and deliver a targeted response that effectively addresses the feedback from property tenants. The survey is well accepted and supported by the portfolio tenant base, which appreciates the communications channel the forum provides.

Future renditions of the survey will retain the core suite of questions to support trend monitoring, whilst supporting an expanded ability to seek responses to issues, customised for each participating property.

The Art of Anticipation…Tenants are increasingly looking to landlords to anticipate their requirements, ranging anywhere from ensuring secure environments and a variety of dining options, to keeping clean and comfortable workplaces. Above all else, tenants want us to solve their problems as quickly as possible.

We all know that often, it’s the little things that make the biggest difference. Quality customer servicenotonlybenefitsthetenants’directexperience and that of their employees, but also projectstheirownbusinessimagewithclientsandcustomers.

With this in mind, we believe it is crucial to take the time to ‘walk in our customers’ shoes’, to objectivelyexperienceexactlywhatitfeelsliketovisit or work in our properties, to get a sense of the spirit of the whole on-site team and to experience the day-to-day touch points as a customer.

But,itisthebasicsthathavealways,andwillcontinue, to matter most. A property can have thefanciestfixturesandfittings,thebestenergyefficiencyprogrammes,withmorethansufficientcommuter facilities; however, if the toilets aren’t perceived as clean, well-attended and well-maintained, the perception of the property will be undermined in the eyes of our customers.

Whenvisitingfive-starhotelsandtoprestaurants,weoftenhearpeoplesay,“Youcanalwaystellaplacebythetoilets!”Sowhyshouldtheofficeenvironment be any different?

Weallvaluegoodserviceandenjoybeingtreatedas customers. This is also true for our tenants and their personnel. Embracing the challenge to drive achangeofmindsetand,thus,positivelyinfluencethe ownership and management of our properties for us to deliver quality customer service, will produceincreasinglysignificantoutcomes.Thoseowners and managers who believe in focusing on the customer experience and who ‘walk the walk’ will gain great leverage in the battle to retain and attract tenants, ultimately mitigating their commercial risk.

Mike George Head of Premium Asset Group Property and Asset Management, Jones Lang LaSalle, Australia

With over 13 years’ experience in the property industry, following an extensive career in engineering, Mike George has an intimate knowledge and understanding of the management of prime-grade property.

Mike has held property engineering and general management roles before assuming portfolio leadership responsibilities.

Mike is responsible for providing premium asset and property management services for some of the most iconic prime-grade commercial properties in Australia. He leads a group of over 120 property professionals located across the principal Australian capital cities, supporting over 900,000 sqm of commercial property.

Peter MerrettNational Head of Customer Service Property and Asset Management, Jones Lang LaSalle, Australia

Peter Merrett has a career that features the leadership of some of the most successful country house hotelsintheUK,twicewinningthenational‘HoteloftheYear’awards.

More recently, he pioneered the transfer and adaption of luxury hotel and hospitality methodology into thecommercialofficeenvironmentattheiconic,high-profileLondonofficeestate,Tower42,oneofthemost successful property industry case studies in the UK.

ThepropertywentontobecomethefirstinEuropetowintheprestigious‘InternationalOfficeBuildingoftheYearAward’withBOMAInternational(BuildingOwnersandManagersAssociation,NorthAmerica)in2008, setting a new international benchmark for customer service.

Peter currently leads and coordinates the customer experience across one of the most prestigious commercialofficeportfoliosinAustraliaforJonesLangLaSalle.

Authors

COPYRIGHT©JONESLANGLASALLE2012Allrightsreserved.NopartofthispublicationmaybepublishedwithoutpriorwrittenpermissionfromJonesLangLaSalle.Theinformationinthispublication should be regarded solely as a general guide. Whilst care has been taken in its preparation no representation is made or responsibility accepted for the accuracy of the whole or any part. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forwardprojectionsinvolvesassumptionsregardingnumerousvariableswhichareacutelysensitivetochangingconditions,variationsinanyoneofwhichmaysignificantlyaffecttheoutcome, and we draw your attention to this factor.

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