Towards a Framework for Sustainable Landlord & Tenant Relationships

Selma Carson and Chris Fortune

University of Salford

Selma Carson 2012

Introduction

The Four Pillars of Successful Property Management (Carson 2011)

LEGAL FRAMEWORK

COMMERCIAL REALITY

PEOPLE

PROFESSIONAL REGULATION

LEGAL FRAMEWORK

COMMERCIAL REALITY

PEOPLE

PROFESSIONAL REGULATION

Selma Carson 2012

UK Occupier Satisfaction IndexProperty Industry Alliance & Corenet

** Basis of survey changed 2010

2007 2008 2009 2010 ** 2011

All 55 57 57 4.9 5.4

Retail 52 57 55 5.1 5.2

Office 59 61 62 5.2 5.6

Industrial 55 54 54 4.6 4.9

SME 49 51 52 4.2 5.0

Large 58 60 59 5.3 5.4

Selma Carson 2012

Occupiers’ Views Responsiveness varies tremendously. Some landlords are very good at

coming back to us with consents; others take forever and demand an arm and a leg.”

“More contact from landlords would be good. When we do sit down with a landlord it can really improve the relationship.”

(OSS 2009) Sustainability remains an important issue for occupiers, who gave this

factor the lowest score and feel landlords still have a lot to improve upon in terms of interaction with them on this issue.

(OSS 2011)

“talking, listening and engagement between landlords and occupiers” emerged as the single most important change required in the industry

British Council for Shopping Centre conference 2010

“somewhere….sits the occupier, without whom any property asset ceases to have any purpose or value”

(Varcoe, 2011)

Selma Carson 2012

Landlords’ Views

“occupier retention and hence cash flow is right at the top of the agenda. The relevance of [our] initiatives has never been higher and the impact …never more pronounced”

(Paul Harding, Real Service Group, 2011) a survey of investors identified obsolescence and retention as

the top two priorities, above voids, rental and yield levels and rental growth

(GVA Grimley, 2010) “Occupiers need efficient workplaces and are not shy in asking

for what they want. Developers need high-quality occupiers. Because property has risen up the corporate agenda, landlords and tenants need to foster a true partnership approach as this will benefit both parties.”

(Jones Lang LaSalle Offices 2020, 2012)

Selma Carson 2012

The Quality of Relationship

Quality Tangibles, reliability, responsiveness, assurance, empathy

Gap between perceived service and expectations(Ladhari, 2009)

Technical, contractual and social bonds Commitment, ethical profile, sharing of information, communication,

conflict, balance of power, personal attributes(Rasila, 2009)

Customer satisfaction Deconstruct to individual experiences, subjective response to direct

and indirect touch-points(Meyer and Schweger, 2007)

Turning satisfaction into positive outcomes Effect of keep, push and pull factors on satisfaction and loyalty

(Appel-Meulenbroek, 2007)

Selma Carson 2012

A Partnership Approach?

Number of stakeholders involved Role - seniority/influence - decision-making powers

Shared understanding and vision Relevance of CSR policies Can relationship override contract? For the long-term, not only in difficult market

conditions(Roussac & Bright, 2009)

(Crosby, Hughes & Murdoc, 2005)(Leishman et al, 2003)

(Thompson & Ke, 2012)

Selma Carson 2012

Relational Bonds in Practice

Technical/operational/functional make it easy – to upsize/change/operate business

effectively

Contractual throw lease in back of cupboard – supplier and customer

Social entertainment, use customers’ business where possible

Impact: 82% “own”, 47% “inherited” cf 30% industry-wide

retention at lease renewal. (IPD/Strutt & Parker, 2005)