Between post-pandemic inflation, rising interest rates, soaring energy costs, and uncertainty in financial markets globally, commercial real estate has seen its fair share of disruption since 2020. Recent black swan events at Silicon Valley Bank and Credit Suisse have raised even more concern about the future of commercial property values, which appear set to course-correct after a decade of positive performance.
With a market predicted to experience a reset in values, tenant satisfaction is more important now than ever. Tenant satisfaction is widely viewed as a leading metric for lease renewals and therefore directly contributes to building occupancy, NOI, and asset value.
Lisa Atkins, Head of Asset Management Services at Knight Frank, observed in our recent webinar that tenant satisfaction is “the best lead indicator of future [asset] performance, as it speaks to retaining the current tenants and ensuring high levels of occupancy at a time when businesses are reviewing their requirements in the era of hybrid working.” According to a recent MIT and Maastricht University study, led by GRESB co-founder Dr. Nils Kok, tenants become 18% less likely to leave and 8% more likely to renew with a 1-point increase in satisfaction.
Current market conditions have made high tenant satisfaction a requirement for building owners who want to ensure asset performance. Here are some of the ways the PEAK Platform, CIM’s market-leading building energy management solution, tangibly benefits commercial tenants and positively impacts satisfaction.
Minimise disruption
Most large commercial buildings follow a scheduled maintenance plan in which building owners routinely pay to assess equipment that is largely functioning and operational. Equipment may fail afterward and remain as-is until the next planned inspection, which might occur up to a year later. This cycle of reactive maintenance inevitably causes tenant discomfort, increased complaints, and added operational expenses over the long term.
PEAK enables building owners to implement data-driven maintenance, which leverages existing plant and equipment data to identify faults in real time. The platform helps the facilities management team pinpoint the root cause of issues quickly, so contractors can start their work with the cause, not the result. This streamlined workflow often means that issues are resolved before tenants know they exist.
PEAK Performance in Action
“Scheduled maintenance checks and servicing is now a thing of the past as the data helps us determine precisely when and where maintenance is needed. We can now actively anticipate and prevent equipment breakdowns which means equipment is more likely to last its specified lifespan and we don’t have to resort to costly fixes or replacements.” — Damien Stacey, National Capital & Planning Manager at QIC. See the full case study.
Improve thermal comfort
We’ve all experienced an indoor environment that’s either hot or too cold. Not only does it hurt tenant comfort, but it can also impact health and well-being, worker productivity, and even the purchasing patterns of retail customers. A recent study from the University of California Berkeley found that temperature was the second largest source of dissatisfaction for building occupants.
The good news about thermal environment issues is that they’re largely avoidable, so long as you can ensure HVAC systems are operating as they should be. PEAK draws upon building data sets to constantly monitor thermal setpoints, raising alerts at any sign of thermal comfort levels outside the accepted markers. Early detection and automated alerting enable on-site teams to adjust equipment functions and correct failures before negatively impacting tenant comfort.
With real-time temperature and relative humidity monitoring, thermal comfort can be continually optimized and adjusted for occupancy, seasonal variation, activity level, etc., reducing hot and cold complaints. PEAK’s Indoor Environment module enables FMs to specifically target tenant comfort and address poorly performing areas within a building.
PEAK Performance in Action
Across LaSalle’s Australian portfolio, CIM enabled an average indoor environment score increase of 13% to a portfolio-wide average of 84%, despite also driving an 18% reduction in energy consumption over the same period.
Reduce costs
While lease requirements vary, commercial tenants often pay energy costs based on their consumption (if trackable by a meter or sub-meter) or as a fraction of the total building rate. Optimising overall building performance to reduce unnecessary consumption puts capital back into the hands of tenants, building owners, or both. Even where tenants are not impacted directly by their consumption, reducing energy costs at a base building level means more money is available to building owners to improve amenities, update plant and equipment, and make other improvements.
The PEAK Platform also drives cost efficiencies by way of significantly reduced ad hoc call-out fees from BMS, mechanical and HVAC contractors, as faults are detected and diagnosed before they snowball into major problems. The continuous intelligent monitoring of plant and equipment also facilitates extended lifecycle, negating the need to invest unnecessarily in costly replacements or upgrades of pumps, fans and chillers etc.
PEAK Performance in Action
Efficiency wins driven by PEAK are actively reducing Charter Hall’s environmental footprint and supporting accelerated progress toward reduced energy consumption. Across the properties where PEAK is operational, Charter Hall has saved 17.4 million KWh of energy since 2019—the equivalent of 12,000 metric tonnes of carbon dioxide avoided. By reducing operational inefficiencies and facilitating lower energy consumption, the platform also drives superior financial performance, a critical element in Charter Hall’s focus on maintaining a portfolio of quality assets.
Lift sustainability metrics
High sustainability ratings (including NABERS, LEED, BREEAM or US region-specific legislation like LL87, LL97 and EBEWE) aren’t just a reflection on the building owner; they reflect upon the building’s tenants as well. Many major anchor tenants even include stipulations on environmental ratings in their leasing requirements as part of their corporate Net Zero strategies.
In Australia, for example, the government requires a minimum 4.5-star NABERS energy rating when leasing, subleasing, or selling commercial office space. With more than two million square metres of office space across the country, the Australian Government is one of the nation’s largest tenants. Private enterprise globally has adopted a similar approach, with many implementing their own stipulations on ratings.
Similarly to Scope 1 emissions, Scope 2 and Scope 3 emissions can also be within the control of commercial tenants, with their choice of commercial space as one public-facing representation of that impact. Recent articles by CBRE and JLL highlighted this trend, with up to 42% of occupiers across Asia Pacific (to date) signing leases with green clauses. PEAK directly contributes to higher green credentials in many instances and can also prevent ratings from slipping as occupancy grows.
Achieving a carbon-neutral status doesn’t just mean energy savings for tenants; it helps them make meaningful progress toward Net Zero targets. Scope 2 and 3 emissions are increasingly under the microscope as Net Zero deadlines loom, and nearly all tenant firms are anxious to show investors and their customers meaningful progress.
PEAK Performance in Action
After engaging with CIM, Kyko Group increased the NABERS rating at 193 North Quay from zero to five. “By the time we started engaging with CIM in 2014, our NABERS rating at 193 North Quay sat at zero. We brought on CIM as we wanted to improve our sustainability within the NABERS framework and reduce our energy consumption costs. The increased rating has made us very attractive in terms of our sustainability credentials, which we have found are increasingly valued by tenants year on year.” —Bill Jenkings, Director at Kyko Group
Boost productivity
The opportunity available for effective facilities management to facilitate improved organisational productivity was quantified as part of the Workplace Advantage Report of the Stoddart Review. There are several drivers of this, namely the benefit of optimal air quality on worker health and the impact of thermal comfort on employee focus. In the UC Berkeley study, 84% of the surveyed occupants that listed temperature as a source of dissatisfaction noted that poor temperature control interfered with their ability to work. This is supported by an earlier IFMA study, which emphasised the markedly high prevalence of thermal complaints received by FM’s.
The Society for Human Resource Management (SHRM) also found that ~22% of workers find it difficult to concentrate when temperatures are uncomfortable, which directly impacts workplace productivity. When productivity is high, so too is tenant satisfaction, helping to attract staff to the office and retain good tenants for the long term. The same applies in the context of tenants across other commercial property types like retail, education, cultural sites, healthcare etc.
And tenants aren’t the only ones who grow more productive; by proactively alerting FMs to the root cause of existing issues and raising high-priority alerts automatically, PEAK frees up time for on-site teams, too. When they aren’t continually conducting manual checks and chasing down contractors, FMs are freed to focus on other strategic priorities like tenant engagement.
PEAK Performance in Action
“Tenant experience has always been critical, but it’s become even more critical since the pandemic, as employers are trying to get their staff back to the office. So it’s important to create an environment that people want to come back and work in. We are committed to achieving net zero carbon without sacrificing the quality of the tenant experience.” — Simon Howard, Co-Head of Australia, LaSalle
Improve air quality
Tenant health and wellbeing is closely linked to workplace productivity, occupant comfort, and overall tenant satisfaction. High CO2 levels contribute to Sick Building Syndrome, which can dramatically affect occupant health and Indoor Environment ratings. Sick Building Syndrome comprises a wide range of non-specific symptoms that aren’t tied to an identifiable illness, but rather can be linked directly to time spent in a building. According to research conducted by Sumedha M. Joshi, this general feeling of ill health increases absenteeism among staff and decreases worker productivity.
PEAK Performance in Action
PEAK’s building analytics and monitoring prevented the potentially devastating impacts of high CO2 levels at an Australian office building. When an Outside Air Fan ceased operation during the workday and CO2 levels reached unsafe levels, PEAK immediately notified the Operations Manager of the spike and the specific piece of equipment that had stopped running. As a result, a technician was deployed right away and promptly returned the operation to normal, returning indoor air quality to safe levels without impacting tenants.
Ready to renew your focus on tenant satisfaction? Request a callback today to learn how CIM can help.
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