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    1. Industry News

    The Tenant/Workplace Equation

    Jan. 2, 2003
    Deciphering the Secrets of Tenant Satisfaction, Attraction, and Retention
    Building professionals have long struggled for the answer to what kind of facility design attracts and retains tenants. Recently, LaGrange, GA-based Interface Flooring Systems and Buildings magazine sponsored a series of panel discussions around the country to discuss the results of research completed by the Building Owners and Managers Association (BOMA) International about tenant satisfaction and tenant retention. In addition to support from Interface and Buildings, these events received funding from DuPont Commercial Flooring. The BOMA research served as a launching point for an exploration of flexibility, amenities, ergonomics, safety, daylighting, aesthetics, and other issues that impact high-performance workplaces.There is no question that the built environment affects tenant satisfaction, and tenant attraction and retention determine a building’s profitability. The panel of experts, including facilities managers, architects, and researchers, explored specific ways to create a better environment. “We oftentimes get people who come to us and they want a makeover. They want something that is more ‘them,’” says David Epstein, design principal, Gensler, Washington, D.C. Adding up the AmenitiesTenants are sometimes pushed to leave a space because their current location is no longer working for them. Generally, the tenant has changed its mission or its business model and is looking for a physical space more in sync with its current status. For example, a company may have downsized and is in need of a smaller, more efficient workplace.“From a property management perspective, tenants don’t come to a building because of a property manager and they do not leave buildings because of property managers,” says Karen Krackov, senior vice president, Trammell Crow Co., Bethesda, MD. From Krackov’s perspective, the main drivers for tenant retention are a) sufficient space, b) efficient operation of buildings, and c) the tenants’ own personal preferences.When it comes to amenities to retain tenants, Krackov also believes most property management companies make the mistake of trying to retain tenants by pleasing the contact they speak to most often – usually the receptionist or office manager – instead of addressing the concerns of the decision-maker who is interested in facilities issues, such as keeping the building in good condition, building upgrades, and necessary capital improvements.Location, location, location: The old cliché still rings true, and the importance of location in a workplace was ranked high by building owners in the BOMA survey, as well as panel experts, as one of the most crucial considerations in tenant attraction and retention. At Freddie Mac, the company’s property is retained because of its close proximity to Capitol Hill and the company’s business partners, as well as commuting time for its staff. “We selected our campus site keeping in mind the commute for our employees,” says Matt Kelly, manager, Corporate Real Properties, Freddie Mac, McLean, VA.Tallying Technology and Tenant RetentionTechnology is also increasingly a driving factor for tenant retention. Adds Kelly, “As we continue to grow, another determining factor is limitations with broadband and not being able to communicate in ‘real time.’”               Location, to some extent, drives business and where a business wants to be. At the same time, a good environment allows employees to function in a professional, efficient manner and that translates to the bottom line. Because Freddie Mac employees are located in a suburban area that may lack the benefits of an urban environment, Kelly believes it is important to offer amenities that keep employees happy and focused.Each of the panel discussions stated that tenants are becoming more knowledgeable about the built environment and demanding more regarding flexibility, durability, daylight, views to nature, and good indoor air quality. “We are seeing a shift to higher quality across the board,” says Stephanie Bartos, assistant professor, School of Architecture, Carnegie Mellon University, Pittsburgh. Putting numbers and assigning a dollar value to productivity is challenging, but Bartos points to increased research directed toward measuring productivity in the workplace. At Carnegie Mellon, for example, much time has been devoted to productivity and long-term retention of employees. According to Bartos, as more research is completed and building professionals are educated on the latest results, the shift toward quality will increase.“You have to first satisfy the usability and location of a space for a tenant. Those are the main drivers; then the tenant will start looking at the quality issues,” says Alexis Karolides, GDS team leader, Rocky Mountain Institute, Snowmass, CO. According to Karolides, quality issues, such as temperature control and access to natural views, are becoming increasingly important as the correlation between interior elements and absentee rates is proven. Panelists urged more building owners and facilities managers to investigate the growing research on productivity.In addition to worker performance issues, the panel of experts stated that issues of worker satisfaction are also becoming business drivers. For example, underfloor air delivery and power systems were noted as optimal candidates for projects, not just because of their power efficiency and return on investment, but also because the system had significantly fewer complaints. “[At a recent office building project], the developer expected 300 calls a year. They completed a building with underfloor air and occupant adjustment and it was down to 30 calls a year. They have less headaches, and people could be working on projects instead of making sure it isn’t too hot or cold,” says Epstein. Freddie Mac is planning on doing a comparison of its new data center, which features underfloor air distribution, against the organization’s more traditional facilities to measure end-user satisfaction.Calculating the Importance of ChoiceThe latest focus in commercial facilities is on choice – allowing tenants and their staff to control their temperature and lighting and adapt their environment to suit their needs. “I think building owners will adapt the [underfloor air] system because of the economics [resulting from the elimination of ductwork] and the freedom it allows in terms of flexibility, relocation, and the ability to release space,” says Gregg Popkin, executive director, Insignia ESG, New York City. According to Popkin, the use of underfloor air will be especially hot in growing suburban environments and CBD markets vs. big cities.According to the panelists, there is also a tremendous need for quiet space in commercial spaces to allow for focused tasks. One of the results of the design and management of facilities during the dotcom boom was a renewed focus on flexible, unique, and responsive workplaces. Along with efficient workplaces, companies are learning the value of building design that encourages innovation. The most important concept to come out of this series of panel discussions on tenant satisfaction is that there has been a change in thinking within the facilities management industry. There is a realization that the most important asset in a building is the occupants. The future of commercial buildings holds a greater understanding of the relationship between end-users and the environment. “Productivity to us is about innovation, coming up with new ideas. We created spaces in 1998 and 1999 that had more collaboration areas, and that change is not going away,” explains Epstein.Safe Work SolutionsAccording to these experts, buildings created under the principle of sustainable design are high-performance spaces that deliver reduced tenant turnover, energy costs, and sick building syndrome. These factors improve a building owner’s return on investment. With the spread of sustainable design programs, such as the Leadership in Energy and Environmental Design (LEED) green rating system from Washington, D.C.-based U.S. Green Building Council, sustainable buildings will be designated as superior to conventionally designed facilities, according to Bartos. “The industry has a lot of inertia; it is slow to change and recognize [green] products as better products,” says Bartos.Although Kelly has implemented several green design principles into his facilities management program at Freddie Mac, he feels that adoption on a widespread basis of more complex green design issues will be much more gradual. Bob Laevsky, senior facility manager, Vivendi Universal, New York City, has reviewed a lot of sustainability information and also believes in the benefits of green design and facilities management. Adds Laevsky, “As a facilities professional, there are a lot of things we can do that are not cost prohibitive.” Environmentally responsible decisions Laevsky has made include the removal of CFCs and halon; using modular wall systems, indoor air quality testing, and no smoking policies; encouraging employees to commute with mass transit; and implementing energy-efficient lamps and lighting controls, where appropriate.In addition to the gradual growing interest in the benefits of green design, facilities managers are responding to an increased desire from tenants for security. “There has been a tremendous uptick in the level of security and life-safety planning in buildings across the country,” says Popkin. This is especially true in high-rise buildings in CBD markets.Because of recent tragedies, tenant satisfaction is often linked to a building’s security and its end-users’ perception of safety. In recent years, facilities managers have been updating their buildings’ systems and emergency response plans. Panelists point to a need for further focus on training and awareness. (An example: Instead of having tenants merely congregate at fire doors during fire drills, have tenants actually exit the buildings.) In concert, expect the best. Today, building owners should expect 100-percent accountability from tenants when participating in fire drills. At the same time, building owners should (and are) also auditing fire drills, having more frequent fire drills, and testing their facilities’ speaker systems.This national focus on security has lead to the facilities management and security industries conducting comprehensive plans and checklists for various building types – including a recognition of the importance of the human component in life-safety. Training, development, and process application have received greater attention. “Better safety may not necessarily result in the purchase of a lot of equipment and re-engineering in a lot of these buildings, but it may result in some tweaking of the systems, which are in place in the majority of the buildings across the country,” says Popkin. “[When] talking about a biological event, if you have a green building there is a good chance you can upgrade that building much more readily than any other building,” says Asher Derman, president, Green October LLC, Elizabeth, NJ. Derman recently worked on a multi-tenant residential building with a water sewage treatment facility, fuel cells, and an advance air filtration system. The building’s high degree of life-safety features appealed to the tenants’ growing demand for safety.Beyond the strong interest in life-safety issues, tenants still have a continuing interest in having a healthful environment. Recent anthrax scares have resulted in a renewed focus on indoor air quality. “What you see in my area of indoor environmental quality, areas of safety and security are now beginning to all coalesce into the same set of design goals,” says Alan Hedge, professor, Department of Design and Environmental Analysis, Cornell University, Ithaca, NY.Hedge is concerned with the entire structure of commercial facilities, especially indoor environments that hold moisture and produce dangerous mold growth. “Studies show that people only spend half their time at their desks, so you cannot just treat people at the desk level. You have to think of the [entire] building as well,” he notes.Preventing workplace injuries is a big part of creating a safe, healthful environment. Currently, many tenants are hampered by piecemeal, reactive responses to end-users’ complaints about aches and pains. As medical costs rise and productivity levels sink, these experts predict large tenants will request comprehensive ergonomic information and solutions from design and facilities professionals that maximize productivity.The series of panel discussions elaborated on specific ways to create a high-performance work environment that better served tenants and their employees, as well as building owners and facilities managers. While there is no one simple answer to the tenant satisfaction equation, creating flexible, responsive buildings is definitely the beginning to the ultimate solution.Regina Raiford Babcock ([email protected]) is senior editor at Buildings magazine. Part II of this information – the third panel discussion in Chicago – will be featured in the February 2003 issue’s “Features” section.

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