- What is Tenant-Ready?
Tenant Ready is a term we created – and trademarked – for providing office space that can be immediately occupied. Our clients are landlords, flex operators, serviced office and coworking businesses; any situation where a company seeks to offer pre-fitted space for tenants. The Tenant Ready product is the design, construction and furnishing of plug-and-play office space, but can include marketing support, logistics, maintenance and finance. Tenant Ready differs from traditional, tenant-acquired Cat B fit out in that the space is often being created without knowing who the occupier will be; and indeed, with an eye to several future occupiers.
- There seems to be lots of new terms like Cat A Plus flying around, what new value is Tenant-Ready bringing to the table and how does it compare?
I don’t really like the term Cat A plus – what they really mean is “Cat B paid for by the landlord”. Tenant Ready is a much broader approach that recognises that the pre-fitting of the space might be carried out by a number of different parties – not just the landlord – and that success comes from renting quickly for the right price, with longevity and minimal future voids. This is a much more sophisticated approach that calls on all our experience, expertise and resources to assist our clients in defining, creating and marketing their product.
- The role of the office has changed for many as a result of Covid-19, is that what led to the development of Tenant Ready?
No, even pre-Covid the demand patterns for office space were changing and it was becoming increasingly apparent that tenants want a much more flexible relationship with their landlords and do not want to deploy their own capital when fitting out their offices. The increase in demand for our Tenant Ready services stems directly from this change in the market.
In fact, Modus has been providing Tenant Ready space through our serviced office clients for over two decades. In recent years the market has expanded almost exponentially with the growth of coworking, the entry of flex operators such as Knotel and introduction of landlord offerings such as British Land’s Storey. Because of the level of demand for these products we decided to create a specialist team and last year we came up with the Tenant Ready name to describe these services.
- Will Tenant Ready type spaces become the new norm?
Certainly not, but it’s going to be very common and a lot of occupiers will seek Tenant Ready when looking for a new home. However, many companies will still want to take long leases and own the design of their office space. For instance, it’s difficult to imagine some of the larger legal practices or banks ever abandoning their core real estate, although they may well put project teams in Tenant Ready space. Equally there will always be smaller businesses who feel that location and design are intrinsic to their brands and will want a traditional relationship with their offices – Modus is definitely in that camp; we’ve been in the same building for 26 years and feel that it’s part of our DNA. Our guess is that eventually 50% of the market will be pre-fitted.
- Will Covid see the death of the office and what does a post-Covid workplace look like?
Covid has increased the need for flexibility and that won’t be going away. We have empirical evidence that companies are already exiting traditional leases and moving to more flexible arrangements directly in response to the pandemic.
However, whilst there is much talk in the media about the reluctance of companies to return to the office – unfortunately now supported by public policy – we believe that in the long run corporates will recognise the role that physical space plays in their businesses and will want their people – at least periodically – to congregate in buildings. The alternative is unpalatable: the death of all the small urban businesses that rely on commuters, huge damage to the commercial property industry, the relocation of hundreds of thousands of jobs to lower cost regions (including overseas), the loss of corporate identity, the cessation of knowledge transfer in the workplace.
We sincerely believe that businesses will rediscover competitive advantage through the collaboration of their people in physical workplaces and that those companies who choose to be forever online – except in some niche cases – will fade away. But commuting just to use a desk is clearly a thing of the past. Offices will need to offer much more and be focused on facilitating the activities that don’t work well remotely; pretty much anything to do with collaboration. Our challenge is to define what these new, ultra-flexible offices will look like, and to develop commercial real estate products that will work in a post-Covid world.