Is partnership the new model?

Traditionally, investors have had the upper hand in office development. Secure the site, planning, funding, press the button and hope the timing is right on delivery. However, our research shows that this is changing: occupier power is forecast to rise over the next decade, ahead of cyclical factors. As property has risen up the corporate agenda, investors/developers have become constrained in bringing new spaces to markets. Developers need high-quality occupiers. Occupiers need high-quality developments.  High-quality spaces will directly impact staff recruitment, retention and performance. They will be critical to worker productivity and, ultimately, corporate profitability, but access to ready-made, high quality solutions is becoming more limited.

Right now, occupiers have a tremendous negotiating position in the market. Now is the time that they can really influence what gets built. Their brief can become much more detailed − from location, capacity, density, sustainability, security and air conditioning right down to the sprinklers. Furthermore, flexible, long-term partnerships with developers will lead to better outcomes for both parties, especially in the absence of debt funding. Add to this a legislative element – the inevitable extra scrutiny of leases emanating from lease accounting – and you have a potent mix for change.

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*[Offices 2020 is an ongoing thought-leadership initiative from Jones Lang LaSalle looking at the next 10 years of the office real estate industry across Europe, the Middle East and Africa]