The digital revolution has impacts that go far beyond computer screens. In the commercial real estate world, advanced technology is resetting the balance of power between tenants and landlords, giving tenants significant advantages. Today's tenants can negotiate for space more effectively thanks to better market information and they can manage their spaces more effectively, reducing the cost of occupancy as well as the labor necessary to manage their landlord relationships. In addition to this, the digital revolution has also changed how tenants look at their space, further strengthening their position.
Better Access to Market Data
Before the Internet commercial real estate revolution, tenant real estate managers had to depend on a broker to share information on available spaces and on what their landlords for asking for rents. Brokers had to use their personal networks to find out what spaces were available since there were no effective ways to pool information. With each broker having only access to a subset of the market, and with each client only seeing a subset of what their broker was aware of, decisions had to be made relatively blindly.
Today, internet sites like CoStar, LoopNet and CommercialIQ as well as local commercial real estate listing sites make information about just about every space on the market available to just about everyone. This means that tenants can survey sites before they even contact a broker. With all of this information, tenants can ensure that they are signing leases at a fair rate compared to other properties on the market. They can also use their information during their tenancy to work with their landlord to attempt to renegotiate leases that otherwise end up being above market levels.
Better Management Abilities
Commercial real estate portfolio optimization software packages like REoptimizer® make occupancy much easier for tenants, as well. These software packages consolidate information about a company's real estate portfolio in a single place. This helps managers keep track of important dates like anniversaries, rent increases, expiration dates and option notification dates.
The best packages also allow real estate managers to compare sites so that they can keep a close eye every property. They can generate reports that make it easy to analyze which sites are more efficient on a rent per square foot basis, on an operating expense basis, and even when compared with other spaces available in their markets. This information lets real estate managers have a better handle on their portfolio than ever, helping them to make better decisions about where to shrink, where to expand and where to move in the future.
New Relationships to Space
For many companies, the greatest impact that digital technology has had on their commercial real estate has been tied to their actual workforces. With more and more companies using technology to enable their employees to work from the road or from home, physical space is starting to become less important. At the same time, landlords continue to develop new property. The ongoing growth of office space availability coupled with the reduced employee per square foot ratios that many companies are seeing are enabling them to negotiate harder for their space. This takes advantage of the fact that many landlords are aggressively seeking tenants and willing to make better deals.
Technology has impacted commercial real estate in many positive ways for tenants. Occupants now enjoy better access to information about the market, about their space, and about their space's role in the market. As the workforce and its relationship to commercial real estate tenancy keeps evolving, technology will continue to play a role in increasing the tenant's relative market power.
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