If you compare the list of Fortune 500 companies in 1955 to the list of Fortune 500 companies today, you’ll find that only 12% of the list has survived the past 60 or so years.
It’s true, stats like this have been used in just about every “disruptive” company’s sales pitch deck to validate whatever innovative product they’re selling (with varying degrees of validity). That being said, if you disregard the true cause or causes of this mass exodus for a moment, this stat does support at least one undeniable truth: success is not owned, it is leased. And rent is due everyday.
No one understands the difference between owning and renting better than commercial real estate owners and operators, and the key to their ongoing success is attracting and retaining the most sought-after tenants. Finding “long and strong” tenants will always be the goal, but they have become a more illusive target. Companies and people will always need a place to work, but how they do it and where they do it is changing drastically – co-working and remote work are new(ish) but significant trends.
These trends have much to do with the needs of modern businesses, or tenants – the customers of the commercial real estate world – and the emergence of TAMI companies.
TAMI, or technology, advertising, media, and information companies, are growing and filling commercial office space faster than any other sector. The tech sector, alone, was responsible for nearly 20% of major office leasing activity in recent years according to CBRE’s 2018 U.S Real Estate Market Outlook, as the sector is expanding at about twice the rate of overall job growth.
While these companies have much to do with emergence of a few disruptive real estate trends, they still represent massive opportunities for real estate owners who can serve them effectively, and those who attract and retain TAMI tenants will have no problem with that aforementioned “rent” check that’s due everyday.
From our research, we’ve discovered what moves the needle for TAMI tenants and how best to bring them to and keep them in your building.
Connectivity Is King
If you’ve ever had the chance to hear Dave Miller from WiredScore pitch, you’ve probably heard him say something like this: “as a business owner, if I told you that your air condition was going to break, your plumbing was backed up, your office ran out of food, or your internet was out, which one would you try to fix first based on its impact on your business?”
The answer, for a vast majority, is internet. It has become paramount to productivity and most employees day to day activities. In fact, internet is among the top three factors for tenants who are searching for office space, along with cost and location.
From the perspective of a Tech or TAMI tenant, who are typically fast growing organizations driven by sales and engineers teams, the connectivity emphasis compounds. To create redundancy and streamline processes, engineers do their work on cloud platforms like AWS and Azure. Sales teams rely heavily on cloud-based CRM products like Salesforce and HubSpot and make calls/take meetings through products like Dialpad and Zoom.
Until now, prospective tenants had very little information available to them with respect to connectivity, but companies like WiredScore are changing that. It is critical to convey to tenants that your connectivity is best in class and that you are delivering their most essential business commodity.
Surface Amenities & Experiences
Ever since Google started putting nap pods and play areas in their California offices, TAMI companies have been using amenities and office perks as a recruiting tool. There is a talent war being fought everyday between tech players in Boston and beyond, and whether or not landlords and property managers like it, they’re right in the middle of it.
While actually having and providing these amenities is obviously critical, just as critical is the ability to surface these amenities and communicate effectively with your tenants about what is available in their building. When we asked the tenants in our survey how they find out about the amenities available in their office building, 31% said: “we don’t”.
Thus, improving communication with tenants is a critical step in attracting and retaining TAMI tenants. Often times, tenants work on big campuses where cafes and gyms could be scattered throughout the property, amenities and perks may be harder to find than they should be. The elevator flyers, posters on the walls, and email newsletters simply aren’t cutting it anymore. If only there was a device people checked 150 times a day…. *cough*:
Create & Maintain Community
If you need validation of the importance of community, look no further than the emergence of WeWork.
You see, tenants don’t love coworking spaces like WeWork just because they blast hip hop music, or offer cold brew coffee on tap – tenants love WeWork because it makes them feel like they are part of a community and experience tailored specifically to them.
If you can bring relevant and exciting perks to buildings, or surface those that are around you specifically for your tenants, you start to foster a strong sense of community. According to Mark Rosenbaum of Northern Illinois University, communities that are developed in third places like gyms and coffee shops often provide social and emotional support equal to or stronger than family ties. So don’t be afraid to get tenants together outside of their office – they’ll love you for it!
If you can put all of these things together and surface your efforts effectively to tenants, you will be able to attract the best of the best to your building.