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Tenants more satisfied

22 September 2011

Commercial property tenants in the UK are slightly more satisfied with the service they receive from landlords than last year, although service charge arrangements remain a particular area of discontent, according to the Occupier Satisfaction Survey 2011.

Despite overall satisfaction levels increasing to 5.4 out of 10 (from 4.9 in 2010), commercial occupiers’ satisfaction with service charge arrangements stood at an average of only 4.3. Furthermore, while 88 per cent of tenants claim to pay service charges for the properties they occupy, almost a quarter stated that either ‘a minority’ or ‘none’ of their landlords provided a service charge budget.

The questionnaire, which is based on the Code for Leasing Business Premises, revealed that occupier satisfaction levels vary according to size of operation. Large occupiers reported a score of 5.4, while small and medium sized occupiers gave a slightly lower satisfaction level of 5.0. Although significant, this difference is less marked than the previous year’s reading. Sector also has a significant bearing on occupiers’ satisfaction levels, with those operating in the office sector registering the highest satisfaction levels (5.6 out of 10), whereas respondents in the retail and industrial sectors reported scores of 5.2 and 4.9 respectively.

Sustainability remains an important issue, yet property owners are still performing poorly when it comes to engaging with their tenants on environmental issues. Respondents reported a score of 4 out of 10 in this area, compared to 3.5 in the previous survey. While this represents a slight improvement, it is clear that much more needs doing in terms of commercial property and the sustainability agenda.

Elsewhere, occupier satisfaction levels were highest for the leasing process, with a score of 6.2. This is a noted improvement on 2010’s figure of 5.5, indicating a gradual increase over the last twelve months. Again, industrial occupiers recorded the lowest score of the three sectors in this field, with a reading of 5.2, compared to 5.8 and 6.8 for retail and office occupiers respectively.

Furthermore, 57 per cent of respondents felt that the level of communication with landlords was ‘about right’, with the majority receiving communication every 3-12 months. However, a third of occupiers considered the level of communication with their landlord ‘not frequent enough’, suggesting that more needs to be done to improve this area of service.

John Story, Chairman of the Steering Group, commented: “This year's survey results show that the overall level of satisfaction among commercial property occupiers has improved slightly on 2010, but significant issues still remain, particularly with service charges, and environmental matters. The level of satisfaction with service charges has shown a marginal improvement but it is still low. It is an aspect of commercial property which needs considerable attention. Many tenants, for example, do not receive any information concerning their building's service charge budget. This is of particular significance, given the requirements of RICS' Service Charge Code which was published earlier this year.

“There is also a need to give attention to environmental and sustainability issues. Whilst, again, there has been some improvement in the level of occupier satisfaction, the score is still very low, particularly in the industrial sector. Occupiers rate their aspirations on environmental matters quite highly, but there is not yet a significant move by landlords to work in partnership to help occupiers achieve these goals.”

The 2011 Occupier Satisfaction Survey was commissioned by the Property Industry Alliance in conjunction with the UK Chapter of CoreNet Global and questions are based on the Code for Leasing Business Premises. The Property Industry Alliance comprises the Association of Real Estate Funds, British Council for Offices, British Property Federation, Investment Property Forum, Retail Property Organisation BCSC and the Royal Institution of Chartered Surveyors. Its purpose is to provide a cross-industry view on a range of issues and to ensure that, where feasible, the industry speaks with one voice in its relations with external stakeholders.


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