Kingsley Associates Reports Increasing Office Tenant Satisfaction
- Aug 18, 2014
Kingsley Associates reported that tenant satisfaction in office buildings rose nearly 2 percent to reach a three-year high, according to its second-quarter Office Industry Trends survey.
The data shows that for the four quarters ending on June 30, 2014, 88.6 percent of tenants rated their overall satisfaction of office space as “good” or “excellent,” an increase from the previous report’s 87 percent, which came in as the lowest percentage observed since the latter part of 2012.
“At Kingsley, we perform correlation analysis to determine which areas move in lock step with overall tenant satisfaction,” John Falco, a principal in Kingsley Associates’ Atlanta office, told Commercial Property Executive. “We have found the most highly correlated areas to be focused around management service delivery.”
The analysis shows that satisfaction rose in eight of the 11 largest markets in the U.S., with Seattle experiencing the greatest increase from the previous quarter, at 4 percent.
“To be honest, we have not found the uptick to be all that surprising. More and more owners are placing high importance on delivering exceptional customer service,” Falco said. “It is perhaps interesting to mention that even in a market like San Francisco, where rental rates have significantly increased over the past year (15 percemt), satisfaction has remained relatively stable during the same period.”
Additionally, the report shows that the rise in perceived value for amount paid also increased this quarter, to another three-year high, coming in at 69 percent compared to last quarter’s 67.3 percent.
According to Falco, the top five areas most highly correlated with overall tenant satisfaction were: Management – Overall satisfaction; Management – Problem resolution; Management – Accommodation of special requests; Management – Responsiveness; and Management – Accessibility.
The survey showed that loyalty built on the previous year’s growth, with increases in tenants’ likelihood to renew observed in seven of the 11 largest markets in the U.S. Los Angeles measured the greatest increase, with 63 percent of tenants indicating intent to renew, up from 58.9 percent last quarter.
“We are witnessing an increase in property management firms placing greater importance on catering to tenants’ needs,” Falco said. “These dramatic rises in tenant satisfaction and perceived value for amount paid are reflecting this new focus.”