The mix of clients between compromise and benefits
In the Construction and Real Estate section of Biz Days, the most significant business trade show in Romania, Mirela Raicu Corporate Account Manager of ESOP Consulting, gave a presentation on “Office market, constantly changing.”
The ESOP representative identified a new concept (customer mix), associated with long-term development and future benefits for both investors and tenants. The idea of the client mix has so far, been widely used in the retail segment. It is associated with maximizing profits by bringing tenants with various fields of activity. As the office market matures and tends to reach a balance in the next 4-5 years, developers will have to differentiate themselves from the competition, given the diversification of customer options.
Due to this fact, the concept of the customer mix can be the solution to solve the problem of expanding companies and counteract their need to relocate. Therefore, in the office segment, the client mix refers to the rented area and the contractual terms. Usually, large business centers rent large areas, averaging between 1,500 and 3,500 square meters, targeting multinational companies as customers. Developers establish contracts for a minimum of 5 years. Still, few take into account the rapid evolution of companies and the fact that they will need more space, which if they can not get, choose the relocation option.
A mix of spaces and modularity of them will allow the company to expand its activities right in that building. Offering areas under 1,000 square meters to medium-sized companies for more flexible periods, of about 3 years, will allow significant customers to expand in the future. In this way, business centers can keep their large tenants. Currently, property owners recommend renting space in excess of current needs, which companies can sublet later.
However, many companies are reluctant to this system. The nature of their business is different, and practice such as subleasing is sometimes perceived as an additional risk. However, as tenants’ options will diversify, the mix of clients will tend to become a necessity, in support of the desire of real estate developers to establish long-term partnerships with large companies. Although in a first stage, the client mix involves more considerable resources of time and management of the client portfolio, it can prove the ideal solution for developers to secure their prestigious tenants, not so much today when the market still allows favorable conditions for owners, but in the perspective of keeping them in the building for the next 4-5 years.