Research proves link between occupier satisfaction and property performance

28 Sep 2016

Policy area: Town centre & Retail

Landlords who invest in building relationships with their occupiers will see a 1.9% increase in financial returns, new academic research shows.

The findings of the three-year PhD research by Dr Danielle Sanderson from School of Real Estate & Planning, Henley Business School at the University of Reading confirm a link between customer satisfaction and property performance.

The research provides quantitative evidence to show that a rise in occupier satisfaction by one level (on a five point scale) will typically improve total returns by 1.9% a year, a clear business case for investing in customer experience [1].

It shows that landlords and managers must build ‘professional, collaborative and empathetic’ relationships with occupiers and show understanding of their business needs to improve their levels of customer service. It also highlights the importance of providing clear and transparent documentation and making sure occupiers understand the value of the services they receive, and that a relationship of trust must be established.

The research findings should encourage more property owners and managers to adopt customer focused strategies, enhancing the reputation of the industry and reducing the risk of further regulation.

Howard Morgan, founder and managing director of RealService, said: “This pioneering research proves what we have intuitively known – that they is a direct payback in terms of the three R’s of real estate - revenue, retention and reputation – for treating tenants as customers. We hope this is just the start of research into this important field of understanding for our industry.”

Tim Stephen, chair of RealService Best Practice Group, said: “This research will challenge those who have yet to embrace the genuine opportunity to enhance returns through improving service which calls for a change in mind-set and enhanced skills within our industry”.

Melanie Leech, chief executive of the British Property Federation, said: "Good landlords have always understood that they are providing a service as well as physical space to their tenants and invest heavily in this relationship. This welcome research demonstrates that not only does good customer service make the relationship run more smoothly, that but it also creates economic value through a better return to the landlord. It is a call to arms to all landlords to make sure they provide the best possible customer service."

Occupier customer Chris Richmond PWC, said: “These findings are very encouraging and show that what’s good for customers is also good business sense for property owners. We hope that investors will take note and ask demanding questions of their asset and property managers to ensure that every opportunity is taken to work with occupiers.”

Dr Danielle Sanderson, author of the research, said: “My research has shown that everyone benefits if property owners and managers demonstrate empathy towards occupiers, understand their needs, and gain their trust”.


Notes to editors

[1] An increase in the mean satisfaction of occupiers at a property by one level (using a 5-point scale where 1 = Very Poor, 2 = Poor, 3 = Average, 4 = Good, 5 = Excellent), should increase total return (capital value of property + income from rent) by about 1.5% per year.

[2] Sponsorship totalling £60,000 was secured from three sources to fund the research:

  • The Lord Samuel of Wych Cross Memorial Trust, administered by the British Property Federation (BPF) was set up in 1989 to remember Lord Samuel of Wych Cross, founder of Land Securities and Chairman from 1944 to 1987. Now wound down, the Trust provided real estate students with funding for industry-related study. Former Land Securities chief executive, Francis Salway, mentored Dr Sanderson during her research.
  • RealService, a Customer Experience Consultancy, that has worked for over 15 years with some of the UK’s largest property owners and managers to enhance the experience of occupier customers.
  • RealService Best Practice Group (RSBPG), a not for profit membership group, with 20 (?) members representing a cross section of the property industry including Land Securities, Derwent London, SEGRO, Transport for London, Bilfinger GVA and Broadgate Estates. The Group’s mission is ‘proactively increasing property performance through improved occupier satisfaction’.