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Relocation process: What services do tenants need?

Relocation process: What services do tenants need?. Work in progress Miikka Putto Aalto University Real Estate Business. Content. Background. Background : why study relocation ?.  Understanding where and how organizations relocate is important!.

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Relocation process: What services do tenants need?

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  1. Relocation process:What services do tenants need? Work in progress Miikka Putto Aalto University Real Estate Business

  2. Content

  3. Background

  4. Background: whystudyrelocation?  Understanding where and how organizations relocate is important! Office occupiers’ relocation decisions have an impact on On all actors within the built environment and society at large On the relocating organization itself • Organisation • Individuals

  5. What is relocation? Relocation is “a change of address of a firm from location A to location B” (Pellenbarg et al. 2002) -> Organisation’saddresschangedfrom A to B -> Office occupiers, short and medium distance Optimallocation • Neo-classicalapproach • Behavioralapproach • Institutionalapproach Processfocused • Organizationsarecomprised of people • Decisionsare made - and affected – bypeople

  6. Previousresearch, examples *1: Pellenbarg, P.H. & Wissen, L.J.G. van & Dijk, J. van, (2002). "Firm relocation: state of the art and research prospects,“ Research Report 02D31, University of Groningen, Research Institute SOM. *2 GreenhalghP. (2008) ‘An examination of business occupier decision making: distinguishing small and large firm behaviour’, Journal of Property Research, 25(2) 107-126 *3 Rasila, H.M., Nenonen,S. (2008) "Intra-firm decision-maker perceptions of relocation risks", Journal of Corporate Real Estate, Vol. 10 Iss: 4, pp.262 – 272 *4 Rothe, Peggie; Sarasoja, Anna-Liisa (2012) Power or activity? Roles of individuals in relocation processes. 
Joint CIB W070, W092 and TG72 International Conference, Cape Town, South Africa, 23.-25.1.2012

  7. Risks On the employeelevel: • increased absenteeism • substantial reductions in productivity • low morale and a poor attitude toward the company that may persist for months and years • an increase in work errors • the loss of experienced, hardworking people • even attempts to sabotage the move. • (Attwood 1996) Relocationincludesseveralrisks • financial risks • functional risks • corporate culture risks • interest group risks • future risks. (Rasila & Nenonen 2008)

  8. Relocations in Finland

  9. The Finnishcontext: whatdotenantsthinktheyneed? Change management Takingcare of practicalarrangements Leaseagreementnegotiation Legal advice Comparison & Selection of option Searchingpotentialpremises Determiningworkenvironmentcriteria Spacerequirementanalysis Haveused; Havenotusedbut a needexist; No need; Cannotsay

  10. Tenantrepresentation

  11. Tenrepmarket in Finland The majority of leasenegotiations is donewithoutTenrepconsultant • Somemarketseven 80…95% mightuseconsultant Typicalclient for Tenrepconsultant • Large, international company • Sensitive for economicfluctuations • Centralised CREM • Consultant company • Brandorienteedcompanies TenRep association Ounasvuori 2012

  12. Triggers to hire a Tenrepconsultant Expiringleasecontract Organisationalchanges Business expansions / cutdowns Hurry Premiseshave to supportspecialfunctionalities Lack of supply (specificrequirements)

  13. Researchaim and methodology

  14. Researchaim To understand the nature of relocationprocesses To understandchallengesthattenantscomeacross To identifyserviceneeds Whatkind of relocationprocessesdotenantshave? Whatchallengesdotenantscomeacross? Whatservicesshouldbedeveloped?

  15. Researchmethodology Describepractices, Identifychallenges Developserviceconceptrelated to relocations Multiple casestudy Semi-structuredinterviews

  16. Preliminary findings

  17. Challengesthatorganizationscomeacross Tenantinterviews: Signifiganttime is spent on the process Relocationproject management is hard to handle Oftenemployeeswerenotinvolved to process The emphasize of communicationwas in the laterphases Suprisingly the respondents (at leastsofar) didnotconsideredthatadvice in leasenegotiationwouldhavebeenbebeneficial Tenants are interested about real estate services but pay willingness is low Some of the respondentsindicatedthatexternaladvicewouldhavebeenbeneficial

  18. Addedvalue – consultantexperiences • Savings • Tenrepconsultant is able to negotiatebetterleaseconditions • Time spend • In-houseknowledgedoesnotexist • No need to wastetime to long lists • Consultant knows the realestatemarket • Professionalism • Professionalism • Possibility to concentrateonly to essentialissues • Tacitknowledge • Consultant canfindallalternatives – access to silentmarketinformation • Tenantsbenefitsarecontinuouslyguaranteed • Specialknowledgeavailable (taxationeq.)

  19. Discussion

  20. Discussion Moreemphasize to relocations is needed • Awareness • Relocationshouldbeseen as an investmentnot a cost In-houseversusoutsourcing Tenantsareinterested in realestateservicesbutwillingness to pay is low Shouldlandlordintegratesomeservices to theirbudgets? For example, technologyparksareofferingalreadywiderange of services. Couldtheybuiltup a business concept to supportpotentialtenants to move in?

  21. Possiblebenefits for the realestateindustry Spaceproviders • To understandrelocationprocesses -> Supply side of the marketdevelops -> Lettingprocessmoreeffective User organisations • Perceiveunderstanding of allaspects of relocation • Lessriskyrelocationprocess • Moreefficientrelocationprocess • Takefinancial, social and environmentalaspectsbetter into account Service providers and consultants • To identifyserviceneed and developservices

  22. Summary and furtherresearch Relocations Significantimpact Organisationsconfrontchallenges Finnishmarket is undeveloped, business potentialexists In order to understandlocationdecisions, the relocationprocessneeds to beinvestigatedfurther Current study continues, so far challenges have been recognised. Next step is to understand office occupiers’ service needs

  23. Thankyou!Miikka Puttomiikka.putto@aalto.fi

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