More Than 80% of Office Landlords Witness Uptick in Lease Renewals as Enhanced Tenant Experience Becomes the Norm, According to the 2024 VTS Global Landlord Report

The report shows that landlords are prioritizing the improvement of tenant experiences to drive retention of current tenants as opposed to leasing vacant space in 2024.

VTS, the industry’s only technology platform that unifies owners, operators, brokers, and their customers across the real estate ecosystem, today released the findings from its fifth annual VTS Global Landlord Report, which identifies the strategies and methods being leveraged by landlords to drive retention, accelerate technology use, and build a resilient portfolio. The report is a result of a survey commissioned by VTS from an independent market research firm surveying today’s landlords from across the globe on their priorities and challenges in 2024.

The report shows that landlords are prioritizing the improvement of tenant experiences to drive retention of current tenants as opposed to leasing vacant space in 2024. According to the latest VTS Office Demand Index (VODI), national demand for office space marked its sixth consecutive month of annual growth, and VTS’ 2024 Global Workplace Report showed that 62% of companies are executing a hybrid work strategy, which both indicate a slow but steady recovery for the office market. However, the market remains fragile, and landlords have therefore shifted their focus to tenant retention and lease renewals, with technology being a top asset, followed by outdoor communal areas, and property operations.

“We are witnessing a conviction for a strong return-to-office in 2024 in contrast to years prior, and while positive for the market, it is becoming increasingly crucial for landlords to remain competitive to meet the evolving demands of tenants for enriched, interconnected workspaces,” said Nick Romito, CEO of VTS. “The strengthening of tenant relationships has driven meaningful results to landlords thus far despite market challenges, and we are continuing to see a culmination of tactics being deployed to put the needs of the tenant at the forefront of their strategies, which will be paramount to their success in 2024.”

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Key takeaways from the report include:

Landlords’ Top Priority in 2024 is Creating Elevated Workplace Experiences to Drive Tenant Retention, with Only 41% of Landlords Prioritizing Leasing Vacant Space

• 57% of landlords prioritize the retention of current tenants, with 56% enhancing property management and tenant experience to do so.
• 82% of landlords are already seeing the length of renewals increasing or holding steady
• Landlords are 2x more focused on property improvements than portfolio diversification, investing in tenant experience technologies (33%), outdoor communal areas (31%), property operations (30%), food and beverage concepts (27%), and fitness centers (27%)

In the new age of AI, landlords are accelerating their use of and investment into technology

• 84% of landlords expect their technology investments to increase compared to last year, while only 4% anticipate a decrease
• Property management software is a landlord’s top tech investment of choice (44%), followed by leasing and asset management platforms (33%) and digital marketing software (26%)
• Nearly half (45%) are keen on the potential of AI to better inform portfolio decisions, advise savings and efficiencies and optimize market data

Year-over-year, the importance of digital marketing continues to gain traction, with those previously holding out due to budget constraints and a down economy jumping on board this year.

• In 2022 only 4% of landlords were utilizing digital marketing software, with that number spiking to 26% in 2024
• Social media ranks as the most powerful channel for finding new commercial real estate tenants (33%), with digital ads noted as the least effective method (11%)
• 34% of landlords spend over $50,000 annually to create, maintain, and update their digital web properties across their portfolio

Survey responses comprised a wide range of portfolio sizes and leasing specialties from hundreds of respondents globally.

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