What are the benefits of social value for landlords and occupiers?

In commercial property, social value is created when buildings support environmental, economic, and social wellbeing. In turn, this improves people’s quality of life. By evaluating and enhancing the social value of their properties, building owners, property managers, and occupiers can improve their impact on the environment. Social value also creates an uplift in the market value of a commercial property.

How does social value impact occupiers?

More and more, occupiers are looking for offices that not only meet their operational needs but also support their broader goal of attracting and retaining top talent to maximise efficiency and profitability. A key part of achieving this involves fulfilling their Environmental, Social, and Governance (ESG) agendas.

If you think about how many hours people spend at work, it makes sense to ensure the workplace is giving something (i.e. social value) back to its employees. Happy employees generally ‘stay put’.

Modern companies are plumping for properties that offer amenities focused on staff wellbeing. This can be both within the building itself and in the surrounding community. These include wellness facilities, green spaces, and community engagement initiatives. Such features are crucial in creating an environment where employees feel valued and motivated. This, in turn, enhances productivity and wellbeing and reduces staff turnover.

Wynyard Business Park on Teesside, City Hall in Sunderland and Helix in Newcastle are three great examples of multi-let office spaces that offer high quality social value for their tenants. Employees can access a whole range of activities from wellness walks, to bootcamps, to bird-box making, to book swaps, reading nooks, street food trucks, to biodiversity projects.

Occupiers can work in partnership with landlords to develop a community engagement programme but most occupiers don’t have sufficient resources and prefer their landlord to provide this. A good programme will link occupiers with the local community and ensure they are ‘doing the right thing’ socially. For example, inviting the elderly in for a coffee, providing opportunities for local school children and chances for staff to volunteer in the local area.

Research shows that best-in-class commercial office spaces that excel in providing these amenities and meeting ESG criteria tend to have shorter vacancy periods. This usually means they need lower incentives to attract tenants and command higher rental values. This demonstrates a clear link between the quality of the property and the occupiers’ ability to sustain a positive and productive workforce.

What is the benefit of social value for landlords and owners?

Real estate investors and asset owners are under increasing pressure to deliver tangible progress against their own social value goals – looking at the “impact” of their investments and activities. Buildings can play an important role in enhancing place. Property owners and developers have a unique opportunity to drive social value through their real estate – maximising return on investment and future-proofing assets whilst delivering lasting positive impact for communities.

While many organisations have developed robust strategies for the ‘E’ and ‘G’ aspects, neglecting social initiatives can hinder their ability to attract occupiers. When addressing the ‘S’ in ESG, the absence of established policy and regulation around social value often leads to it being perceived as a ‘nice to have’ rather than a ‘necessity’. Investors are increasingly drawn to properties that promise secure, long-term income and compliance with regulatory standards. Additionally, buildings that integrate social initiatives and cater to community needs can significantly enhance the property’s appeal.

There is a growing trend towards high-specification, environmentally friendly office spaces. Sustainably accredited buildings often experience shorter marketing periods and yield stronger financial returns. Investors are increasingly interested in impact-focused companies demonstrating strong ESG performance, as they tend to outperform their peers over time. This growing interest is driven by the dual promise of financial returns and positive community and societal impact.

Collaboration is key to enhancing social value 

Understanding and addressing the needs of a community is essential to maximise social value. To do this successfully, it’s important that occupiers, landlords, building owners and local authorities collaborate, assess and share best practices. Collaboration with local stakeholders helps to foster community engagement and local impact. If all stakeholders work together to identify needs and priorities, they can ensure the most efficient resource allocation and aim for long-term interventions.

Top tips for generating social value:

• Create common areas that are comfortable and facilitate relaxed interactions. Look at the space you have and how it can be better utilised to enhance ‘social’. For example, do you really need that formal meeting room? What about your traditional reception area – would those spaces be better off being given over to your people, where they would be in more regular, beneficial use?
• Look up, and look out, of your office footprint. Do you have outdoor space that could be used more usefully – a roof terrace, a yard? There are lots of encouraging examples of colleagues reaping the social benefits of planting plants and vegetables, together at work.
• Train together. There has been a rise in people keen to upskill and expand their knowledge since the pandemic. Ask your employees what training courses they’d be interested in and have a trainer come to your office to deliver courses. Or, look beyond career skills and get some fun and interesting hobby training courses arranged.
• Encourage non-work activity. Bike rides, walks, cake baking competitions, quizzes, book/clothes swaps – arrange activities that bring people together and give people a reason to come to the office – think about creating benefits and experiences that they don’t get in their home office.
• Community engagement. Do you have other office tenants around you that you could get to know and maybe even cross-sell with?
• Maybe you could arrange a street food vendor to come to your office a couple of times a month – send the menu round – get people to pre-order and commit to coming together to enjoy a meal.
• Connect with your landlords and their managing agents. Have meaningful and positive interactions with the team managing your building or estate – if there is one – and ask them to help you bring people together on site. At Knight Frank, we work really hard across our clients’ properties to better engage occupiers and bring them together using lots of the initiatives, like some of the examples mentioned earlier.