Photo of Arie Barendrecht

NEW YORK CITY—When weighing a decision on space, the top two considerations are location and price. True or false? Only partly true. After location, the second most important factor in a tenant's current space, according to a study by Radius Global Market Research and WiredScore, is the quality of Internet connectivity. When it comes to evaluating future space needs, connectivity takes pride of place, with price and location ranked second and third in priority.

Connectivity isn't something leasing decision makers take for granted; in fact, many find that they can't make this assumption. Eighty percent of the leasing decision makers surveyed by Radius and WiredScore—who included chief executives, heads of real estate and facilities professionals—reported having problems with their office Internet connections.

Disruptions in connectivity occur an average of once per week, according to survey results, and 77% of the respondents said these outages hurt profitability. In terms of the effects of outages on a company's employees, increased stress level was cited by 45% of survey respondents, followed by frustration in helping customers (41%) and lower productivity (36%).

Titled The Value of Connectivity: What's the Cost of Poor Digital Connectivity for Commercial Real Estate, the survey shows that about the same proportion of tenants (77%) feel that the leasing process would go more quickly if they knew the property was Wired Certified in accordance with the rating system developed by WiredScore. In addition, if an owner could prove a building's reliable connectivity, better than four out of five tenants (84%) would pay more per square foot for their space.

Drilling down into specific capabilities, connectivity factors that would lead tenants to pay higher rents include technology in place to improve mobile coverage and reception (77% of respondents), speed/bandwidth (75%), redundancy (73%), resiliency (73%), reduced set-up time (71%) and cost (70%). Ironically, 63% of survey respondents said it's difficult to get information about a space's connectivity when they're negotiating a lease.

That's not an idle complaint: 91% of survey respondents said that a lack of reliable internet connectivity would affect their rental decision. And 51% said they wouldn't consider renting office space at all if they knew it possessed poor connectivity infrastructure and would, in fact, limit their search to Wired Certified buildings.

“Tenants want an assurance that their building's infrastructure will meets their connectivity needs in the immediate, but also in the future, regardless of whatever technological leaps are in store for their business down the road,” says Arie Barendrecht, WiredScore's founder and CEO. “Landlords can provide the level of transparency that tenants are seeking though an independent assessment of a building's technological infrastructure, which we now know increases initial leasing interest and prompts tenants to sign faster and pay more.”

This survey was conducted online in August among 150 office tenants defined as having at least some decision in leasing decisions. Markets covered by the survey included New York City; Los Angeles; Chicago; Philadelphia; Dallas/ Fort Worth; the San Francisco Bay Area; Washington, DC; Houston; Boston; and Atlanta.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.