by Kirk Layton, President & Co-Founder of The Tenex Group
The office market is having a moment, and not the fun kind. Hybrid work isn’t going anywhere, demand has softened, and vacancy rates in a lot of cities are sitting at levels nobody budgeted for. In this climate, “great location” and “we redid the lobby” don’t cut it the way they used to. Tenants have options, and they know it.
Here’s the part that should make you feel better: there’s a lever still fully in your control, and it’s not a $40-million capital project. It’s tenant experience. And for once, we don’t have to take that on faith — there’s actual math behind it. Turns out “vibes” have an ROI!
The Study That Turned “Happy Tenants” Into a Balance Sheet Item
Economists Juan Palacios (MIT) and Nils Kok (Maastricht University) ran the numbers on this — and by “ran the numbers,” we mean they went through more than 37,000 tenant surveys across roughly 3,000 office buildings in 392 cities. This is not a “we surveyed 40 people in a Slack poll” situation. This is about as close to definitive as commercial real estate research gets.
Their question: does tenant experience actually move the needle on renewals, occupancy, and rent — or is it just a nice thing to put in a case study?
The answer, per their data: it moves the needle. A lot.
For every one-point increase in tenant satisfaction (on a 1–5 scale), they found:
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Willingness to renew climbs 6%
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Likelihood of recommending the building jumps 5%
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Move-out probability drops 8%
Zoom out to the building level, and a 10% increase in average satisfaction correlates with:
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2% higher gross rent growth
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6% higher effective rent growth
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4% lower vacancy
None of those numbers look earth-shattering in isolation. Stack them across a portfolio, and you’re looking at real dollars — the kind that show up in NOI, not just in a tenant testimonial on your website.
Plot Twist: It’s Not About Having the Newest Building
Here’s the detail that should be reassuring if your building isn’t the shiniest new tower on the block: the researchers controlled for building class. So this isn’t just “new buildings win, old buildings lose.” Once you strip that out, the biggest drivers of satisfaction turn out to be things that have nothing to do with asset class:
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Responsive, accessible management
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Clear, consistent communication
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How fast problems get resolved
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Building upkeep and security
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Amenities and shared spaces
In other words, the economics of tenant experience reward how a building is run, not just what it’s made of. That’s genuinely good news, because “run it better” is a lot cheaper than “rebuild it.”
Where the Numbers Meet the Lobby
This is exactly where tenant experience programming earns its keep — lounges, lobby activations, building events, curated perks, a building ambassador who knows your name. None of that is decoration. It’s the mechanism by which a building goes from “a place people go to work” to “a place people are glad to work.” That shift shows up as higher satisfaction scores, which — per the research above — shows up as better renewal rates and better rent performance.
The Tenex Equation, Spelled Out
Put it all together and the logic runs in a straight line:
Better tenant experience = higher satisfaction = higher renewals = stronger effective rents and occupancy.
This isn’t a soft argument anymore. It’s an economic one, backed by the most comprehensive tenant satisfaction study currently out there. If retention, occupancy, and NOI are the goals — and they usually are — tenant experience isn’t the “nice to have” line item. It’s the lever.
The economics of tenant experience reward how a building is run, not just what it’s made of. That’s genuinely good news, because “run it better” is a lot cheaper than “rebuild it.”
