Texas is joining other states in the USA in adopting stricter consumer privacy laws. It might not be intuitive, but laws and regulations dealing with the collection and storage of consumer data create compliance concerns for both landlords and tenants. How can a landlord use this compliance requirement to attract tenants (even in the office and retail sectors) in a competitive market? How can a tenant identify data privacy concerns to stay compliant in an ever-changing regulatory landscape? What should commercial real estate investors consider?

Landlords should think of their tenants as consumers in this context. Consumer data is basically any information, including but not limited to, sensitive data that is linked (or reasonably could be) to an individual person that can be identified through the data. This goes beyond identification of the tenant entity for commercial leases and specifically concerns the individual workers, invitees, agents, etc. of the tenant. Any information that can reasonably be tied to an individual pretty much makes it consumer data, which is subject to more stringent data protection requirements. Like it or not, landlords have to comply with the protection of this data if they are going to collect and/or store it.

Landlords for offices or industrial locations often require tenant workers, guests, vendors and others to access the building, elevators or other amenities through the use of badges or paper logs (yes, even analog data collection is subject to data privacy regulations). Commercial landlords also often have their own private database containing sensitive information, like lease terms, including rental payments, insurance information, and more. Perhaps there are recordings of license plate numbers when vehicles enter or exit a garage, or records of who accesses a restricted area of a building. Maybe a restaurant or retail center provides complimentary wifi access for anyone who wants to use it. Utility usage is often tracked for LEED compliance or as part of building analysis, such as traffic pattern. All of this might reveal consumer data about individuals who may be workers, or even guests, of a building tenant. Collecting and storing information about these activities can be considered collection and storage of consumer data. All of this information can be traced back to an individual person. That means that commercial real estate landlords have to comply with best practices in protecting this information.

Commercial tenants also collect and store consumer data. They might receive it from their own systems or in conjunction with the landlord or other partners. A tenant could host an appreciation event for its own customers, or a training meeting for its employees. That probably means an attendance list, from data collected by the landlord or the tenant, recording who enters and exits at what time. It could be as simple as a sign-in sheet or a sophisticated identification-scanning system. These individuals, or other invitees (like third-party vendors, contractors, maintenance workers, etc.) might also access building facilities (like parking areas or restricted areas for audits or maintenance), require reservations for meeting rooms, or use wifi access provided within the building.

Not all customer data collections are as obvious. Even retail and mixed-use environments collect and store consumer data. Methods include customer loyalty programs in a shopping environment or surveillance wristbands at entertainment facilities. Of course, there’s always the ever-desired wifi access for everyone’s cell phone and social media. These users are also more likely to be minors, as opposed to in office environments, which adds another layer of privacy and security concerns.

Add in factors like franchisor requirements (point-of-sales recording), HIPAA laws (medical compliance), and product privacy (online location or financial data sharing), and it’s no wonder there’s apprehension and anxiety in the commercial real estate lease ecosystem regarding the desire to collect and use customer data, while at the same time safeguarding it compliantly.

Landlords that invest in secure and compliant data collection and storage will attract more sophisticated clients, especially ones that are regulated, like banks, and customer-facing industries, like retail and entertainment.

Tenants that don’t want to implement their own systems for data-collection purposes could be willing to pay a premium to building owners that provide a sophisticated infrastructure that does it for them, or that they can access to complement their own systems. Landlords can allow a tenant to use its system to track its workers and other visitors to the site, such as by providing access logs for a tenant space when a meeting or customer appreciation event occurs. Concerns about the security of collected and stored consumer information, when collected for vendor partners or loyalty programs, will abate as consumers of all ages can provide their personal information without worrying about how it will be stored or shared. The tenant/customer, as well as the landlord, won’t have to miss out on information it could use to provide a better experience for its customer. The landlord-tenant relationship will be strengthened with good and compliant customer data practices by all parties to the transaction, in a secure

To reiterate, data points that can conceivably be traced to an individual person become consumer data. Such data then has to be protected by the party that collects and stores the information. By demonstrating robust security programs, compliant data collection and storage practices and the ability to help the tenants/clients meet their own data privacy requirements, a landlord can be competitive in attracting high-quality tenants in sectors like medical, insurance and technology, as well as experience-driven retail and lifestyle centers.

Commercial landlords following stricter protocols regarding consumer data privacy collection and controls will be better positioned in the commercial real estate market, as individual states adopt more stringent data privacy measures for consumer data. Data governance in buildings with landlord support will attract tenants to a more secure, controlled and compliant environment. Tenants/customers will have one less concern when auditing and analyzing privacy controls and following the stricter state requirements as they are adopted; anonymizing and aggregating data will help pinpoint important trends without compromising consumer privacy. It’s a good time for investors to look for landlords that are planning for these upgrades .

As a commercial real estate attorney, I can review your lease documents to make sure you’re getting the security you need in a compliant environment.

Stay compliant. Stay competitive.

Learn how Texas’ new data privacy laws impact your commercial real estate operations — visit lawbyjz.com for insights that keep your leases and investments secure.

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