Creating flexible, connected spaces
The commercial real estate market is changing rapidly – for investors, landlords and occupiers. It’s not just the profound impact of the pandemic on the property market and the accompanying surge in companies adopting more flexible working practices for their staff. New technology is also reshaping the market, allowing companies to embrace new products and services that are changing the way commercial spaces are let, used and managed. In order to remain competitive, landlords and commercial real estate investors need be agile. They need to adapt quickly and provide the flexibility their customers increasingly want.
“Enterprise occupiers are looking for more than just space,” says James Shannon (pictured), Chief Product and Technology Officer for essensys, a UK-listed company that provides software-as-a-service and technology to the flexible real estate industry. “They’re expecting to license or lease a productive space. This means touchless access, the ability to have booking availability and amenities.”
These days, property management is becoming about much more than just managing an asset. He says: “It signifies the evolution from pure asset management to a dynamic service and hospitality delivery.”
In this new world, so-called proptech enables traditional investors, who may not have the internal capability or resource to do it themselves, to deliver better services for their occupiers. Technology is a critical tool which allows landlords and investors to be more active in the market.
Shannon says the pandemic has played an important role in accelerating uptake of new technology in the industry. “We have to recognise that the pandemic has been a catalyst for proptech deployment,” he says. “The real estate market had already been demonstrating a growing need for tech-driven, flexible workspaces. JLL predicts 30 percent of office space to be flexible in some form by 2030. This trend has accelerated as a result of Covid-19.”
The pandemic has fostered the emergence of the ‘work from anywhere’ ethos which, in turn, is bringing about a huge evolution in the world of real estate. It has underscored the need for flexible and well-connected workspaces. Shannon says: “The more forward-thinking landlords and investors see this opportunity and are looking for partners to enable them to provide these services quickly.”
Essensys develops software and technology that helps landlords and real estate investors provide a “seamless digital experience for end-users”. The first step is to give occupiers the ability to easily browse and book space using a simple smartphone app.
“Following that, when people turn up at the building, their experience should be smooth – from going through the turnstile on the ground floor to taking the elevator, booking meeting rooms, interacting with printers and hot desks – our ultimate goal is to make that journey, both digital and physical, as flawless as possible,” Shannon stresses.
Better use of data also has an important role to play in the sector. Shannon explains: “Once a building is connected, you have real time data flowing and customers setting their requirements as they use the space. That data gives us the ability to measure and qualify their needs, then filter those through to the necessary resources, inventory and staff.
“This is going to be a natural evolution which moves first to flexibility, but then to measurability. We aim to get to the point where we have a real-time feedback loop which not only gives the landlord and the investor better data on how to fine-tune their product, but also helps to create a better environment which the enterprise customers can deliver to their staff in terms of productivity, connectivity and enjoyment of the physical space.”
To fully benefit from all of this technology, organisations need to fundamentally shift the way they view real estate.
“Traditionally, commercial real estate has been quite siloed, not just geographically, but also functionally. Several elements like security and connectivity might have been outsourced. Now the approach needs to be more holistic,” Shannon explains. “Landlords and investors are having to work in a more coordinated and cross-functional manner.”
This means certain functions need to be taken into account much earlier in the build cycle. Things like security, visitor management and connectivity need to be designed at a much earlier stage in the building process.
Shannon says: “An organisational change needs to take place. They are transforming from purely managing an asset to delivering hospitality and services, which is a significant development.
“The internal shift required to do this is one of the greatest challenges we come across. Organisations need to adapt. We can provide the platform to enable the technology for buildings but its full value can only be leveraged if organisations are themselves set up to manage this as well.”
He notes how geographical differences in the way properties are managed also need to be considered. These discrepancies may further hinder asset managers’ ability to fully benefit from the technology available.
“Change takes time. Although the technology allows us to be very dynamic and agile, the organisation needs to be ready for it. These solutions can generally be deployed very quickly but the asset manager will dictate the pace at which change will actually be realised,” Shannon says.
This is what will drive differentiation across the industry; the landlords and investors able to adapt more quickly are likely to be more successful. According to Shannon, the more traditional pure asset managers have been slower to the game: “The more advanced, sophisticated hybrid type of investors and commercial real estate asset managers are already further down the technology path. They might already be delivering tech-enabled, flexible spaces and may be looking to deliver another next generation product.”
In addition to meeting the changing needs of their occupiers, deploying proptech solutions across a real estate portfolio allows landlords and investors additional advantages. “Proptech reduces time-to-value across a property portfolio, which accelerates return on investment,” Shannon remarks.
In addition, industry statistics show customers are willing to pay a 15 to 20 per cent premium for technology-enabled space. “So having proptech solutions in place allows investors to charge more for space, which also enhances their return on investment,” Shannon adds.
However, he believes the more long-term and deep-rooted impact of technology solutions goes beyond straightforward return on investment. Harking back to his earlier comment regarding differentiation, Shannon stresses: “Technology is all about being able to deliver flexibility both commercially and physically. It provides landlords and investors with the ability to attract the most lucrative customers; the biggest multinationals with the most demanding staff.”