The Blending of Real Estate and Hospitality: Providing Transformational Experiences
This conversation with real estate industry heavyweights, hosted by Mark Furness, CEO of essensys, is taken from our REAAS Tribe discussion at SPACE UK. It explores the shift from property company as landlord to service provider, as well as the importance of a service provider mindset.
What it means to be a service provider in 2021
Furness began the discussion by asking whether becoming an occupier-focused service provider delivering a hospitality-like experience is "the last thing the real estate industry really wanted".
Playfully, Furness suggests that landlords would have been happy to keep handing over the keys to big empty boxes, before coming back in five or 10 years to talk about the upward-only rent review.
Of course, it matters less and less what landlords want. It's the customer in the driver seat. Occupiers are looking for a new model designed around their needs and those of their businesses. This will have several consequences for the real estate industry.
Thais Galli, Tishman Speyer's Managing Director for Innovation, says that the Covid-19 pandemic has made being a service provider in the real estate industry "more important than ever".
The forced Work From Home experiment has underscored the need for flexibility, with landlords and space providers needing to differentiate themselves from the market.
People are going to need to be excited to go to work if they are being given the option to skip the daily commute, whether this is for part of the week or starting to work remotely full-time.
Services and the experiences you create are the best ways to differentiate your space right now
Because of this, Galli says that from Tishman Speyer’s perspective, it is vital that services encompass the entire work experience. This means that from the moment people walk into the lobby, they need to feel that things are being made better and easier for them by being at work, rather than being at home. This can range from having the latest technology, to food and beverage options, to what you can offer people to do during their lunch hours.
"Services and the experience you create in the workplace are really, from our point of view, the best ways to differentiate your space right now. This was already changing before - Google and Facebook - the tech companies of the world – were already offering a different kind of workplace.”
This strategy has enabled Big Tech to improve their workplace experience and attract top talent. Landlords are now striving to provide the same kind of flexibility, experiences and services to make spaces more fun and productive.
Community & Convenience
James Pellatt from Great Portland Estates agrees with this view, adding that this push came from a position of convenience and making life easier for occupiers.
“A lot of it is taking away problems from occupiers and trying to find solutions for them: different occupiers want different services at different times. We need to be nimble and flexible and adapt a model that isn’t a cookie cutter that says this is absolutely everything that works.”
Pellatt says that Great Portland Estates prefers to effectively provide a pull-down menu to allow people to make the decisions about their own space that will make their daily work experience as good as it can be, consequently allowing them to thrive.
"We want to provide transformational experiences and build transformational relationships”
James Penfold from The Collective, , the British co-living and co-working building provider, says that people are increasingly looking for community and to be part of something that’s bigger than themselves. They also expect things at the click of a button or the push of an app, but at the same time, they demand exceptional experiences at good value-for-money.
“Ultimately our purpose as a company is to enable people to lead more fulfilling lives and that applies to everyone we work with... we want to provide transformational experiences and build transformational relationships.”
The Flex Revolution
David Ebbrell from M7 Real Estate agrees that M7 is also seeing a more demanding customer experience, even from small organisations of less than 20 people. He says this may be due to a halo effect from what they’re seeing in the market from organisations like WeWork, even if they’re not present in some of the smaller regional towns M7 has been occupying.
“We’re a pan-European business and what we’re seeing, especially in the Netherlands, which I think is a great indicator for what might be happening in the UK, is that they’ve always had a high degree of flexibility in terms of their office-based workforce’s ability to work from home.”
Ebbrell adds that roughly a third of the Dutch employees in the office market have that flexibility and what M7 has seen there is a de-densification of the way offices are used and a higher concentration of desire in terms of collaboration space.
Adaption in an uncertain future
Moving into the future, the extent of flexibility that will be offered will depend greatly on customer demand.
“The only thing that’s absolutely certain is that the future is uncertain," James Pellatt says. "Adaptability, flexibility and most importantly, feedback and obtaining data – and sharing that data with occupiers – is going to be key to success. There’s never been a more exciting time to work in real estate.”
"There’s never been a more exciting time to work in real estate.”
Landsec's Oliver Knight develops this by saying that it comes back to thinking beyond the four walls of your office space offering. This means ensuring that you can provide convenient social, health and wellbeing aspects to the workplace, as well as looking at how you can influence or change the wider environment as well.
Penfold adds that it is important to look for grounding in the local community, but also to create a unique destination that draws in people from a wider area, while Lowery makes the interesting point that trying to find a seamless experience between the digital and physical – those working from home and those in the office – is going to be another vital aspect of dealing with an evolving workspace.
Watch or read the full conversation which took place at SPACE UK, On-Demand here.