What do tenants actually want? The REAAS Tribe discuss the shift to experience curation
Justin Harley, Yardi’s Director of Flexible Workspace and Residential Real Estate hosts this insightful discussion on Tenant Experience with the REASS Tribe at BWT UK, boasting a wealth of expertise in flexible and boutique workspaces, co-living, and digital innovation.
Michela Hancock, MD of Greystar’s European Assets, says the common thread for tenant experience is what they as a landlord can offer: building specification quality, on-site teams, amenities, and services. There will be natural differences between offerings for students – who generally require more pastoral care, targeted events, and amenities like games rooms – and the wide-ranging build-to-rent portfolio for young professionals through to retirees, where requests are diverse and changeable.
Engaging with tenants to focus on their needs
Greystar have on-site teams and amenity spaces on all their properties and offer services and events. Hancock stresses the importance of listening to residents’ requests and shifting focus depending on what the tenants want. She notes that virtual events were extremely well-received and kept their communities engaged during lockdown.
“We manage 730,000 units globally, so the amount of data we have from our customers is really powerful to be able to track trends,” Hancock reveals, adding that people want more outdoor space, while Broadband speed is critical, although, “They (tenants) felt our on-site teams were the number one amenity. Having that personal contact there during lockdown was very valued.”
They (tenants) felt our on-site teams were the number one amenity. Having that personal contact there during lockdown was very valued.
Olly Olsen, Co-Founder and Co-CEO of The Office Group, says that while most companies have lost customers because of the pandemic, loyalty has increased: “The ones that have stayed, have stayed… because they really value the environment they are in,” he expands, “but they are all asking for changes to their space.”
Olsen adds that about 10% of tenants are asking for more cellular office space, while new customers are asking for slightly less space, but with more geographical spread for their teams. He believes that nobody really knows yet how their hybrid work environment is going to pan out and advises letting things unfold for three months after people return to office work before reviewing, rather than trying to immediately dictate office changes.
Israel gives clues on a post-Covid world
Yotam Alroy, Founder and Business Development Director at Mindspace, says that Israel is currently a good indicator of what things will be like post-Covid. Vaccinations have been rolled out to most of the population, new infections are minimal, and life is starting to return to normal. In terms of office flex-space, Alroy notes, “Demand went up 200% if I compare it to 2019 peak levels.”
Israel has a high proportion of tech companies, so Alroy says working from home at the beginning of Covid was successful, and globally many tech companies were talking about not coming back to the office. But he cautions, “Then we saw many of these companies starting to struggle with cultural DNA,” noting that the number of large corporates wanting a new space has increased fivefold.
Alroy shares that everyone, from brokers, to landlords, to members, is either considering or is already doing something with flex-space, which is a huge change from just two years ago. In terms of other industry changes, he points to problems with maintaining workplace equality for home offices, as well as Israel’s effective rollout of vaccines reducing the legitimacy of employees using safety concerns as a reason for not returning to the office.
Alroy believes that other countries will start to have similar experiences as employers seek to create unity, leadership, and other important cultural factors by bringing people back to the office. He believes that most employers will offer one flexible day each week, while commuting will not be as big an issue as expected: “We have been commuting for 100 years, I don’t think it will now stop because of a disease that, post-vaccine, will be like any other.”
The office environment: a period of reassessment
Ian Mair, MD of Digital Innovation, Grosvenor, agrees that it is far too early tell what the work environment will look like, but this is giving people the opportunity to reassess. He also doesn’t see things moving totally towards home working, and says the interesting question is what the office environment will look like. “People generally want to come together, and if you’ve got the infrastructure to do it… people will come together, it’s just a social norm,” he says.
People generally want to come together, and if you’ve got the infrastructure to do it…people will come together, it’s just a social norm
Mair continues that the question is what to do next. People talk about flexibility as something that works for themselves; it should be about what we do together: “Is it flexible, or is it just effective working? Where is the best place to do effective working (and) effective collaboration?” asks Mair.
In terms of innovation, Grosvenor is looking at measurement: “We’re rolling out some occupancy sensing that allows us to get that insight. What people say they want and what they actually do are often different things,” Mair reveals.
Patrick Nelson, Head of International Real Estate at WeWork, says they capture a lot of in-house data through their booking system, a ticketing system, and sensors, feeding it back into the design of future buildings. This includes ‘big picture’ information, such as how people use different types of conference rooms, but also down to small nuances like table positions.
“Flexibility is more valuable than I think it’s been in a very long time,”
Nelson agrees with Olsen that this is a weird, in-between period where people are trying to focus on planning at a time when the future of office use is more uncertain than ever. This ties into the need for greater design and thoughtfulness for agile office users. “Flexibility is more valuable than I think it’s been in a very long time,” Nelson.
From a co-living point of view, Ed Thomas, Customer Experience Director at The Collective, looks to dispel myths surrounding who actually uses co-living spaces, noting that while there is a really broad range of appeal from their youngest member at 18, to the oldest at 82, the one uniting factor is a mindset that values open-mindedness and curiosity.
“The need for community and belonging is really important to our survival,” he says. “One thing that will stick with us… is the importance of… being connected to others. I think for that reason co-living will become a more attractive proposition, because you can be in a building where the whole idea is (that) you know your neighbours and support one another."
I think for that reason co-living will become a more attractive proposition, because you can be in a building where the whole idea is (that) you know your neighbours and support one another.
Thomas says The Collective pretty much transformed their offering overnight due to the pressures of Covid, implementing booking systems, room service, in-house grocery sales, and an internal buddy system at all their spaces. They will keep most measures in place due to their success.
Curating Experience: A Total Offering
The Collective takes an active role in fostering connections: "We’ve learned that actually it’s far better to… think of ourselves as enabling the community to grow rather than curating it,” explains Thomas. A lot of this centres on supporting residents to run their own events and come up with their own activities.
We’ve learned that actually it’s far better to… think of ourselves as enabling the community to grow rather than curating it
Hancock says there has been a massive shift in the last seven years, from initial scepticism and lack of understanding about full-service rental, to a point where now people come in and immediately ask about events. While Greystar has a dedicated Events Manager, Hancock also agrees with Thomas that it's important to foster the ability for residents to do this for themselves. She also says that Greystar will continue holding virtual events due to their popularity, adding, “We’ve learned a lot, and people now are expecting the experience, whereas before they didn’t even know what they could expect.”
Mair says that with Grosvenor’s diverse portfolio, they try to look at common features like friction. “We’ve got an HQO-powered tenant experience app in our head office that we’re rolling out wider,” he says, “and that’s about giving people utility, giving them seamless flow – whether it be building access (or) access to other services within the office.” Mair also highlights the element of ‘surprise and delight’: giving people reasons to keep returning to physical spaces.
Olsen says it’s a question of ‘when’, not ‘if’, in terms of giving more control to customers over their use of space. As a space provider to many companies, he is able to regularly give customers data on the physical movements of their team (without focusing on specific individuals, for data privacy reasons). “They can then be more effective in creating the best-value workspace and in finding the right locations and workspace for their needs,” he explains.
It’s a question of ‘when’, not ‘if’, in terms of giving more control to customers over their use of space.
Nelson also cautions that you run into privacy difficulties if you go into any detail on the actions or movements of individuals, but feedback on the locations being used is valuable. “With a platform like WeWork, TOG, or Mindspace… the member can use any of the buildings in the portfolio. Understanding that is like a real-life voting with your feet postcode analysis,” he says.
Mair agrees that data privacy is critical, as well as noting that utility of space is paramount, saying that the more information available on maximising this, the better. Hancock builds on this by saying that rather than tracking their users’ movements, Greystar surveys residents every three months about space preferences, use of space, and changes they would like to see in their buildings, using that information in the next round of developments.
A time for flexibility and increased services
“The important (aspect) is to remain flexible and shift with your customers’ preferences, because things can change fast,” says Hancock. “Listen to (your) customers… as they have more and more products (available)… I think that if they’re not happy, they will walk somewhere else”.
The important (aspect) is to remain flexible and shift with your customers’ preferences, because things can change fast
Harley suggests that the investment community is also starting to take more interest in tenant experience, rather than simply viewing real estate as a long-term, bond-like investment asset. Mair agrees that there is a shift towards thinking about how to layer on service to an asset-heavy business: “Bricks and mortar (are) not enough anymore, the service and the experience (are) absolutely critical to the value of the building,” he says.
Bricks and mortar are not enough anymore, the service and the experience are absolutely critical to the value of the building
Alroy says that Mindspace switched growth strategy two years ago, to grow via management agreement. “It shows the need from a landlord’s perspective to have a bit more control on their own product (and) a bit more flexibility,” he explains, concluding, “This allows us to put (tech and additional services) into the building… basically activating the rest of the building… which gives this building a higher score in terms of amenities and customer experience. I think landlords understand that more than ever.”
Olsen says that reducing churn is vital. “The experience is now fundamental to the churn rate, customers are happier, (which means) greater value,” he adds. Nelson agrees with this sentiment, saying that the conversation has shifted in the last 12 months from ‘should we look at flex’ to ‘how much flex should we take’, concluding that competition in flex is being driven by business decision-makers, who love flexibility, and office users. He believes that while these two groups have historically been massively overlooked, they are the ultimate customers. The flex offering gives massive value and while that isn’t trading through yet due to churn, the demand from those two customers is undeniable and ever-increasing, and this will eventually feed through in a much fairer way.
While tenant experience will vary, the common thread for landlords is to listen to their tenants and provide a flexible offering with diverse amenities and services.
The post-Covid world may not change as much as people think. It may require a period of readjustment and reassessment before deciding future strategies.
Community is vital and there has been shift amongst tenants, from a lack of understanding about the provision of services and amenities, to acceptance and expectance of services and experience: bricks and mortar are no longer sufficient.
Flexibility has rapidly become the standard, and the massive value to be gained should become increasingly clear.
This discussion was hosted by Yardi, the leading provider of high-performance software solutions for the real estate industry.
P.s. Join us for REAAS Virtual on 17 June exploring Real Estate as a Service & the blending of property & hospitality. Find out more here.