by John Salustri — Originally published in the November/December 2019 issue of BOMA Magazine
You’ve heard the call and, hopefully, you’ve responded: The space you offer is no longer a commodity, it’s a service. In this day of “tenant experience,” it’s also an expectation and a differentiator from your competition. And, not surprisingly—to paraphrase the slogan of a popular high-octane energy drink—technology gives tenant service wings.
Property managers aren’t the only ones dealing with the rise of space as a service. That above-mentioned expectation is being driven by tenant companies that are struggling to lure and keep employees. With a rock-bottom U.S. unemployment rate, any help tenants can get will only make you and your building look better in their eyes (see “A Changing Workforce”).
“Property management now means that you’re also a cruise director and event manager,” says Becky Hanner, BOMA Fellow, CPM, LEED Green Associate, RPA. Hanner, who is principal of Hanner Commercial Asset Services, adds that the nature of service now extends far beyond the confines of the building…into the parking lot and beyond.
“Parking used to be just a utility,” she explains. “Now, you might have a tenant that is planning an employee appreciation cookout or a health-day fair, and you must designate a part of your lot for food trucks and other services.” That’s a lot of over-and-above coordination for any manager already neck-deep in day-to-day building issues.
Apps to the rescue
Happily, you don’t have to go it alone. That glowing device in your pocket—your ever-present smartphone—supports building applications (or apps) that are growing in customization and range, connecting your tenants to an array of building functions and, to use that word again, services.
“With the right platform, a property manager can now log an event into an app, send out open enrollment to servicing vendors and have it booked,” Hanner notes. And, that’s all in addition to the documentation: “property rules, regulations, event location and insurance requirements. These can all be posted, and the property manager will be automatically notified if documentation is outdated or insufficient.” Giving said wings to such an event “returns considerable time to the property management staff,” she adds.
“Apps are still brand new to the industry,” says Tom Larance, head of JLL’s Experience Management initiative, known as the Curae Approach. In the frontier days (read: 2008), apps were little more than glorified calendars, focused on what was happening in the building: a yoga class or pop-up retail event. “Now, they host a range of functions, including base-building services. Yes, our clients are asking for the fun things, but they also want work orders and access controls and QR codes to eliminate the need to sign in,” according to Larance. “They want to maintain a level of security, while making the process more seamless. The technology is definitely evolving.” Some savvy property management companies are even using proprietary apps to connect the amenities of all the buildings in their local portfolio into one grand set of offerings for tenants in any of their buildings to use.
But, offering that technology and seeing tenants use it are two different considerations. “The measure of success is not just making the technology available to clients, tenants and visitors,” states Larance, “but it has to be engaging as well. It should provide easy access with all functions in one place.”
That all-in-one approach isn’t lost on vendors. “One of the biggest challenges was fragmentation, with completely separate apps for your events calendar, room booking and visitor management,” explains Prasan Kale, CEO of property experience platform developer Rise Buildings. “That kind of fragmentation breeds attrition. When only 30 percent of your tenants sign up for a food truck app, I guarantee that, in six months, less than half will even still have the app downloaded on their phones. But, with a single digital experience that can functionally do it all and scale as new services and amenities are added—without redirecting to a webpage, but native on the platform—your adoption rate can climb upward to 80 percent or more.”
A changing workforce
Where is this enormous drive towards optimizing amenities coming from? One explanation: a changing workforce.
A favorite stereotype about millennials is that they lack company loyalty. In reality, the entire concept of company loyalty has little meaning to a generation that has experienced very little job security in their relatively short careers, and their tendency to strike out for better opportunities makes for a very dynamic workforce. Or, as Gallup’s 2019 “How Millennials Want to Work and Live” report puts it, “Millennials’ enthusiasm to find better opportunities means organizations have to enhance their attraction or recruitment strategies. The strongest companies will understand how to both recruit and retain millennials.”
For hiring employers, Gallup is clear that this means more than nap pods and latte machines. Indeed, millennials more than previous generations want a meaningful connection to their company, both in terms of alignment with their own personal values and the opportunity to grow. (Only 29 percent of millennials surveyed reported being engaged at work. For the record, boomers, at 33 percent, aren’t exactly bubbling with excitement.)
“In many cases, we’re catering to a younger workforce that’s very mobile, tech savvy and convenience oriented,” says JLL’s Tom Larance. That doesn’t mean that the focus is on millennials—and, soon, Gen Zers—to the exclusion of all other generations, “but millennials are now the dominant workforce generation. Boomers still like the convenience that building amenities can bring, but millennials are driving that.”
Becky Hanner sees the transition as well: “Younger employees desire an experience and a sense of community at work. And, because of the shrinking workforce pool, they can demand it.” However, that demand manifests itself well beyond food trucks. “Companies are including their human resources department in their site selection to ensure the location offers the best advantage for hiring. The amenities provided by your property can attract younger workers when they are considering job offers. Having amenities where a worker can get their bicycle fixed or their pet groomed during work frees up time on their weekend.”
And, therein lies the essential connection between this so-called “flight risk” and employers’ need to stem it—and, more importantly, how you can pitch in. It’s the connection between space and service. And, increasingly, this connection is being forged by an app.
Vetting vendors 2.0
Choosing the right platform comes down to the age-old issue of vetting your providers. There’s a litany of questions a property manager should be asking, Hanner says. “The big questions are if these technologies have financial backing. Is their technology robust or was it developed in someone’s garage? Does the company fully understand the needs of commercial property managers and provide a good solution to the specific problem? Will the software development team listen to your concerns? Will it be easy to implement and relevant next year?” And, the big one: “Will the company still be solvent in a few years?”
Getting solid answers to any of those questions can be angst-inducing, but, according to Hanner, the biggest frustration comes “after you’ve invested time, money and energy in something only to find the company doesn’t stand behind its promises.”
She has noticed a sort of Great Divide between what managers are accustomed to asking and vetting a vendor in the world of software. “Vetting a technology provider is no different than vetting a landscaper or roofing company,” she says. “The difference is that property managers are already comfortable vetting traditional services. They know what questions to ask them, but technology companies are outside of their norm.” Hanner believes that, as tech takes over a broader array of building services, that comfort level will grow.
ROI: The great white whale
Of course, it would help if there was a definitive return on investment (ROI) to justify the initial outlay, a White Whale consideration given the squishy nature of measuring tenant satisfaction. “It’s something we’re constantly looking at,” notes JLL’s Larance. “Cost is always a factor, as it is with any evolving technology. We’ve seen it before, and as time goes by, prices become more affordable.”
No matter. Increasingly, it’s the price of doing business, he adds. Don’t forget the expectation factor: “Tenant services are as important as every other basic aspect of property management.”
Which translates to retention. Hopefully. “The top-line key is getting a high level of adoption,” says Rise Buildings’ Kale. “By giving Joe and Jill Cubicle an in-app experience that aligns to the physical and overall brand experience, they’ll share their satisfaction with their higher-ups, who, in turn, will renew their leases because employees are happy, productive and engaged by being in your building.”
Yes, he acknowledges that managers take a chance when converting that communication stream into hard ROI. Nevertheless, the benefits remain, and he lays out a three-tiered argument for the gains, hard or soft, that can accrue to the building: “First, it’s imperative that you drive adoption of and engagement with the app, because it undoubtedly leads to retention,” says Kale. “A fully integrated app adds significant value through its efficiency, time savings and ease of use. A tenant moving out represents a huge capital cost, so you want them to have everything they need all in one place. Second, with a mobile-based, real-time information system, your staff members become three times more powerful than legacy web 1.0 systems or paper and pen.” The resultant savings in staff time and personnel “have a direct impact on operating expenses.”
Little apps, big data
Using an Old World reference, Kale calls tenant-service apps a “megaphone into the building population” and a powerful tool for tapping into serious data, the third leg of the ROI stool he builds. “The one thing right under our noses that the industry has missed is the massive distribution and data channel we’re sitting on,” he explains.
Tenant use of an app reveals “their likes and dislikes, their habits and behavioral patterns,” adds Kale. That information can be harnessed to tailor all of the services we always hear about, from food service to car washing—even those parking lot events. “It allows owners and operators to look at real estate, not just as brick and mortar, but as a true service based on hard data that clearly indicates what tenants find to be enjoyable, beneficial or both.”
For the tenant, the building experience “becomes sticky, social and connected,” Kale says. For management, “all amenities are not only on-brand, but every time a service provider walks through the building and there’s an app-based transaction, the building gets a piece of that. It becomes a profit center, not a cost center.”
Blue-skying a bit, JLL’s Larance sees a day when such capabilities will be off-the-shelf for everybody, and, rather than added on, will become part of the building design. “We see buildings coming out of the ground now that are enabled for the full slate of tenant-facing technologies. It’s the continued evolution of all components of robust building performance.”
That evolution will continue to soften the line between bricks and expectation, the next step in space as a service.
ABOUT THE AUTHOR:
John Salustri is editor-in-chief of Salustri Content Solutions, a national editorial advisory firm based in East Northport, New York. He is best known as the founding editor of GlobeSt.com. Prior to launching GlobeSt.com, Salustri was editor of Real Estate Forum.