In the real estate industry, location used to be king. If your building was located in a city hotspot, your amenities and services were secondary to the views or convenience you could offer. Rather than simply a place to keep laptops dry and employees safe from the elements, now tenants are expecting much more from their office spaces.
At the same time, new players in the market are boosting the competition. Shared office spaces like WeWork, Spaces, Convene, Industrious, The Office Group or B. Building are becoming increasingly popular with their wide range of services, from deals with local hairdressers to building wide community events. And it’s not only small businesses that are flocking to them. Major corporations like Google, IBM and Heineken are also renting these spaces.
Meanwhile, others are cutting down on office space due to the increasing trend towards remote working/telecommuting. As companies take advantage of this by cutting back on expenses, real estate brokers are finding it harder to sell traditional office deals.
These factors are shrinking the pool of potential clients, meaning that property owners will have to diversify their service offerings in order to stay competitive.
The emergence of the PropTech industry is helping property owners and real estate brokers, not only to cut costs, but also to identify new revenue streams. The innovations happening now are completely changing the definition of value in real estate.
Cutting costs through more efficient use of space and energy
Flexible working arrangements are completely changing office dynamics. Instead of having full occupancy five days a week, many work spaces are experiencing highs and lows, with the office being packed on a Monday and then desolate by Wednesday.
Industry leaders are capitalizing on this shift by reshaping the traditional business model. Instead of offering full office spaces dedicated to one company, many are transitioning towards hot desks and shared meeting rooms. Optimizing use and number of rooms, desks and parking spaces through bookings.
The insights PropTech tools provide can lead to 20-25% more efficient usage of space. Clients that we work with at OfficeApp have been able to cut external parking costs by 80%, just by managing peak moments on one centralized platform, resulting overflow efficiently.
Meanwhile, some tools are helping building managers use energy more efficiently to cut costs. Perhaps the most popular transition has been switching to LED sensor based lighting. This move is saving AT&T $8 million a year in electricity costs. But there are even more innovations in energy usage coming our way. HVAC optimization solutions are helping building managers as well. Some have even seen improved water usage by up to 21%. Advances in climate responsive design are also helping to regulate building temperatures in more efficient and cost effective ways. A number of companies are now offering self tinting windows which harvest UV rays from the sun, lowering both glare and heat gain on extra sunny days.
Enhancing security through tech backed access control and visitor registration
With companies collecting and storing more and more sensitive user data, security has become a top priority for businesses everywhere. But, while many focus on building up barriers against cyberattacks with complex passwords, firewalls and constant monitoring, office security often goes unnoticed, leaving a potential weak point.
Just recently, Apple experienced a case of corporate espionage which could have resulted in the loss of sensitive information about its self-driving technology.
One of the biggest draws of smart offices is the security and piece of mind they can offer tenants. Proper access control for both the building itself and rooms containing sensitive information need to be put in place. Visitor registration should not be something that’s overlooked. Tech-backed access control and visitor registration allow you to monitor who is coming in and out of your building at all times. Not only does this make your building more secure, it also dramatically speeds up registration time during normal office hours and special events.
Identifying new sources of revenue with data
The data being collected doesn’t just enable you to meet the immediate needs of your tenants. With this information, building owners can move beyond this by anticipating new needs and expanding their service offerings. Companies need to understand what types of local services are most popular amongst their tenants, especially now that some are able to get revenue splits with partnering product and service providers. Management teams need to think about what local partners would help them generate the most revenue and create the best experience.
This tenant experience should not be overlooked. Landlords have been able to accelerate and increase rented space by up to 300% and also increase the retention rates of their tenants by providing measurable community engagement initiatives. Before embarking on these initiatives property companies need to be prepared. They should ask themselves if their teams actually have time for community building. If so then using digital apps can help offer a better community experience by organizing building wide events and workshops and giving residents a channel to communicate with management and each other.
The interesting thing is that, despite widespread agreement that PropTech will transform the real estate agency, adoption of new technologies has been slow. According to a survey by KPMG, 90% of real estate professionals agree that the industry views PropTech as an opportunity/enabler, yet 56% still rate their organization as 5 or below out of 10 in terms of digital and technological innovation maturity. This means that the time is still ripe for early adopters to make significant gains. As consumer demand changes we might see the three most important factors in real estate go from “location, location, location,” to “technology, technology, technology.”