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The Impact of Workplace Experience Technology on Asset Strategy

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One of the main values of any workplace is its ability to provide a good experience, day in and day out, for its occupants. Because of this, landlords and owners frequently look for ways to optimize the modern building systems (HVAC, elevator, and security) in order to provide the most comfortable, frictionless experience. But the physical building is only part of a workplace experience, especially since we spend so much of our time interacting with our digital, connected devices. In order to enhance their buildings’ experiences many landlords have begun using software that connects tenants with the buildings that they work in.

This category of technology has been dubbed Tenant Experience Software, or “TeX.” These platforms usually take the form of a user-facing application that allows occupants to communicate with building management, utilize a building’s amenities and connect with the surrounding neighborhood. In order to understand how exactly it is changing real estate we asked our research team to investigate what tenant experience software is, who are the companies creating and using it, and how exactly it is affecting asset performance.

Going in, our hypothesis was that these types of technologies will make spaces more profitable by providing a better tenant experience, streamlining a building’s operations, creating additional streams of revenue and producing entirely new data sets for landlords to understand their tenants. But we needed to find evidence that these benefits actually translate into a demonstrable advantage that can be leveraged into higher lease rates, greater tenant satisfaction and retention, and lower vacancy rates. We tried to take an objective approach to how this technology is impacting the commercial office asset class and ascertain what the future might hold as this technology becomes more prevalent.

Through our research, we amassed a wealth of data on the companies creating workplace experience software as well as how the technology was being used within the world of real estate. We examined how digital tenant engagement can limit the costs of building operations and collected anecdotal evidence of the positive impacts on a building’s performance. But our most fascinating conclusion revolves around the ways in which these platforms are actually changing the way spaces are managed. We uncovered a dichotomy between an “old data” approach to buildings and a more modern, agile “new data” approach. In our opinion, understanding these modalities of ownership represents a broader shift in the role of buildings in our lives and an opportunity for property owners in the United States and abroad.

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Workplace Engagement Software Defined

There is no official PropTech dictionary so we wanted to make sure that we were comparing apples to apples. There is a lot of software for building management, in fact a lot of tenant engagement apps started with this function, but we thought it was important to separate the ones that have a tenant facing component of their technology. This interaction with the tenant is a core component of what it means to be an engagement app rather than just a tool for management.

The most comprehensive definition that we came across came was from Katie Sullivan, former Director of Communications at HqO, a tenant experience software. “Tenant Experience Software is a technology enabled tenant experience strategy that emphasizes amenities in the building and the surrounding neighborhood, and prioritizes community, content, commerce, and control,” she explained. We like this definition because it brings together the idea of amenity activation, tenant communication and community involvement. It also makes an important distinction that tenant engagement apps are not just a technology but a “technology enabled strategy.” The technology alone is not what creates tenant engagement. Like any form of communication, both sides need to participate, so for properties to see returns on engagement apps they will have to play an active role in the ongoing conversation with the buildings’ occupants.

Impact on Assets

One of the things that we wanted to accomplish with this report was to understand the tangible benefits for workplace engagement apps. For the tenants who use the app, the benefits are rather straightforward: easier communication with building management, easier access to information about the building and its surroundings, activated amenities, and a boost to interorganizational connectivity. But the real estate industry is defined by small margins and large capital expenditures so decision makers often search for evidence of tangible ROI before investing time, money and resources into new technologies.

According to Marshall O’Moore, Director, CBRE Advisory and Transactions Group and Consultant to the company on co-working spaces and performance of spaces, “although we know that using tenant experience software increases retention rates and decreases vacancies, there is less evidence of correlation to asset value or lease extensions, which are the bread and butter economics of a real estate market. This shows the software is still considered ‘a tool in a larger toolbox’ by major real estate operators, wherein the experience has allowed tenants to stay longer, but has yet not been able to affect the economics of real estate on a larger scale.” This builds on the idea that tenant engagement was a strategy rather than a technology. These tools, if used correctly can create engagement but only if they are incorporated into a larger blueprint.

The holy grail, of course, is to be able to measure impact on rents and retention.

Marc Rosenthal, Vice President of Marketing, HqO

Only a small sample of the overall population of office buildings use engagement software. Many of the ones that do are often parts of pilot programs in showpiece buildings in dense urban areas. Marc Rosenthal, HqO’s VP of Marketing, admits that there is not enough evidence to conclude that tenant apps can automatically make building “X” amount more valuable. “The holy grail, of course, is to be able to measure impact on rents and retention,” he said. “However, the category is still so young that most have not been through full lease cycles yet. Without a full lease cycle, it is very hard to understand impact on rent or retention.” All of these factors make it nearly impossible to prove performance benefits (such as elevated lease prices, decrease in vacancy and increase in retention) for an average office space with any sort of statistical significance. But it is important to note that this likely has more to say about the infancy of the technology that it ineffectiveness.

Measuring Performance

There are plenty of ways to measure a building’s performance that don’t have to do with vacancy and lease rates. Many commercial buildings are owned long-term by investors large and small as stable generators of income. Therefore, if a tenant app can bring down the cost of a building’s operation and therefore increase its NOI it has essentially made it a more valuable asset. Courtney Cooper, Principal at Alate Partners and investor in tenant engagement app Lane, told us that the efficiencies that tenant engagement apps can streamline into a building’s operations were one of the main reasons that she was bullish on the technology. She told us that “property teams achieve measurable operational benefits by using tenant engagement platforms to streamline and automate routine tasks, such as visitor registration, parking management, and tenant communications.”

Stéphanie Ollivier aggrees. He is the Deputy Director of Week’in, a property management group in France, that has been using an app created by MonBuilding within their office buildings. He told us that “it stands out as the ideal tool to supplement the actions we take to manage and better identify our employees’ needs.” They even claim to see a productivity increase for their workforce by 30%.

These kinds of increased efficiencies are usually due to a seamless data integration that happens between the tenant and the building staff. The communication could be as simple as letting management know about uncomfortable temperatures or which parts of the building are most in need of cleaning services. It can be as complicated as passing important visitor information on between the lobby and each office’s registration desk.

We also spoke to the team at COHESION IB, maker of tenant engagement software. They point to visitor management as a great example of how the interconnectivity that workplace engagement apps create can lead to operational benefits. Their research shows that a 1 million square foot tower will get around 1,000 visitors per day. When you are able to eliminate time sinks for visitors who no longer need to stop at both the front lobby and the tenant reception, that adds up to 4,000 total hours saved by the visitors, 3,200 hours saved by the building management and 1,600 hours saved by the tenants themselves. Every hour saved by building staff is profit in a financial model.

Surprisingly, during our interview, increasing income and decreasing costs was just one of the things that we heard about from the real estate industry. There were a number of other, less quantifiable, aspects of a digital tenant engagement strategy that were being discussed in board meetings of real estate firms around the world. In sum, the main performance impacts for TeX systems are as follows.

1. Costs

We wanted to understand more about the purchasing decision for tenant engagement apps, for the property managers that eventually make them. We were lucky enough to get a hold of Jeff Shaw, CEO at Bridge Commercial Real Estate. He is currently examining the prospects of TeX engagement software in some of their properties. When we asked him what were his main considerations in his purchasing decisions, his answer was telling: “Cost.” He went on to explain that this isn’t just the price of the technology itself, but the time and effort it would take to keep the programs going. He was interested in “whether content updates are put on by the local property management teams or are populated by the app itself or someone with the app company.” This concern comes from experience. He said, “when we have used it in the past,
the content management and tenant buy in was challenging and time consuming.”

Many tenant engagement apps charge per square foot, others by number of users. The companies we tracked were constantly changing their pricing structures and these costs are easily calculated. However, the benefits of these applications, as we said earlier, are a lot trickier. Obviously costs are going to be a large part of any return on investment equation. But in this case they are much easier to understand than benefits.

2. Amenity Activation

One of the most expensive things in a building, especially if you look at opportunity cost, are its amenities. Conference rooms, gyms, waiting rooms, and shared spaces often sit empty when they could be put to better use generating rent. Getting these spaces to be more frequently used, and in ways that are more meaningful to tenants, can unlock a lot of untapped value. Alate’s Cooper explained to us that “properties are also able to increase the ROI of existing amenities and programs by broadening awareness and using engagement data and in-app surveys to improve what they offer tenants.” She also discussed how engagement apps are allowing spaces to be used more democratically and communally by pooling a building’s occupants’ collective desire for things like health classes and events.

For an amenity to manifest its full potential, building occupants need to be using them. We talked to the real estate investment and management firm Jamestown, which has implemented the HqO app at the Innovation and Design Building in Boston, MA. So far they have been happy with the amount of use that the software has received, being able to achieve 66 percent building penetration with the app, 52 percent being monthly active users. They have used a number of incentives to get tenants to use the range of amenity activation services that the app provides including a Reebok giveaway that saw 100 shoes claimed in 7 minutes. Of the tenants that came into the app to enter to win a pair of the shoes, 23.5 percent of them clicked through to another piece of content and 18.4 percent booked another event.

As these apps find their way further into tenants’ workflow, it will likely have a snowball effect on their usage. The paradox of amenities is that while they largely get ignored by tenants, prospective tenants perceive them to be valuable. Closing the gap between perceived value of an amenity and how the amenity actually can improve a tenant’s experience is an important component to the function of workplace engagement technology. This idea of the importance of perception in the eyes of office hunters brings us to our next point.

3. Marketability

While many tenants have still not put a specific price to how they value engagement apps the marketability of the technology shows that there is something of a halo around having these tools come as part of a building’s services. Our Jamestown contact also mentioned using it in their marketing material. Plus, in what might be one of the biggest signs that
the workplace engagement category is catching on, they said that they were starting to have tenants inquire about them.

Another operator that we talked to was Dream Office REIT. They use Lane in a number of their offices. When we asked Hanley Koo, Director of Client Services at the firm, how tenant facing software was changing the way his office buildings were performing, he said, “we have great traction on our programs and content and we believe the value will translate into increased marketability of the building.” Although he wasn’t able to provide specific numbers he told us that using Lane “adds to the overall building experience, which we think will drive retention, promote higher rental rates and improve the general tenant experience.”

[Tenant engagement metrics] can further support leasing teams in retaining tenant, and attracting new ones. For example, if the lease is rolling over, they can present data such as 50 percent of employees have used the tenant engagement program.

Tina Urquhart, Founder & CEO, Charm City Concierge

Chase Garbarino of HqO gave us a great example of how leasing brokers can use the data from tenant apps to inform their decision making. In one of the buildings that deployed his company’s technology, a decision needed to be made about one vacant, ground-floor retail store location. The leasing brokers were looking to fit in many more restaurants within the building. The asset had a 30-40% vacancy rate and management was looking at a huge capital expenditure on restaurant outfittings. Upon accurate data collection of tenant shopping behaviors through application retail integrations, the brokers realized that a particular retail store location was more in demand by the tenants. This allowed the brokers to easily lease up the unused space while supporting community engagement and thus increasing retention of tenants throughout the entire asset.

Information about the TeX platforms themselves can also be used by brokers when renegotiating leases with existing tenants. The usage of the apps can be a tool to show the value of the space, besides the metrics that the tenant is already tracking. Tina Urquhart, Founder & CEO of Charm City Concierge, which uses Simpli, told us that engagement metrics “can further support leasing teams in retaining tenant, and attracting new ones. For example, if the lease is rolling over, they can present data such as 50 percent of employees have used the tenant engagement program.”

4. Brand Image

One of the central tenets of branding is having regular, frequent touch points. Traditional touch points for property managers have been move-in, move-out, rent payment and maintenance request. None of these confer a particularly positive connotation and none happen regularly so it has always been incredibly difficult for property companies to establish any soft of strong brand image.
But tenant engagement apps have the potential to completely change this paradigm. They are able to give a property lasting, quality engagement with tenants with regular positive touch points. The emotional aspect of some of the services that a workplace engagement app can provide such as entertainment and convenience could be used to incorporate a property brand into the mindshare of a tenant in a way never before possible.

This benefit only applies if the property is able to be co-branded into the app. For some operators, having a central role in the branding of these apps is one of the most important components. Hines, for example, is working with an app called Workwell. Their Chief Information Officer, Jesse Carrillo, recently said, “Workwell publishes their Software Development Kit, or SDK, to allow for easier integration, either as a link back to the partner’s site, branded to look like Workwell, or using built-in Workwell functionality and a partner’s Application Programming Interface (API) to transmit data.”

This allows Hines to keep the branding of a property for certain location if they want. It also allows them to participate in a type of co-branding with other partners on the app. Carrillo said, “They have a large variety of integration partners, and the list will continue to grow as more sites are added.”

5. Tenant Productivity

The role of office manager seems to be evolving. Dream’s Hanley Koo explained his idea of a modern definition of a building manager’s job, “They make sure the building is running smoothly but most importantly, they maintain a great working relationship with our tenants during their time in the building.”

Offices are also increasingly being used as a way to attract top talent. This has created another recent shift in the traditional role of the building or asset manager. Leah Harsfield, asset manager for National Development, recently said that a good portion of her job as an asset manager has evolved into helping the CEOs of tenant companies “get the best people and make sure they stay there. So we’re navigating how to create that experience for the talent in their daily life. It’s odd to think that that’s on the landlord, but it absolutely is.”

The most important aspect of commercial property today is tenant services. Making sure you are offering a good and healthy lifestyle for employees in a commercial building is critical as businesses focus more on employee and retention.

Mark Rabinowitz, Director, Shelborn Asset Management

If the occupiers themselves see value in technologies that connect their physical workplace with their digital lives then they will likely pay for the productivity gains that it will provide much like they do with other enterprise solutions like Slack or GitHub. Plus, there has been a general change in the way office work gets done in the modern economy. Companies are increasingly using contractors to put together working teams. Younger workers seem to be getting accustomed to working on short term, “gig” projects. According to Cooper of Alate, “Companies are reacting to a more mobile and flexible workforce by redesigning their space to accommodate different modes of working and enhance collaboration in the office and with distributed teams.”

Happier tenants are usually more productive ones. Mark Rabinowitz at Shelborn Asset Management based in London uses DistrictTech as their tenant engagement platform. He looks at it as one of his businesses main services, “the most important aspect of commercial property today is tenant services. Making sure you are offering a good and healthy lifestyle for employees in a commercial building is critical as businesses focus more on employee and retention.” He has already seen his tenants respond positively to the wellbeing programs that apps like DistrictTech facilitate.

Director of asset management at M&G Real Estate Aaron Pope was able to associate a decrease in vacancy due to an increased attention to tenant wellbeing. They use Equiem in some of their larger business parks and said that: “The platform has enabled us to foster a sense of community across the park while investment in communal amenities has supported this shift towards improved employee wellbeing. The few remaining vacant units have been quickly let since, with the void rate across the park as a whole dropping by 78 percent over two years.”

6. Additional Sources of Revenue

Even though the revenue split that many apps are willing to give for goods and services purchased on the platforms can easily become a direct return on investment, it is one of the hardest to quantify. There is no good estimate out there about what an average tenant spend might be on these apps and so we are only able to speak to the possibility of the extra income, not speculate on how much it might be. Local businesses will likely be keen to find customers in nearby offices and bringing together the purchasing power of an entire building (or buildings) should be able to command discounts that users wouldn’t get individually. These together can make for a compelling reason for office workers to become part of the ecosystem and increase the software’s ability to understand their tenants.

The ability to use data to understand tenants on a much more detailed level than before is one of the major changes caused by these digital technologies. By collecting a deep amount of data on each individual, technologists can start to understand the best ways to taylor products to each user with a surprising level of accuracy. Dr. Timothy H. Savage, former Data Science Advisor, CBRE and Clinical Assistant Professor at New York University’s Schack Institute of Real Estate explains that: “There is a data war that is taking place, just like between Google and other search engines trying to be the best. Here, the companies aim to increase potential of assets by reducing operating costs and increasing energy savings. The key is data aggregation and predictive analysis of a tenant’s space utilization data.”

A Data Dichotomy

The data war continues to rage on in the real estate industry. Real estate owners and operators are looking for new ways to understand their buildings and their tenants. To do so they are investigating technology like tenant engagement apps to give them richer data sets that can be mined to create better products. The quantity and quality of data that technology companies can acquire could complete change the way that large traditional real estate operators make decisions, yet the operators have varying perceptions about the sustainability of such technologies.

The “old data” being collected by traditional real estate operators vary in many ways from “new data” being collected by new tenant experience companies. With new data, the endpoint is not aggregation but using this data to provide insights about tenants and end users. These different types of tenant data each have their own characteristics:

In the traditional model, the flow of data is usually static. Asset and facilities managers analyze the usage of different spaces within the building. This allows for operators to collect sample data sets and design spaces and utilities in such a way that any qualitative understanding of what users want comes from direct interaction between occupants and building management. In the new model, the flow of data is a dynamic and personalized. Apps are able to record every user’s interactions individually and design decisions can be made based on much more granular data sets.

The radical shift in workplace strategy has changed the perception of asset strategy from just optimal utilization of space in a building to creating the most useful tenant experience. Office spaces are becoming more “human centric” and emphasize important tenant metrics like productivity and creativity, which could favor the more all encompassing datasets that tenant app can provide.
Here is a breakdown of how the office design and management process uses both the “old” and “new” data and what it might mean for the way offices are run in the future:

The Traditional Real Estate Model (Old Data)

A typical workplace strategy and human experience team in a large building operator consists of real estate strategists, architects, financial analysts and facilities managers. We were able to talk to a senior executive within the workplace strategy division of one of these large building operators, Newmark Knight Frank. He told us that his organization uses data to inform their occupier services, workplace and space design activities:

Many improvements in occupier services come from data collected from the security desks that focus on the time of arrival and exit. Sometimes, this data also exists in a more dynamic form if every employee has an electronic ID card for the building. This allows for entry, exit, elevator and conference room usage to be understood within the asset. But this analysis lacks any specific data about the users themselves, which could help a property manager give insights to their tenants about their teams preferences and habits.

Often, spaces need to be redesigned to meet the needs of their users. Any of these changes will have consequences, some of which might be unexpectedly negative. Currently, in order to understand how changes in the workplace will affect occupant behaviors, building managers use a rather “hands on” approach to data collection. They place junior architects within an office to observe activity and draw usage maps for the space to try and understand how changes within the space will affect occupant activities. For instance, they will examine how open office plans might effect, both positively and negatively, the activities of an organization using the space. Putting an architect onsite has a lot of drawbacks. It is costly, not highly scalable and leaves the possibility that the activities performed while the architect was “in house” were not necessarily representative of a normal workday.

As we said earlier, wellbeing is becoming an important metric for both occupiers and managers. Unfortunately, the general nature of the term makes it particularly hard to understand. Today many managers rely on an infrequent, voluntary survey, a method that has obvious shortcomings. As HqO’s Rosenthal points out, “today, landlords rely on the once a year Kingsley (or other) survey for tenant coordinators at their company. A small group of known users respond to the survey and those results are then extrapolated for the entire building,” adding, “measuring tenant satisfaction across the entire building population, or at least a much larger sample size can be done today using digital engagement technology.” To help better track this, his company has created a tenant satisfaction score for their buildings that are constantly evolving based on real user feedback.

Most occupiers understand the need to give their buildings’ users valuable amenities. Doing so means understanding what types of amenities will actually be used. Here, data is seldom used. Each building has very specific characteristics and amenities are often prioritized based on costs. One of the main ways that real estate operators understand their amenities is by collecting usage data. While this allows the operators to understand the demand for the current amenities it does little to inform management about desires for services and amenities that are not yet deployed at the building.

Currently, all the data collected by traditional operators are based on architectural and project management studies and personal experiences. According to Theoretical and Practical Reflections of an Emerging Approach in Office Architecture, “The traditional model follows the principle of ‘evidence based design.’ It considers space, not only as a probabilistic encounter, but also as a generic function. This space is also used differently by different organizations. This evidence-based model provides a probabilistic use of space in an office.” This probabilistic use of space allows experienced property managers and facility managers to manage space in terms of perceived usage. While this can lead to good results it relies on the abilities of each manager to be able to understand their building. A process that is less reliant on the ability of each building’s staff can be achieved by recording and predicting everyday activity usage of the space.

Earlier we used a quote from Brian Schwagerl, Principal, BGS Advisors and a Global Real Estate & Facilities Shared Services Strategist. He is a space designer in the New York real estate market with many large projects under his belt. His take on workplace strategy combines a traditional approach with modern design considerations. His viewpoint on workplace strategies stems from a point of relationships and tenant engagement:

“It is important for property managers and owners to know their tenants on a first name basis and then be able to service their needs. Servicing apps are not enough. A software is just one tool in a toolbox for landlords to master. Tenant engagement requires understanding of the place. Properties with better WiFi and connectivity do demand higher prices and always have a competitive advantage. But with recent privacy concerns like Facebook, apps with locational and tenant data do face a great challenge in a data-centric world to create more efficient spaces.”

As you see data collection in the real estate industry is an age-old practice that hasn’t changed much in the past few decades. While it has worked well and does give important information to office designers to create optimized spaces, we want to take a look at how it compares with the new model of data that is collected from workplace engagement apps.

The New Model of Real Estate Technology (New Data)

The new model of real estate represents a significant change in the relationship between building managers and tenants. Tenant experience software provides much deeper insights into how people use space and how the buildings can better serve the needs, articulated and non, of their occupants. This shift is not only a move from static data to dynamic data but also a massive change in workplace strategy. As compared to traditional real estate operators, office engagement technology companies are able to understand and provide a new set of tenant expectations based on retail preferences, security, sustainability, mobility and wellness. Here, the data is dynamically being recorded for different spaces in the building.

Here are some of the ways that tenant apps are able to understaand a building’s occupants in a way never before possible using traditional data collection methods.

Space utilization:

Activity mapping is the process that the industry currently uses. It is a bit more time consuming and records data of movement of people in a few days over the course of the season. This method has an inherent disadvantage to real time dynamic locational data collection. The locational data method collects data all day, everyday rather than just using trying to extrapolate overall usage from a select number of sampling days. This allows analysis to be also be more accurate since “noisy data” can be removed from such a dataset. Noisy data refers to certain movements of the people which might have taken place by chance and are not part of their everyday movement patterns. With comprehensive locational data, analysts can differentiate regular movement patterns from erratic one-time events, which may not be detected clearly in activity mapping.

Retail preferences:

Since many workplace engagement apps allow users to buy goods and services within them, data is collected through retailer integrations on what types of services are being demanded by each user. Occupants ordering food or shopping online creates an individualized data set for each user that can be cross referenced with other information like job titles and demographics. Events held in the building can also inform building management about the entertainment preference of each occupant and request for future events and services can be easily communicated within the app. Companies like Facebook and Amazon have been using purchase history to understand their users personalities with a high level of accuracy. Now the real estate industry will be able to deploy the same strategies.

Security:

Rather than just looking at entry, exit, elevator and conference room usage, engagement apps allow management to understand not only who is in a building but what they are doing as well. Understanding occupant and managenets’ habits can help connect the dots as to where security concerns might arise like a propped open door or a room that is surpassing its occupancy allowance.

Sustainability:

Connecting and informing tenants is a way to create a community driven approach for environmental initiatives. In order to do this buildings must be able to understand important building information like energy usage. Knowing not only when resources are being consumed, but by whom, can give managers a lot of options in how they are able to reduce consumption. These can then be communicated on a granular level (floor by floor, office by office or even person by person) it can create powerful gamification incentives and help teach occupants how to be more mindful of their usage.

Knowing the timing and patterns of tenants in the building, it is easier for operational managers in the building to know when light or energy is not being used or when to switch off HVAC systems to reduce energy costs, while applying energy management principles. Dynamic data sets allow property managers to reduce energy costs by dynamically switching off lights, HVAC or electric appliances when not in use. This is done through activity monitoring of people and democratizing energy usage to people allowing automatic reduction in energy costs. The depth of data here, remains almost the same. Except for in spaces when dynamic lighting will switch off if the tenant is not in his workplace for some time, saving a few extra dollars on energy. These sustainable efforts are especially important now that a number of energy use policies are starting to be legislated around the country where governments are asking for building energy usage from owners.

Mobility:

One of the big differences of the new data sets that building apps are able to incorporate is that they include information what is happening outside of the buildings as well as in. Since many of these apps have information for transportation (public and private) they are able to inform managers about how tenants are getting to and from the building. These can help inform decision making about parking needs and inform managers about the importance of alternative methods for transportation.

Wellness:

Supporting a healthy community is one of the best things a building can do for its occupants. While this sounds easy the echoes bouncing off the of empty office gyms around the world tell a different story. Wellness is defined and achieved differently by every person so data about what types of classes and services are being used and requested is required to make informed decisions about costly wellness amenities and programs.

One important thing to note here is the existence of a bias when it comes to tenant app data. While many managers that we talked to were happy with the high adoption rate of these apps, none of them thought 100 percent adoption was realistic. There will always be those that do not use the apps. These often tend to be either less-tech savvy, older occupants. This is likely why we have seen the spread of engagement apps in areas with more modern workforces like Boston, New York, Washington DC, Atlanta, Houston, Chicago and San Francisco.

Final Thoughts

Hussain Ali-Khan, Global Alliance Director at CBRE, the world’s biggest commercial property manager, told us workplace applications like CBRE’s Host (formerly CBRE 360) represent a new way for managers to interact with their clients versus more traditional management software that primarily connect building owners and operators for work orders and budgeting. He envisioned a world where both of these would eventually merge: “the ‘killer app’ is to transcend the closed gardens and aggregate more people onto a single platform.”

The companies building tenant engagement apps obviously see growth potential in replacing property management software. The tenant engagement software company Bixby, for example, merged with a company called WorkOrder in 2018 and now offers work order management for free as a way to get clients into its “more robust platform.” But replacing companies like Yardi and MRI will likely be difficult or impossible. Even VTS, which has become one of the most popular leasing software options, is highly integrated with the two rather than trying to replace them in the industry. Management software could also represent a threat to tenant engagement companies as well. Yardi has now rolled out their Kube offering after they acquired Wun Systems.

Workplace engagement software is poised to become a valuable part of modern office real estate. Before it does, though, it will need to prove its worth to a myriad of users: tenants, managers, guests, brokers, contractors, owners, investors. These stakeholders all have different understandings of value from these technologies but they all stand to benefit from them in some way. The communication and intelligence that engagement apps can build over time can make the industry more efficient and therefore more valuable for all parties involved, even if some of them have zero-sum relationships.

Writing anything about the workplace experience technology industry is like shooting at a rocket ship. The industry is changing so fast that it makes keeping up with current developments during the writing process a task in and of itself. After speaking with the people building, using and investing in workplace engagement software we saw that few things were certain about how the technology would fit into the property landscape at large. But what did seem to be certain is that this represented a new way that properties were able to understand their occupants and thus themselves. We can talk about how the details of how the property industry value buildings, but in the end it is the users that make the decisions. There will always be value in creating a better product for your users, even if the monetization methods are not yet fully understood.

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