The commercial real estate industry is going through a conceptual awakening about the understanding of what their product actually is. Where the answer used to be simple, space to work, it is quickly evolving to be a much more complicated and subjective tenant experience. To help understand and improve their buildings’ experiences many in the property industry are looking to new technologies, one of the most impactful of which is a tenant facing app which has been dubbed TeX (tenant experience) software.
Last month we did a deep dive research report about examining the impact of these applications and made the subsequent article about it the cover story for our print magazine. Part of this research included talking to Gabrielle McMillan, CEO of TeX developer Equiem. She had a really interesting observation for a follow up conversation we had during a panel we put together at this years RealComm conference. She told me, “I don’t think any other industry has gotten closer to its customers and made less money.” This aphorism really shows how much room there is for the buildings that we spend the vast majority of our time it to become a larger piece of our mind and wallet share.
I don’t think any other industry has gotten closer to its customers and made less money.
Last week I was happy to get an email announcing that Equiem had received the biggest ever investment to date in tenant experience software. The $8.4 million investment certainly shows that investors are also looking at the outcome from the paradigm shift in real estate to a more experience based product offering. So, I reached out to Gabrielle to get a better understanding of what this money means for her company and what she sees for the future of TeX software.
One of the findings of our report was that defining the benefit on a building’s performance from TeX software was difficult due to how new the technology is. Most buildings that have adopted a tenant experience app have not gone through a full lease cycle, making it hard to prove an improvement in retention and vacancy rates. But landlords are increasingly hedging their bets with TeX applications like Equiem. “We are often engaged when a building is either being developed, or going through a repositioning, often due to concerns over upcoming vacancy which has sparked a need to ensure the building is competitive in today’s market and delivers the standard of amenity and hospitality that today’s tenants demand,” Gabrielle said.
I asked what her product roadmap was, now that she had a hefty development budget. The companies last investment raise in 2016 had resulted in an overhauled platform rollout that they call Equiem NEXT. Now, Gabrielle seems to be looking at adding more advanced technologies on top of her digital building interface. “This roadmap will be centered around predictive data, creating increasingly personalized experiences, seamless card-free building access, and a sophisticated integrations and partnerships network,” she told me.
When asked for a prediction of the future of the space Grabrielle came back with another one of her bold, clearly well-educated statements, “Smaller players will find it hard to keep up, given the high capital cost of deploying and maintaining enterprise-grade, sophisticated software at scale, coupled with the relatively slow rate of landlord adoption. My prediction is that in the next five years we will see three larger players come to dominate the space—maybe just two.”
I would call the market for TeX software anything but mature but Gabrielle does bring up an important inevitability. As any technology becomes more popular, more is expected from it. This means that smaller players often consolidate in order to innovate fast enough to stay competitive. While she said nothing of Equiem being one of the companies to pursue a strategy of consolidation, their new war-chest makes them a likely candidate for the role of consolidator.