I had the benefit of attending an event this past week on the “Workplace of the Future.” (Shoutout to @Bisnow, thanks for the ticket) and I was very impressed with the discussion that took place amongst the panel. With a wide variety of backgrounds, from coworking leaders, enterprise employers to architectural design and even a large commercial property ownership group, it was interesting hearing the varying takes and discussion centered around how people are working now.
Discussion ranged from topics on how coworking is meeting the demands of a millennial workforce to how buildings are retrofitting and improving themselves in order to attract the type of Tenancy required to be effective and revenue-positive. Because let’s be honest, buildings need tenants for income, and income is the valuation driver for 99.9% of commercial real estate assets.
What I was pleased to hear was that from all of the attendees and speakers one theme ran throughout, that CRE needed to start listening. It’s something that employers have been doing for years, working with their potential hires, current employees and leaders to redefine how their real estate is working hand in hand with their culture. While big, enterprise organizations are doing this, actively measuring data, utilization and feedback to improve their bottom line, I wonder if smaller organizations are taking the same approaches to their real estate.
Changes in management and leadership in business are leading to changes in how businesses are occupying physical space. Tenants are using data to make better decisiosn. Planning effectively, surveying employees and making lease decisions based on feedback internally are critical for the Tenant. I would argue changes these are now just as critical for the Landlord.
We’ve seen companies like Shell in Houston reduce their space footprint by over 1M S.F. saving millions per year in rent costs, yet their happiness quotient and recruiting efforts have improved. The effect on Landlords is absolutely profound.
This is against the old thinking about space, which is simple. Companies scale up/down with offices as needed and they expect employees to continually utilize that space.
That has changed and is no longer true.
The way we work has changed….think wifi, virtual meetings, pervasiveness of internet, the spaces we lease and release has started to evolve as well. No longer are employees required to come in 100% of the time to an office. Maybe even at their location a conference room or collaborative space is used more than a private space? Perhaps employees use multiple spaces for different things, every single day….so how does commercial real estate, and the buildings whose very definition it is to lease space account for this?
Surely we cannot expect Landlords to shift their spaces on a dynamic basis…leases are in place, construction costs are high and even with a long lease commitment the bottom line must hold true. Or does it?
These questions fascinate me. I think we glean some important lessons from this discussion on how space is changing is the modern world, and what the smart/forward thinking Landlords are doing best.
Here are my thoughts…
- Landlords must not think of Tenants as just a number on a spreadsheet, and in addition, must no longer think of their lease spaces as the only service they offer.
- Buildings must evolve to provide additive quality to a business, operating not only as a physical location and store of employees, but as a development opportunity to recruit, retain and grow their business and employees.
- How is this done? Creative solutions exist in not only amenity layers (let’s get away from slides and beer) but really in Landlords and providing the resources their Tenants need to succeed. Gleaning the right decision hand in hand with their consumers, the Tenant.
- Maybe this is improved technology services…layers of Wifi throughout the building that allow employees to not need wired connections anywhere, get up and go.
- Perhaps it’s in construction. Smart design leads to purposeful collaborative areas for innovation, coworking and meetings to take place
- Maybe it’s even more innovation to parking and transportation, providing Uber-like services to shuttle Tenants where they need to get too. Solving traffic and frustration with daily commutes that plague all commercial assets in busy urban environments.
The common thread in all of these is they are based in questions. Questions are great…we’re just not asking them! Landlords are struggling to glean the answers to effectively deploy capital that can attract (and more importantly) engage and retain their Tenants. Competition for leasing is fierce in many markets (like Houston) so what can they do to get the edge? It’s simple, they need to start asking questions and listen.
Feedback and data are the new engines of progress. You’ve likely heard that data is the new oil. Our most valuable resource! It’s sitting there untapped in the world of commercial real estate. Our continual resistance to change and the fractured interests, goals and biases of the many many individual owners, brokers and lenders has hurt us greatly. Our failure to embrace transparency, feedback is holding us back. There is no centralized force (like a residential MLS) requiring any of the stakeholders of commercial real estate to provide even a base level of information, to be responsible and forward thinking with their customers, the Tenant. Who literally pay the rent.
So with fractured interests comes fractured data, and that leads to fractured decision making. We see buildings struggle for years because they are just not doing the simplest thing, asking what they should be doing or building, asking Tenants what they need, they’re just operating on blind assumption.
We have a responsibilty to do better. The workplace of the future is a future where Tenants and Landlords work together in an ecosystem based on growth. We must get past the old ways of simple revenue PSF and start challenging ourselves to provide solutions with the real estate if we don’t want to be left behind.
Feedback is a tidal wave, so grab a surfboard or embrace the perils of being static in a dynamic world.
In every other industry from amazon to home buying, feedback is leveraged as an essential tool to shape decision making. It is just starting to happen in commercial real estate. So why is this so important, why must Landlords learn to listen? Because it will benefit them.
Yes, feedback can be scary and sometimes really daunting to embrace. But the somewhat crazed chef Gordon Ramsey said it best, “Damn the good reviews…I want to know what I am doing shit at, so I can get better.” So how can feedback make Landlords better?
Imagine Landlords using the feedback gleaned from their Tenants like employers use with their employees. Deploying capital and making decisions based on actionable data. Imagine not operating blindly, but operating from a position of symbiosis.
That’s what we really try to accomplish with Tenavox. We help Tenants and Landlords work together to create not only a more efficient transaction but a relationship based on active listening and experiential feedback. When conversations occur around what Tenants (who are really businesses and consumers) need to be successful, what can their real estate do for them to grow their business? That is the very heart of what we do.
Now make no mistake, some Landlords scoff at feedback. We often hear “Why do I care what “X” Tenant says…they all say the same thing, the rent should be lower, blah blah blah.” While we don’t agree with that assumption, vehemently so, the key is in how we collect feedback. Here at Tenavox we align ourselves with Tenants, we give them a real voice so we can really listen. We ask that critical next question that comes next…“why should the rent be lower?” In the aggregate, this is seriously powerful stuff.
For example, this next question and subsequent answers could be critical. Perhaps the business of the Tenant has faced challenges that the real estate has exacerbated or could have solved. Personnel changes, restriping a parking lot, hell, maybe it’s as easy as providing coffee! Often there are very simple things that can be done that will result in happier Tenants.
I assure you, we have seen it in every industry, happy customers equal repeat business. So why not find out what can make these customers happy?
Tenants are our customers, not numbers on a spreadsheet.
Let’s start treating them that way…
It’s what our mission is, through transparency of data, information and feedback we can drive a healthier relationship, a symbiosis for the stakeholders of the commercial real estate world. Let’s raise the bar, and start working with Tenants to drive more successful, longer-term and satisfied relationships.
For more information on how we can help you listen to your Tenants, and drive more qualified businesses along with critical experiential feedback on your buildings please reach out to us.
We’d love to listen. www.tenavox.com
As always, thanks for reading.
Josh Feinberg is the cofounder of Tenavox, a commercial real estate tech company dedicated to providing Tenants with the best information possible in order to create and sustain better transactions, better relationships and better leases in every commercial building they serve.
You can reach him at firstname.lastname@example.org