Historically, commercial real estate (CRE) landlords have considered the majority of their technology needs and responsibility in the context of everything required to operate their buildings, right up to the tenant door.
The resulting operational tech stacks included solutions such as work order and preventative maintenance systems, security access, space management tools, and an increasing variety of other point solution offerings. And it stopped there.
When tenants needed their own applications to manage their space and employees, they would research, test and license solutions themselves. Larger tenants’ organizations might lean on their own facilities management teams, or even have a national third-party team guiding their decisions.
But today, the landscape is shifting. We have seen CRE landlords either proactively or reactively stepping in as technology partners for their tenants. The driving force behind this is the ground-shaking post-pandemic impact of the work from home and hybrid work model on their tenants’ space needs and utilization.
CRE landlords find themselves in the situation now of needing to help their tenants understand what is happening, and how to manage it to help them retain the space they occupy. The impact has resulted in landlords and management teams helping tenants manage their space as well as creating their own flex space offerings. With that, CRE landlords will need to extend tech tools into their tenant space as either an amenity or subsidized service and share insights and recommendations with their tenants.
The CRE industry has entered the era of data as a service.
What is Data as a Service?
At a high-level, data as a service (DaaS) is a recognized concept and defined as an information delivery and distribution model in which data files are made available over a network. Data is typically stored in the cloud and can be accessed through different devices.
In simple terms, and for purposes of this discussion, it is used to describe a new operating model for CRE where landlords and management teams are using data from systems deployed in a tenant’s space to guide and help them make informed decisions about their space utilization and needs.
Let’s take a deeper look at the implications of a DaaS approach and the types of tools required to help manage in the current environment.
CRE leaders inherently know data is important to making the best decisions. The challenges and frustration many have experienced with proptech solutions in general, ever since they started hearing about the promise of “big data,” is that the industry hasn’t done a great job of making data insightful and more importantly, actionable.
As landlords move into providing data as a service for the benefits of their tenants, it is important that the systems they select and deploy deliver on this critical need first.
These are some of the elements in a DaaS approach landlords should consider:
- What are the outcomes we hope to deliver that will serve our tenants and our mission to maintain occupancy and revenue?
- Does the system we are deploying in our tenant’s space deliver insightful and actionable information?
- Who ultimately owns the data?
- This will be driven by your approach and the related questions to consider are:
- Are we contracting and deploying the solution?
- Are we subsidizing?
- Are we recommending?
- Are we partnering with our tenants in repurposing their space?
- Do the tools being deployed have applicability to the broader building, and will they be used by our operating staff or management team?
More Questions and Solutions to Consider
What does all this mean for CRE landlords?
Tenants today are making important decisions when it comes time for their lease renewals based on their approach to remote work and getting people comfortable coming back to the office as well as how space is being utilized.
Tenants are asking:
- Is the space and environment healthy, safe, and conducive to productivity and employee well-being?
- How much space do I need if my teams are only in the office 40% of the time?
- Who is coming in?
- How are people working together when they’re in the office?
- What spaces are most used?
- Can my employees have access to the locations and resources they need from wherever they are working from?
- Is the building delivering the amenities and programs needed to motivate employees to return?
- Increasingly, is my space and building sustainable and efficient?
Given these questions and new workplace realities, it’s well-understood that tenants may want to reduce the amount of space they occupy when it is time to renew leases or worse, not renew at all.
Landlords must get involved and ahead of those potentially negative outcomes. Here’s where data as a service can help. As a CRE landlord, you can help answer these questions and influence the decisions, or at a minimum have early insight into potential problems.
The place to start, in terms of technology, is deploying solutions designed to answer the occupancy and space utilization questions identified above. These are typically sensor-based systems and there are many providers that offer sensors alone, middleware, or fully integrated solutions. Regardless of the approach, remember to focus on the outcomes in terms of data and actionable insights. A red flag is if you or your tenant has to interpret data and draw your own conclusions.
An additional consideration is the ability to leverage data from these systems (via integration) to inform operational considerations such as cleaning, energy use, etc.
This is also important if/when a decision is made to help tenants convert space to flex space and help manage it, or if you will offer and manage your own flex space. Your management staff will only want to operate out of a single system, so integrations are critical.
A benefit of tenant experience apps is that now leaders, such as HqO, have evolved into workplace experience apps and can support both the landlords and occupants needs as well as expand the amount of data and insight they provide. They are also great tools for communicating sustainability programs and results.
Other data-delivering and actionable tools to consider include:
- Indoor air quality monitoring. It’s still a concern, and there’s strong data emerging on the importance for productivity. This is not going away.
- Mobile access/digital identify management, which is growing in importance in the hybrid work world.
Creating New Revenue Opportunities
The role of CRE landlords is already essential. However, when you are viewed as a true partner by your tenants, it can help build loyalty. Simply put, a collaborative relationship between landlords and tenants helps keep tenants in the spaces they are in today.
When you become a true partner who provides data as a service, you reduce the amount of tenant churn or potential reduction in space. And it can lead to new revenue opportunities. For example, do you have the availability to create flex or hybrid space? If so, that becomes a new revenue stream. For some inspiration and proof of concept, some hotel brands have been doing this for years (even before the pandemic). Other CRE companies, such as JLL, are seeing the value as the world of work has become all about flexibility.
To capitalize on these new opportunities, you’ll need some help from your tech stack. As you adapt and innovate to approach the new world of hybrid work and add data as a service to your strategy, we’re here to answer your questions.