Real Estate Needs To Be More Customer-Centric To Create Today's Offices

During the past 12 months, people’s attitude toward the office has done a U-turn. At the start of the coronavirus pandemic and national lockdowns, workers embraced working from home and many claimed the office was dead. Today, people are planning a return, keen for more human interaction than a video call. 

However, it is still the case that businesses and developers are fundamentally rethinking the purpose of an office. Lockdowns have taught businesses that they need to take a very different approach to how to use space effectively. To understand how to create the offices businesses really need requires a far closer relationship with the end user from the start, HB Reavis Leasing Manager Louise Ioannou said.

“As an industry, we have acknowledged that the office has changed,” Ioannou said. “Therefore, the relationship with the end user also needs to evolve. We need to pivot away from being an industry dominated by the needs of the developer/investor and become far more customer experience focused.”

What The Coworking Model Teaches

A recent thought piece published by The Oxford Future of Real Estate Initiative at the Saïd Business School entitled The Future Of Real Estate Occupation: Issues argued that the lack of direct relationships between the user and the owner is holding the real estate sector back from creating buildings that really perform in terms of people productivity, sustainability and finances. It determined that the growth of coworking spaces has already changed the relationship between the landlord and the end user.

“As an operator, WeWork or Spaces has a B2B or B2C relationship with small business and self-employed customers,” the paper states. “At the other end of the spectrum, however, might be a German pension fund or core fund owning a UK office; with a local asset manager (say, APAM); and a sub-contracting property manager (say, CBRE). It would be normal to lease the asset for 10 years to a FTSE 250 company represented by a corporate facilities manager on triple net terms. In such a case the connection between the customer/user and the vendor is extremely fragmented or non-existent. How can this produce an efficient use of space?”

Ioannou agreed, but she believed that it's not only coworking and flex space providers that can engage directly with the customer. She explained how HB Reavis has created an integrated business model that allows it to engage directly with the end user. The speculative developer starts to think about who it might lease a space to as soon as it embarks on a development project and continues working directly with a client throughout — as designer, contractor and later, manager.

“We’re well positioned to have aligned objectives with clients from the very beginning,” Ioannou said. “In a traditional real estate model, there’s a physical gap between the developer and the client, but that needs to be smaller. If you have a closer relationship with a client, you can develop a better relationship that shouldn’t end once a lease is signed.”

Technology Brings Understanding

Anticipating the change in end user requirements in recent years, HB Reavis developed its own space-as-a-service brands, offering coworking and fully serviced office spaces on short-term leases, as well as customer engagement and smart building apps. Ioannou said that the flexibility to provide different types of space on different lease terms, including a traditional office lease, sets the developer up well in a world beyond the pandemic. 

The company has also fully embraced technology, such as the creation of its smart workspace tool Symbiosy, which gathers data on aspects from humidity and temperature to how space is being used. The paper from the Saïd Business School argued that smart building technology will provide “the missing link in the occupier market: understanding the users of the space”. 

“Our customer engagement app being rolled out at Bloom Clerkenwell was developed in-house to enhance the workplace experience,” Ioannou said. “How we use technology to digitise the workplace experience has evolved as we have developed Symbiosy. We can look at the health of the workspace, such as CO2 levels, as well as how to create a ready-to-work offering that meets the tech needs for different people.”

This data is not only useful for the landlord providing space, Ioannou said, but for the tenant itself. The global pandemic has thrown up a lot of question marks around where and how people can be most productive. When data is coupled with business analysis, answers can be produced.  

“More can be done to identify what jobs need to be performed in a business and, therefore, what type of real estate is needed to support the business,” she said. “If you look at what employees need from the start you can plan an office that works: Is it a place for learning? This is why we're keen to engage with occupiers as early as possible to enable us to tailor our workspaces. Our integrated model allows us to do this with all our stakeholders fully aligned to support client needs.”

Clearly a lot of questions need to be answered by all layers of the commercial real estate sector, including the end user, before we have a clear picture of what an office in five years' time might really be like. One route to get to those answers and create the offices people need, however, could be for the sector to engage more directly with occupiers as consumers.  

This article was produced in collaboration between HB Reavis and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.