#brokerage, #commercialrealestate, #cre, #proptech      
June 22, 2020

Commercial Real Estate – Welcome to the Experience Economy

COVID has forever changed the nature of the workplace. Brokerages must change how they think about working with tenants. How can they keep up? By turning place and process into experience.

The Coronavirus has condensed five years of technology adoption and workforce strategy evolution into 4 months. Commercial real estate will never be the same. The results, though still murky, will push us more toward true “Space-as-a-Service”, toward companies demanding flexibility of space when they want, how they want. Events, defined collaborative sessions; the new office will be a place to stage measurable experiences for the employee, becoming the physical portion of the overall holistic workplace experience provided by a company to their workforce. These massive changes to how companies view their space will force even larger changes across the real estate industry. I’ve written often that the real estate industry has a simple decision to make on their future: adapt, or die. COVID has brought this decision to the industry’s doorstep. Those that rise to the occasion will thrive in the new normal. Their north star? Brokerages need to shift their mindset, from providing a service, to providing an experience.

What does it mean to turn a service into an experience? 

In the sitcom Taxi, the character Iggy (played by Christopher Lloyd), decides to become the world’s best taxi driver. He begins serving sandwiches and drinks, conducts tours en-route, and sings Frank Sinatra songs to passengers. Iggy turned himself from a provider of a service into a provider of an experience, creating a different type of offering to his clients. The result? More tips – and happier customers. The experience of the ride was of more value to the customer than the service provided, the ride itself. [1]

How does this translate into the real estate world?

The first sector in CRE to understand the need to provide experience to tenants was co-working. Co-working accounted for 50% of the total lease volume in the top 30 U.S. markets last year. Stop, and read that sentence again.

50%

Why did co-working experience such massive growth? Simple, operators in the market failed to adapt, they failed to provide an EXPERIENCE to the tenants looking for a new way to leverage space. I wrote at length about WeWork’s experience-first strategy, but it boils down to three things:

  1. Flexibility: Everything fits clients’ changing needs, from space, to place, to terms, to services.
  2. Immediacy: Everything is actionable now through real-time data and mobile-first experiences
  3. Space as culture: Everything orients around connecting space with company culture.

Service providers couldn’t offer any of these, so coworking filled the gap. Now the market conditions are even more extreme.

For the first time ever, when deciding whether or not to lease a space, an occupier can choose to do nothing. Not a good enough deal? Well…we’ll just work from home a bit longer. Not the right space utilization? Well, we’ll just work from home. Not flexible? Not immediately actionable? Not tied to the company’s cultural lifeblood? Well…we’ll just work from home. 

Empowering, modern experiences will win. Brokerages need to focus on understanding the experience that a company is trying to create for its employees and the unique role of space within a holistic workforce strategy. 

Showing leadership with this sort of empathy and curiosity will demonstrate your commitment to your clients, but I would argue that it’s still not enough. The firms that will come out on top after the COVID dust settles will not only recognize the importance of the internal experience to their clients. They will also create a transactional client experience that is equally modern, sophisticated, and aligned with where businesses are going.

How do you provide clients a better experience in the leasing process?

How about turning your clients wants and needs into definable space characteristics that fit in their holistic workforce strategy? How about giving your clients data on-demand, providing them real-time market data right under their fingertips so they can make decisions faster? I’m not talking about adding the word “innovation” to your website. That is meaningless without the willingness to adopt new ways of working with clients, new ways of completing lease transactions. One built on a holistic client experience that puts their needs first and works the way they want to work.

What would better experience mean for clients? Well, for starters, occupiers will get connected with the right space, faster. Being connected to spaces that fit their defined need cuts down deal time dramatically, so brokers win big as well.  For clients, finding new space is no longer a begrudging necessity (at best) or an excruciating process (at worst). It becomes an adventure and investment in the growth of the company. Think they’ll call you when they’re ready for their next space?

All told, a better experience changes your value to your clients, from an effective commodity into an essential business partner. Iggy got more tips, brokers will get more referrals and win more deals.

Brokerages can no longer take the risk of continuing to do business the same old way. The stakes are high. Brokerages MUST change. They must adapt. 

If they don’t? Well…we’ll just work from home.

[1] “Welcome to the Experience Economy”, Joseph Pine and James Gilmore

Tags
#brokerage #commercialrealestate #cre #proptech
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