Why Building Owners Need to Have a Hand in Establishing Tenant Experience

While much of the commercial real estate world tries to determine the best ways to navigate the uncertain future of the office, a recent Commercial Observer webinar took inspiration from an unlikely source.

“The office definitely is the physical social network,” said Jacob Bates, managing director and head of flex, for the Americas at JLL, quoting notorious WeWork co-Founder Adam Neumann. “For all the craziness, that was one of the best things he said.” 

This quote encapsulated the purpose of a March 23 webinar hosted by CO Partner Insights, and presented by HqO, “The State of Workplace Experience in 2022.”

The discussion featured insights from Bates; Nancy Panos, new product manager for technology solutions at Cushman & Wakefield; and the webinar’s moderator, Zach Driscoll, HqO’s regional manager of channel partnerships in Chicago.

Bates used Neumann’s quote as a jumping off point to discuss the major dilemma facing office landlords and occupiers, as the commercial real estate world wrestles with what office life will look like as work from home and hybrid work environments become part of the expected office experience. 

“It really is a physical social network. I think it should be a Zoom-free space,” Bates said. “It’s more about collaboration and creating connection. The experience has to be thought through, from the moment you leave your house, to the parking garage, to the lobby, the floor, the barista. It has to be a completely connected experience.”

“If I’m senior leadership of a company today and my employees are working 100 percent remote, I’m asking, are they able to innovate?” added Panos. “Do they live within our culture anymore, or are they so far removed that they don’t feel connected and engaged? Having an engaged employee is the key to loss of turnover.”

Panos noted that Cushman & Wakefield recently did a study, in conjunction with George Washington University, to determine the optimal in-office vs. work-from-home arrangement. The study found that the system that best leads to productivity is one that splits the difference.

“We studied what happens if somebody works from home entirely versus if somebody comes back to the office five days a week, and what the benefits and pitfalls of each were,” Panos said. “We found that the optimum week was two and a half days in the office and two and a half days to work wherever you want.”

While this could seem like a best-of-both-worlds finding, there was a major qualifier: the time in the office had to be collaborative. 

“The research showed that it wasn’t just that people came in two and a half days. They had to come in on the same days that the people they collaborate and work with come in, so they could collaborate with their teams,” Panos said. “If I worked on Monday and Friday and the team I collaborate with works on Tuesdays and Wednesdays, I didn’t benefit from it. It had to be two and a half planned days where you put collaborative teams in the office at the same time. So that took more maintenance and more thought on the part of the company to really optimize when people came in.”

Another interesting shift in the wake of the pandemic is that traditionally, figuring out the specifics of the “workplace experience” was left to occupiers and office managers, with building owners’ involvement adding up to little more than collecting rent and making repairs. Today, Bates noted, owners need to take a far more hands-on approach to establishing a positive workplace experience.

“What’s we’re seeing and being asked to help with is, how do owners help tenant companies figure out that experience. That’s playing into merchandising and consumerization strategies for assets,” Bates said. “How do we think about the different product mixing of solutions? And then, how do we mix in flex and coworking? It involves how we mix in tenant lounges, conferencing, food and beverage, wellness. We’re helping them take it to the next level in terms of, what does it look like in providing, expanding and enriching the experience for the people who come to the building every day?”

The discussion then drilled down into specific changes that could be made to enhance tenant experience. 

“You’re looking at what’s happening around the neighborhood, the city or this building,” Panos said. “You’re asking, what kind of programming can we do to bring people together, and how do we get that information out to all the tenants? Then there’s the thought of, how do we make their experience seamless from before they get to the building? Like, if the street is closed in front of the building, and they’ll have to come in on a different street. Getting that information out there shows you care about tenants before they even get to the workplace.”

One aspect of office that will impact the desire for more flexibility within traditional office functions is an increase in the availability of flex space, which many traditional office owners are now integrating into their portfolios. 

“At JLL, we talk about space versus suites, with ‘space’ being co-working,” Bates said. “As we go forward from an investor, asset-owner perspective, JLL is holding true to 30 percent of the entire office stock becoming some type of flexible space by 2030. This means that about 70 percent of the office stock will likely be suites and not coworking, targeted more toward small businesses, occupiers and enterprise-type companies. We’re helping investors product-mix their building between those two products, trying to identify the right product mix with the right amenity package and the right experience package.”

Ironically, the availability of increasing options for flex helps owners conceptualize options for both flex and traditional offerings, using the occasion to change the general conception of comprehensive solutions for the office’s future.

“This all enables tenant companies to ask questions like, what are my workplace experience strategies, and how can I bring the experience in the workplace closer to my employees?” Bates said. “Or, can I create something that’s is more amenitized and more flexible? Can I reduce cost, but also increase the experience? Those are the things we’re seeing asset owners think about, and when they do, we have examples. You can make the building more valuable in a lot of different ways while creating a differentiated product mix and experience.”