Commercial real estate tenants are likely to find flexible office space arrangements more attractive than before as COVID-19 subsides. As tenant demand for flex space intensifies, landlords have some work to do in terms of closing the gap between what they believe tenants want from these spaces and what they actually provide, according to new research carried out by independent market research firm, Verdantix.
The study was commissioned by, essensys, the leading global provider of software and technology to the flexible workplace industry. A market leader since 2006, essensys wanted to see exactly how big of a disconnect exists between landlords and tenants when it comes to flexible workspace. Flexible space was recognized as a growing trend well before the pandemic hit; JLL expects that 30% of office space will be consumed flexibly by 2030.
Between recognizing this growing demand for flex and more landlords gaining interest in adding flexibility across their portfolios, the report cites the demand drivers for flex from a multi-perspective research process. Verdantix spoke with 36 global landlords with over 2.5 billion square feet of office space in their combined portfolios and 15 enterprise occupiers.
“We felt Verdantix was best placed to conduct this research and uncover what occupiers were looking for versus what landlords felt they were correctly delivering,” essensys Chief Product and Technology Officer James Shannon told Connected Real Estate Magazine. “We thought there might be a bit of a mismatch and wanted to help the market better understand the growing flexible space sector and some of the pain points that both occupiers and landlords face.”
The great technology divide
The assumptions essensys had about the disconnect between landlords and tenants in the flexible space market were accurate. Only 13% of tenants surveyed believed that landlords are strongly positioned to serve their flexibility requirements, according to the report.
There are several technological shortcomings that have led to this disconnect, but connectivity is one of the biggest ones, according to Shannon. The main issue is existing in-building connectivity doesn’t meet tenant expectations or demands. Most enterprise tenants are seeking high-performing connectivity that’s not only reliable but also meet their security requirements. They want private networks that separate their data from other tenants, and an individual password for the building’s Wi-Fi, not a common log-in that’s shared among all building occupiers.
“Putting up some coffee shop Wi-Fi with a single password for everyone is the quick and dirty way to deploy connectivity,” Shannon said. “But it can’t meet the needs of the most demanding customers. That’s an expectation gap that needs to be met, especially post-pandemic where we’re relying on video conferencing and cloud-based applications. Enterprises are more than ever looking to flex spaces, which they’re using beyond their traditional headquarters to provide more of a work from anywhere pattern.”
Enhanced connectivity goes beyond being able to access Wi-Fi or a private network, however. It’s also critical when it comes to entering the building, booking meeting rooms and creating touchless experiences to minimize anxiety and maximize sanitation. Flexibility is now about more than just working from different areas—it’s about enhancing tenants’ overall work experience.
“Flexibility is the ability to deploy space in a much more flexible way that allows occupiers and their staff to wake up on a given day, look at their mobile app and decide where to work,” Shannon said. “It’s the ability to let staff move seamlessly between different spaces, not only in a digital world where they’re booking space but in the physical building environment, where they are looking at occupancy—which locations are busy and where are their co-workers working from on any given day.
Protecting data at all costs
As critical as it is to keep customer data safe, security still remains an afterthought. In fact, 67% of tenants are not fully satisfied with the data security provided in flexible spaces, according to the Verdantix report. Part of the issue is that in-building data protection often isn’t addressed until there’s a breach, which leads to a disaster for tenants and their customers. To prevent this, Shannon encourages a proactive approach, which includes looking at it from a “pyramid of needs” perspective. This includes looking at how people enter the building (physical security) and then move up to network and digital security.
“It’s very easy to engage point solutions. But these can create security gaps between the different solutions,” he said. “A holistic approach allows you to look at it all the way through so that when someone’s connection is disabled, they not only lose their Internet access, but they also lose their Wi-Fi, door and app access. So, when you disable a user, they get turned off across the board.
“With a holistic approach, you don’t need to log into to five different systems and remember to turn off all five log-ins. Removing the friction and pain points from security management is often the way to minimize the attack surface because security frequently comes down to human error. You can make a building or network system as secure as you like, but if someone forgets to disable that log-in, your system is vulnerable to threats.”
Putting tenants’ needs first
Amenities is a word often thrown around when it comes to flexible workspaces. It’s a great selling point landlords can use to attract and retain tenants, but according to the Verdantix report, the extras landlords are promoting are not necessarily what tenants are looking for. Tenants generally want amenities that will help them be more productive and make their job easier to do. So, services that can help tenants book a conference room, more easily enter the building or securely print documents are much more welcomed than whatever food or drinks might be available.
“Very often tenant engagement apps are more focused on when the user isn’t working,” Shannon said. “The food and beverage, the amenities, the perks and not the productive hours of the day. We’ve taken a strong focus on the productive hours of the day and how to enable our enterprise customers to license and activate a solid set of flex space.”
The combination of embracing technology and using it to meet tenants’ actual demands is a surefire way for landlords to boost their flexible space business. Not only can they occupy their building more quickly, but they can capture high-quality enterprise customers, which in turn could attract more high-profile customers who are looking to move away from the traditional, long-term lease model.
“Enterprise customers are looking to deploy flex space in a more flexible way,” Shannon said. “They want landlords that can deploy turnkey and flexible solutions and landlords that don’t just offer space but can enable productive space and seamless digital experiences that support remote, hybrid and distributed working models employees demand today.”
In March, essensys launched its Flex Services Platform to help landlords do exactly that—address customers’ needs. It de-risks the flexible workspace opportunity for landlords by removing complexity and enabling them to deploy flex space with key components of essensys’ software and technology such as connectivity, booking availability and billing, while integrating with existing CRM investments, accounting systems, tenant engagement apps and smart building solutions. Flex Services Platform allows landlords to use the best of breed modules from essensys, and integrate them with other best of breed solutions.
“Flex Services Platform provides all the software and technology required to deliver next-generation flexible workspace experiences in a single modular platform,” Shannon said. “From digital infrastructure through space management and flexible operations, all the way through to occupier experience, Flex Services Platform delivers that seamless end-to-end experience from digital to physical. It’s the platform that’s built for the next decade of flexible real estate growth and technology.”
Joe Dyton can be reached at joed@fifthgenmedia.com.
