For this extensive piece, we’re excited to welcome the insights and expertise of guest author Paul Stanton. As co-founder and partner at Proptech Bankers, Paul works with proptech companies and next-generation real estate companies to architect growth strategies to solve fundamental problems in real estate via M&A and capital raising.
Flexible working and the new hybrid work schedules adopted by enterprises and SMEs created a big shift in the world of traditional offices.
Over $500B of office assets in the US alone will be in distress due to shrinking demand for traditional office leases. To reposition these distressed office assets, asset managers will have to leverage new technology tools, flexibility, and hospitality to compensate for the decline in demand and risk surrounding the traditional lease model.
In other words, they will have to learn to generate new revenue streams via meeting and event spaces, flex office space, F&B, fitness memberships, and other services to meet revenue targets as market dynamics for workspaces change.
The fate of office buildings is dependent upon asset managers’ ability to generate new & profitable revenue streams via hospitality, flexibility and technology.
This will shift office assets from “static” operations – whose primary offering is the long-term lease – to “dynamic” operations that can generate a number of revenue streams depending on asset, market, and demand.
The P&L of a “dynamic” building could look something like this:
This is already underway around the world and many forward-thinking asset managers have adopted space as a service model, driving more revenue and turning their buildings into workplace destinations.
Examples include Penn 1, 1 Vandderbilt, 22 Vanderbilt, 780 Third Avenue, and the upcoming renovation of Lever House in NYC, among many others around the globe.
To adopt these new revenue streams most profitably and efficiently will require:
To help you get started, we’ve compiled a list of our top 10 software tools to help landlords, asset managers, and property managers generate more revenue from office space assets and transition to the world of flexible working.
Lulafit is a leading amenity management consulting and technology company. They can help you optimize your amenity plan for maximum engagement with intelligent and tenant-informed design decisions. Furthermore, they can help you build community with an alignment of people, hospitality, programs, events, and logistics. Their proprietary technology acts as an experience multiplier. It enhances the experience on-site and serves as an extension of your amenities.
High-quality and thoughtful amenities are an important factor in driving demand as they give more and better reasons to leave our homes and go to an office building. Therefore generate more revenue from your office assets.
OfficeRnD Flex is a leading flex space management software used by more than 2500 coworking and flex spaces around the world. It can power your own flex space operations (owner-operated spaces) or serve as the main platform for your coworking operating partner.
The platform can help you:
Flex space is in huge demand and is the best-performing office space class in the new hybrid world. The FlexIndex has recovered to the pre-pandemic levels and is expected to continue climbing as the demand for more flexibility is ramping up.
The OfficeRnD FlexIndex shows that Flex Space has fully recovered to pre-pandemic levels in November 2022 and is likely the best-performing office-class real estate at the moment.
Flex and coworking spaces can generate much better yields if done right. However, doing it right is not easy. You need a very strong distribution channel that can constantly bring you new leads, opportunities, and bookings to feed the funnel. Flexibility means a lot of turnovers and therefore you need a constant inflow of new potential users of your space.
One great option to solve these challenges is to connect your flex space management solution to a GDS (Global Distribution Network) which will push your available spaces – whether these are desks, offices, meeting rooms, or event spaces – to the right online (marketplaces, website, etc) and offline (brokers) channels to drive more demand.
Related read: The Ultimate Office Move Checklist
Listing your available spaces on flex space marketplaces is a great option to have more exposure to the growing demand for space as a service. These marketplaces are especially good at bringing high-yield bookings for meeting and event spaces as these are more transactional. Lately, the leading marketplaces can also generate a lot of demand for hot desks as they work with a lot of enterprises adopting hyper-hybrid models where employees can work from any flex space on a curated network (known as Hybrid Anywhere).
You should certainly have your space products available for booking on the leading enterprise-grade flex space marketplace called LiquidSpace.
PilotoMail is a mail management software powering mailroom automation for flex spaces and mail centers. As more and more companies are going partially or fully remote, they will need a virtual address to register as well as process their mail. Many flex space operators are generating great additional revenues by offering a range of virtual mail services.
PilotoMail can help you automate and scale virtual mail operations and turn your great address into a revenue-generating asset. Which can significantly increase your average revenue per square foot.
A great tenant experience is essential not just to generate more revenue from your office assets but to generate any revenue. One of the important elements of a great tenant experience is having a unified mobile app that can give tenants easy, digital, and physical access to all amenities and services. The best tenant apps will connect to everything in the building – from the elevators, and different doors, through the parking lots, meeting and event spaces, and all other services. Furthermore, they can provide a lot of data for human behavior that is invaluable to adjusting your services and driving more revenue from your assets.
Planning to offer more on-demand and transactional space products to drive more revenue will also require an update to your access control infrastructure. You will need a smart, cloud-based system that can offer users seamless access to the spaces they booked or signed membership for. Smart door access systems will usually deeply integrate with your property, flex space system, or tenant experience app so that you can achieve full automation and a better experience for the end user.
Furthermore, using a smart access control system, you may provide unified access to your tenants to all assets and amenities.
Another extremely important element of the modern building infrastructure is Network connectivity. Offering more flexible, on-demand services will result in a much higher volume of people accessing your buildings. They will need to access the network much more simpler and quicker.
Modern network systems help you automate the management and provisioning of in-building networks across spaces and buildings. They can offer a digital identity that can make the tenant experience a breeze when roaming between buildings, spaces, and services. Furthermore, you can generate additional revenue by offering additional network services and additional bandwidth to your flex space members.
Historically, property managers weren’t necessarily paying full attention to what was happening within the offices of their tenants. In a world where most organizations are adopting hybrid work schedules and the demand for traditional office space is decreasing, landlords should start paying a lot more attention to their tenants’ actual needs. In a hybrid model, the actual need for space might be a lot less than what was pre-COVID. For example, a company of 1000 won’t really need space for 1000 desks. In fact, it can go easily with, for example, space for 300 desks. You can check our hybrid work calculator to advise your tenants here. Despite its reduction of the space you rent out, you may still increase the yield per sq. ft. by providing additional services offered to a higher number of tenant employees.
One of the leading Hybrid Work Management solutions out there is OfficeRnD Hybrid.
Last but not least, you need a flexible and powerful CRM that your staff would love to use. The era of clunky and hard-to-use niche or homegrown CRM systems is over. Or worse, not using a CRM altogether.
A robust Sales and Marketing CRM can have a huge impact on your ability to attract more tenants and users to your spaces. Increasing the services you offer, including flex and on-demand services, will dramatically increase the number of people you deal with. You need a strong sales management process that can support high-volume transactional sales, as well as more human-centric sales. Furthermore, a marketing automation system can have a massive impact on streamlining your communication and follow-ups. As a result, by improving your pipeline management, you can certainly increase yields and revenues.
Flexible working is here to stay! The only way forward is to adapt to the demand for flexible spaces and better services. Technology can play a key role to help you in this transition to turning your buildings into destinations!
Special thanks for the valuable insights to our guest author Paul Stanton. As co-founder and partner at Proptech Bankers, Paul works with proptech companies and next-generation real estate companies to architect growth strategies to solve fundamental problems in real estate via M&A and capital raising.
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