What Most Of The PropTech Industry Gets Wrong About Tenant Experience
by Prasan Kale, Co-Founder & CEO
I often talk to those in the real estate space about how, aside from location and architecture, a building can distinguish itself from others. The conversation normally starts with the role physical amenities play and evolves to tech-enabled experiences that create connections for everyone within the building. While the amenity side of the equation is usually well known, people often misunderstand how technology can differentiate a property by making it more efficient and connected. As it turns out, there is a right way to go about it and a wrong way. Check out my recent Forbes article for a deeper dive on where people in our industry frequently go wrong.
For more than 25 years, the real estate industry has engaged in an amenities arms race. It started with conference rooms and fitness centers — table-stakes by today’s standards, unless you live or work in San Francisco or New York — and escalated with the addition of private event rooms and roof decks.
Fast forward to 2020, and the industry has gone down a rabbit hole, with office and residential property owners investing in niche amenities such as bars, golf simulators, yoga rooms and bowling alleys.
This is what passes for tenant engagement in the real estate industry: giving people amenities and physical spaces to enhance their building experience where they live and work. While this approach may have supported past growth, it has several limitations. Specifically, it is:
• Capital intensive: It’s expensive to build a gym.
• Opportunity cost intensive: Physical amenities take up rentable real estate.
• Static: Changing a gym to a swimming pool is expensive and disruptive.
• Lagging: Whatever the next building adds to its physical amenities, you don’t have.
• Ineffective in connecting occupants to the building or each other: Most physical amenities don’t promote connectivity within the building or to the building’s brand.
Furthermore, as these amenities have narrowed in scope, they have also narrowed in audience. If you install a dog-washing station but only 20% of the building owns dogs, you’ve spent a lot of money on an amenity that provides no value for 80% of your residents. It’s not exactly a winning recipe for building and engaging community.
We are now at an inflection point. The amenity wars have evolved, with the focus shifting from space-driven experiences to tech-enabled ones supported by both supply and demand.
On the supply side, owners/operators want technology to increase efficiency and automation while addressing the limitations of the physical amenities outlined above. Comparatively, speaking from experience as the CEO of a building technology platform and former real estate developer and asset manager, I can say that technology is relatively inexpensive, personalized, dynamic, current and on brand, and it’s designed to connect occupants with each other and the property.
On the demand side, occupants want technology. Current consumers of office space and multifamily residential (namely millennials) use technology in every facet of their lives. They can request an Uber, deposit a check, order food and much more from their smart devices. Yet many buildings require occupants to email a staff member or even fill out a piece of paper to do the most basic tasks.
While real estate owners/operators are awakening to the need and potential for technology in their buildings, the tech industry itself has inadequately created meaningful engagement or demonstrable value. The problem lies in the belief that people want technology for the sake of technology. The message is, “Your building needs an app so people can talk to each other and buy coffee from the shop downstairs.”
Unfortunately, this approach to tenant experience is backward.
People already use technology to talk to their neighbors (Facebook, Nextdoor), order food (GrubHub), or have groceries delivered (Instacart). They don’t want another “app for that” — they already have too many.
Rather, if you want to deliver a tech-enabled experience in your building, you need to give occupants a reason to use your building’s technology in the first place. This does not start with ordering a coffee from downstairs. It begins with providing functional capabilities that occupants desire, that afford them better service or increased access to what they want from their building, and that they can only do using the technology deployed at your property.
Providing staff and occupants with functional technology in your building will give them a reason to use it. Only once they are using the technology for things they can’t do elsewhere, such as registering visitors, booking amenities or submitting a work order, can you invite them to use that same platform to do things they might do elsewhere, like talk to each other or purchase goods and services.
Engaging occupants is a worthwhile goal. Happier occupants stick around longer, and properties become more profitable as a result. Technology can help deliver this result, but tenant experience is not an amenity you can throw at a building’s population and hope to see results. You have to show people how technology makes doing things at their home or office easier.
Only once you have provided them unique, functional value will you have earned the right to engage your occupants in a meaningful and mutually beneficial way.