Flexible Real Estate May be the Future of the Office Sector, but Tech is Necessary to Make it Work
Which Flexible Software Platform is Best for Landlords and Operators?
Last week I wrote an article on Tenant Experience Apps where I compared the biggest players in the space to help provide some clarity as to which option may be best based on the unique needs of each portfolio. As mentioned in the article, I am a big believer in these platforms and I maintain strong confidence that they will play a critical role in the future of Commercial Real Estate. While these platforms offer a wide variety of features to increase tenant delight and improve operational efficiencies, they do not natively address all of the needs for the single biggest evolution to ever hit the Office Sector: Flexible Real Estate.
For a host of reasons, which I have covered in prior articles, I anticipate exponential growth in the demand for Flexible Real Estate over the coming years. While the trend of flexible real estate (coworking, hotdesks, private flexible, on-demand, and subscription plans) has been gaining popularity over the past few years, COVID significantly increased the appeal of short-term real estate solutions. Property owners have 2 options when it comes to offering flex services to their tenants:
They can partner with (or lease space to) Operators such as Convene, WeWork, Industrious, VentureX, Regus, Serendipity Labs, The Office Group, and many others.
They can offer flexible options directly to their tenants through an in-house offering. Examples of these solutions include Tishman Speyers’ Studio, Durst Ready, and Hines², and others.
Since the dynamics of a flexible real estate transaction are so different from that of a traditional lease, a technology platform is needed in order to administer the different offerings. The types of features which are required to implement this strategy include booking/access, payments, search & discovery, customer service/maintenance ticketing, dynamic pricing, and subscription services. While some operators use proprietary software, the majority of them use off-the-shelf solutions created for this specific use case. When landlords offer flex directly, they almost always use off-the-shelf software; many times choosing a white-label version with their own branding. It is easy to conflate Tenant Experience Apps with Flexible Office Software, and while there is some overlap, flex offerings are very nuanced and require a very specific set of features.
Almost every property owner that I speak with is considering the possibility of incorporating more flexible options into their portfolio. The biggest hurdle they face is on the capital side. Banks much prefer to loan capital to buildings will solid, long-term, creditworthy tenants, but one has to assume that banks will either adjust their underwriting requirements, or innovative entrepreneurs will launch solutions that meld the changing dynamics of short-term flexible agreements with the requirements that lenders have for buildings leased up with long-term commitments. That then leaves one remaining hurdle: Managing the space itself. Operators as well as landlords must have their own tech-stack to optimize revenue and reduce operational costs to create a best-in-class offering.
Flexible Real Estate is still in its infancy, and while some software providers have been around longer than others, most of the players in this space are relatively new. It can be challenging for landlords and operators to decide which solution is right for them. In an effort to help zero in on the best option, I reached out to the leadership teams of the largest companies in this space and I asked them the following: “Why is your solution the best one available on the market and why should landlords and operators choose to partner with you”?
Below in their own words, the category leaders provide their sales pitch.
OfficeRnD
Funding: $4M (new round to be announced soon)
Countries they currently serve: 60+ (45% of customers in the US)
Existing Customer Base: 800 customers (brands) that operate more than 2000 locations
“OfficeRnD enables workspace operators and landlords to engage customers, manage flex space, and drive financial performance, all on a flexible-first principle. OfficeRnD is the leading flex space management system because it offers a unique combination of product depth, best-in-class workspace engagement apps, and unparalleled customer services. OfficeRnD has offices on 3 continents utilizing the power of a diverse and decentralized team which helps to deliver an outstanding localized customer experience across the globe.
The OfficeRnD Flex platform allows customers to fully automate their flex space operations - from contracts & memberships, through bookings, billing and payment processing, to fully integrating it with all workspace amenities such as WiFi, Printing and Access Control. When that's combined with the best workspace engagement apps that allow customers to self-service and enjoy the best possible digital experience, it becomes an end-to-end solution for flex spaces”.
Client Quote
Becca Briscoe, Product Management (former) - Common Desk
"OfficeRnD has put the power in the hands of our staff and our members in ways that we haven't had before. Everyone has become so much more autonomous and that has been a great place of growth for our company.
OfficeRnD is so self-sufficient that we no longer have to spend hours and days trying to fix issues. That is HUGE for us!”
Learn more about OfficeRnD here: https://www.officernd.com/operators/flex-spaces/
Zapfloor
Funding: €1.000.000
Countries they currently serve: 15+ countries all over the world
“Zapfloor is a versatile solution that is built to help serviced offices grow. We’re able to respond to your exact needs thanks to our modular approach. This way, you can make your software package as simple or as advanced as you require, while still maintaining its intuitiveness. Our system gives you access to a wide variety of tools that make managing your spaces easier while still offering complex functionalities.
Gain complete control over your workspace capacities
Automate your billing and contracts
Connect and manage all your locations
Boost member engagement
Create a smarter and more innovative office environment
Generate advanced analyses for making data-driven decisions
We practice a trusted guide approach to customer service. What this entails is that we go above and beyond industry standard customer support. This approach is often cited by clients as one of the reasons why they love us”.
Client Quote
Business unit manager at Lodge.co:
“We love the floorplan and the way Zapfloor offers us the most dynamic way to manage our workspaces and meeting rooms”.
“Are you as excited as we are to get started? Book your personalized demo of our platform with one of our sales representatives. Find out how our software fits in with your specific company. Learn more about Zapfloor here: https://bit.ly/2QWU5QN”
Nexudus
Funding: Undisclosed
Countries they currently serve: 90 Different Countries
Existing Customer Base: 2,000 different operators in just over 2500 locations.
“Nexudus has been in the market for over 10 years. Our main focus is to provide the technology and orchestration services to manage and automate many of the processes you find in today's workspaces. This includes pretty much the entire sales funnel, from enquiry to on-boarding, day to day space management such as supporting different memberships and benefits models, meeting and desk reservations, visitor and deliveries management and, of course, billing and payment processing. We also have a strong focus on community management to ensure members and tenants can make the most of the group of individuals and companies around them. This includes items like online discussion forums, virtual meeting rooms, online courses and members and company directories.
Nexudus' core offering lies in its flexibility and the way it can adapt to the myriad of business models we find in this industry while providing a modern and streamlined experience for members and tenants. We also connect with over 250 external services to offer best-of-breed technology solutions across the different regions we operate. The entire platform is built using an api-first design, which means our customers and partners can also build their own solutions on top of our base offering and deploy or even sell those add-on services to the rest of the industry and other customers. Nexudus is also a 100% white-label solution, which means many of our customers can freely take our platform and implement their very own user experiences and journeys, while keeping their brand through-out the product.
The founding team has a strong technology and finance background, specially around transactional businesses, which means product design and development comes naturally to us. Both the core support and development team work hand-in-hand from our London offices, which enables us to quickly evolve the product and respond to the changing needs of this industry”.
Client quote:
Qaunain Meghjee, Head of Technology (former) at Level39
“With Nexudus we were able to move quicker, experiment faster and streamline the majority of our operations into one tool. Nexudus offers many sections, features and expandability options tailored for coworking, real estate and office building management”.
Learn more about Nexudus here.
Archie
Funding: Undisclosed
Countries they currently serve: 15 Countries Worldwide
“As an all-in-one platform, Archie is used by property owners and coworking space operators to run their entire flexible workspace operations, but also to provide a one-of-a-kind connected workspace experience for their tenants.
From extensive workspace networks to individual spaces, we believe that powerful, innovative team operations should be within reach for every workspace.
The most challenging issue that flex space providers face when operating flexible workspaces is the burden of shorter-term rentals, while ensuring a high-quality experience for tenants. Archie solves these issues by positioning the operators for growth at two different levels:
1. Streamlined Flexible Space Operations:
Archie is at the core of a powerful back-end system that streamlines issues such as leasing agreements, billing & invoicing, lead management, finance & accounting, reporting, work orders, and communications. All core components of the workspace are managed by Archie, including the door access system, printers, and Wi-Fi management, ensuring smooth operations.
2. A Connected Tenant Experience:
Through Archie’s efficient tenant side app, tenants are always in touch with the physical space, no matter where they are located.
Residents can consume workspace services easily, schedule their bookings, receive notifications when visitors or packages arrive, receive support from the on-site staff, pay their invoices, and even subscribe to their favorite events or classes.
When you select Archie as your flex space partner, you will be paired with an experienced Archie onboarding specialist that will analyze your current operations. These specialists will provide recommendations on the industry’s best practices for managing a flexible workspace, before training your staff on the operations and finalizing the software.
Schedule a demo with us today here to discover how Archie can position your flexible space operations for growth”.
spaceOS
Funding: Series A planned for end of year
Countries they currently serve: Europe, North America, Middle East, South-East Asia
“spaceOS is the most global workspace platform out there, available in 11 languages, deployed in 19 countries on 3 continents. It’s unique in serving office building landlords, flex space operators and corporations.
It’s thoroughly human-centric, focusing on delivering the most value for end users via a broad range of functionalities and great visuals – spaceOS has won Propel by MIPIM as the best User Experience platform of 2020.
spaceOS offers an open architecture allowing convenient integration with building systems, hardware and cloud-based software platforms to seamlessly exchange critical data, optimize user experience and enhance decision making. 30+ integrated access control systems, 7 elevator systems and various parking, HVAC and operational platforms enable spaceOS to be swiftly and effectively deployed.
Thinking of spaceOS as a tenant experience app is very narrow, spaceOS powers a full-blown transformation of any office building into a data-driven, human-centric and hybrid workplace ready space. It turns real estate from corporate cost-centers to value creating assets, crucial to the business success of its tenants”.
Client quotes:
Yoshikatsu Kosuge, General Manager, Hitachi, Building System Business Unit
“Through this collaboration with spaceOS, we look forward to accelerating customers’ digital transformation and contributing to improving quality of life for office workers”.
Bettina Hax, Head of Real Estate Markets International (former) at Commerz Real
“spaceOS impressed us from the start with great UX and a clear value proposition for our tenants. It was like a nice, sporty convertible you can drive away with instantly and have fun. I believe that tenant centric technologies are key for the future of agile workspaces and I enjoy seeing happy tenants, who receive a push notification when a food truck is arriving and they can order hassle-free from the Tulipan House App”.
Spaceflow
Funding: Undisclosed
Countries they currently serve: Spaceflow is available worldwide, currently it is active in 18 countries: US, Canada, UK, Australia, Germany, Austria, Switzerland, Belgium, the Netherlands, Denmark, Qatar, the Czech Republic, Hungary, Bulgaria, Estonia, Kazakhstan, Poland, Romania.
Existing Customer Base: 150+ contracted buildings, 30M+ square feet commercial space, 4,500+ residential units
“Spaceflow creates digital experiences to enable better life in buildings. Integrating data, technology, and people, the company helps both commercial and residential landlords and building operators go through digital transformation to connect buildings with their occupiers.
Spaceflow provides an all-in-one solution with four main parts: an operating system to configure core modules and integrate building hardware, admin dashboard to analyze data, tenant experience mobile app for occupants to enjoy the convenience and better life in buildings, and finally community management to guide clients through the transformation and to engage the community.
Buildings now need to run on an operating system that integrates both physical and digital aspects to create one experience for their occupants. Spaceflow enables that and from one platform, occupiers are able to access their building and open turnstiles, monitor the air quality, book any on-site amenities, report feedback or issues to the property management and much more. Through a digital ecosystem powering tenant-facing processes, we empower asset and property management with access to data and possibility to ease the processes.
Getting familiar with real estate technology and tenant experience might be not easy. Spaceflow team can help you set up realistic goals and navigate you through the digitalization process”. Schedule a non-binding consultation here”.
Client quote:
Jérôme Schaefer, Real Estate Asset Management for North & Central Europe, Allianz
“We have gotten to know a number of Tenant Experience and building applications that are basically on the same level in terms of the content. With Spaceflow, however, it is our belief that we have found the best usability and user interface. The app is fast, intuitive and self-explanatory. A second important point is that the Spaceflow Community managers help from the very beginning to explain the added value to the tenants, they continuously post content, organize events and always look for new possible partners.
Our primary goal is to maintain direct contact with our tenants’ employees and to provide them with information about the building. Secondly, it is very important that we have a platform available in which we can integrate all the different digital solutions that exist in our building today, e.g. keyless entry, booking a meeting room, paying for concierge services and so on. We are very happy with the collaboration with Spaceflow”.
Tenant Experience Apps Vs Flexible Real Estate Solutions
As I read through the sales pitches above, there are clearly features mentioned that are similar to features in last week’s article on Tenant Experience Apps. Some providers promise to solve for both use-cases in the same platform and perhaps they do, but I remain convinced that these are 2 very different offerings. In order to optimize the full functionality, I believe that you need to pair 2 platforms together. My thesis remains consistent that the eventual winner in the smart building space will need to provide a single operating system, and I foresee 2 paths to get there: Integration and M/A.
Integration
Number of integrations seems to be the metric that is used to determine which platform is the best one to choose. I agree that an open platform is the only way forward, and integrations are key for success. However, I would argue that quality of integrations and quality of partners are more important than the total number of integrations. At the end of the day, the integrated partners need to deliver as promised, and when a problem arises there tends to a lot of finger-pointing and no single throat to choke in order to get resolution. The worry that I have in this space is that Tenant Experience Apps and Flexible Real Estate Solutions will see each other too much as competitors instead of partners, and will shy away from true integrations in an effort to compete head-to-head. I remain convinced that the winner in the space will be a combination of the best players in both spaces.
M/A
Whether or not there is resistance to integrate, my prediction is that a complete solution will most likely come via acquisition: A leading Tenant Experience player acquiring a Flexible Software company. Not only would they make a great marriage (assuming a good culture fit), but the majority of the flexible players are very early stage companies: Preseed, Seed, or Series A. Since so much funding has recently gone to Tenant Experience Apps, the best place to deploy that fresh capital might just be in acquiring a Flex Software provider that has amazing technology but has not yet scaled their revenue.
There are two other companies in the race that have had traction which I did not include in the article above. One is publicly traded with a market cap of nearly $150M (Essensys), and the other (Yardi Kube) is a subsidiary of industry giant Yardi. I did not include either of their pitches above because neither responded to my outreach (in fairness to them I only gave short notice). Although I do not have much exposure to either company, based on their success to-date it is important that they are also mentioned as a worthy competitor. My goal is always to remain unbiased, and it is important to me that I provide as full a picture of the industry as I possibly can.
If you are looking to implement Flexible Real Estate Software and are interested in unbiased feedback, please feel free to reach out to me anytime. I am passionate about this space and I am always excited to chat about it.
Glenn, I am thoroughly impressed by how on-point your content is on a consistent basis. Great stuff, please keep it up. Thank you