Ease of access, location flexibility, and maybe a market correction replace infotainment as the main attractions for workers reticent about a commute
BY PHILIP RUSSO AUGUST 1, 2023 6:30 AM
Office landlords and most commercial tenants want want workers to return to full-time office work as quickly as possible, but providing the technology incentives to bring them back is still a huge challenge as the fourth Labor Day since the world first heard of COVID-19 approaches.
As central business districts from New York City to San Francisco struggle to achieve even 50 percent office attendance three days a week, a number of proptech companies are attempting to make the return of workers more convenient — if still not highly desirable — for the work-from-home class.
Step one for some proptech companies addressing the issue is simplified access to the office.
“We built a platform that we call connected access enablement,” said Matt Kopel, co-CEO, president and co-founder at Stamford, Conn.-based SwiftConnect, which links access control systems and other proptech to streamline credentialing for companies and building owners. The platform automates an employee’s building access through their phone, rather than having to continually show identification and fill out forms upon entry.
“It gives permissions to get into the places that you need to do work, at the times that you need to, from street to seat,” Kopel said. Whether landlord or tenant, the technology allows the user to more seamlessly enter a full-time, hybrid or flex office space, he added.
Founded in 2020 in the midst of COVID, SwiftConnect has seen rapid growth in its business. The company has deployed employee badges and mobile identification in Apple and Android digital wallets at several dozen trophy buildings across the U.S. and the U.K., including the world’s first at Silverstein Properties’s 7 World Trade Center in Manhattan, said Kopel. BXP (formerly Boston Properties) and Bridge Commercial Real Estate are also customers.
“Tenants want a better experience for their employees as they return to the office,” said Brandon Arcement, chief commercial officer at SwiftConnect. “They want to make that access experience more digital, more self-service and on-demand than it was in 2019 to meet the needs of their affluent, high-end employee populations.”
Landlords’ usage of SwiftConnect’s products is driven by their desire to gain and retain tenants, but also by increased efficiencies, said Arcement. “One of our landlords told me the other day, ‘I’m not trying to do access control better. I’m trying to get out of the access control business. I want to defer this to my tenants and allow your integration to take away all the operational inefficiency that I have to deal with on a daily basis, while at the same time meeting the needs of my clients.’ ”
Trying to understand how workers can best be enticed back to the office will entail landlords and tenants working together to create an optimum technological platform, said Adam Segal, co-founder and CEO of Cove, a Washington D.C.-based company that consolidates tenant experience, operations and key performance data for office and multifamily. The 10-year-old company counts Cushman & Wakefield as a strategic partner and Chicago’s Willis Tower (formerly Sears Tower), the largest commercial office building in North America, as a client.
“I think the biggest challenge — or I think the exciting opportunity — is what’s going to be the new behavior around office,” said Segal. “Because obviously, it doesn’t apply to everyone. Some people want to exclusively work at home, some people want to exclusively work in the office, but it’s a bell curve. Most everyone falls in the middle.
“It’s incumbent upon the employer to differentiate themselves and help deliver that aspect of work in order to show what it means to work for a company. Otherwise, it’s very hard to wrap your arms around Company X versus Y. Companies themselves lose a certain level of identity.”
Some large proptech companies are betting that integrating software beyond building access will increase workers’ return to the office by making it easier for workers to interact.
“We sell our software to heads of real estate, heads of HR, or CEOs of enterprise companies, and small and medium businesses,” said Harish Krishna, global head of WeWork Workplace, which provides a platform for businesses to plan and manage their hybrid work as part of coworking giant WeWork (WE).
“We’ve seen over 60 percent increase in terms of people coming into the office when they use a software like this, where they can see who else is in the office and how to better plan their visit,” said Krishna. “To be sure that when they come into the office that they have a seat reserved for them and then everyone they have to meet and collaborate with is also going to be in the same location.”
Companies that force their employees back to the office can cause some of those workers to quit, especially those who like working remotely, said Krishna. Putting software tools in the hands of employees to empower their use of office space can be a more effective means of bringing them back from remote work.
“We built WeWork Workplace and launched it in July of last year as a solution for companies of all sizes, whether they have a return-to-work policy or not,” Krishna said. “It doesn’t have to be a WeWork office. It can be any office.”
Recognizing that easy access and maximum workplace flexibility are two huge components to luring workers back to the office, asset management software company VTS created VTS Activate. It’s designed to give the end user tech-enabled software to control their everyday work, said Prasan Kale, managing director of tenant experience at VTS.
Gone are the days when an ice cream social could be used to guarantee workers coming into the office, said Kale. “It can’t be infotainment. You have to deliver real functional value and give the user what they need today in a post-COVID era.”
Tenants and landlords can measure the delivery of such functional value, Kale said. “The evidence is in the data, where buildings deploy our technology and we see the high-functional operations capabilities being deployed,” he said.
“So when we deploy this technology, the byproduct is a bunch of exhaustive data that you can look at, including occupancy trends. Then match them to the investment that the landlord is making in getting people back to the office. The proof is in the very high figures on the [lease] renewals.”
It’s not all incremental success, though. The difficulties in bringing workers back to the office are so daunting that one experienced proptech entrepreneur has decided to fold his company’s tent and begin his search for the next big thing.
“When I founded Flow, the idea was to provide an app that enabled remote workers to access workspaces in a flexible and frictionless way,” said Mark Smukler, co-founder and CEO at Flow, which provides pay-as-you-go access to coworking spaces, fitness studios and health spas. “In particular, the understanding and the ability for workers to be able to work and collaborate digitally and remotely.”
Then a light switched on for Smukler. Or perhaps better to say a light switched off.
“I’m an individual who has actually completely changed his perspective and has done a 180 on my view of remote work,” Smukler said. “Around 2020, 2021, I believed that companies that adopted remote and distributed work policies would ultimately outperform companies that maintained in-office work-centric policies. The reason I believed that was you significantly increased your ability to attract the best possible talent by expanding your talent pool from a local radius to the global landscape.
“But I now feel that companies that adopt and find ways to nurture in-office, in-person collaboration will actually outperform companies that are primarily distributed or, in particular, fully remote.”
Smukler based his reversal of opinion on his own post-COVID in-office interaction with Flow’s team, although he admits it’s more of a gut feeling than a data-proven conclusion. “I hate the kind of water cooler, passing in the hallway type narrative around this, but I do think that there’s a lot to be said for tapping somebody on the shoulder and asking a quick question and the ability for the team to develop relationships that result in faster and more creative, more iterative work that results in a better product.”
The return to the office will not be easy — “I have thoughts, but you won’t like them: Prices will drop and find a market. The end,” Smukler said of lease pricing — adding that a “price rebalancing” may tip the scales further.
“The commercial real estate product will change toward a more flexible service model,” said Smukler. “Rents will realign with current market demands and then you’ll start to see a pickup in leasing activity at those new prices. I was betting on more of a re-envisioning of the product, but I think that I misunderstood the cost and difficulty of adopting the new product — not on the demand side but on the supply side. Meaning that it’s going to take a long time for these buildings to change their product offering.”
For Smukler, that viewpoint contributed to a major decision he shared with PropTech Insider: to shut down Flow. The official announcement is planned for the end of August, he said.
“I see our co-working partners struggling to fill their spaces, struggling to make the co-working model work,” Smukler said. “Co-working is predominantly a loss leader. You just don’t generate profit on coworking. You generate profit on offices, and, in that sense, you want bigger companies taking bigger space for a longer amount of time. Those are the kinds of customers that our flex operator partners are looking for.
“What differentiates them from a traditional office provider, except for flexible shorter-term leases and maybe some service layer, is that from an economic perspective they recognize the closer they get to a traditional lease model, the better their businesses.”
Philip Russo can be reached at firstname.lastname@example.org.
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