While everyone has a different take on the future of the commercial real estate industry, there is one thing we can all agree on: the pandemic has brought about a dramatic shift in how people interact with real estate. In today’s workplace, how you work is as important as where you work. The biggest enabler of this dynamic change in both employee preferences and the style that companies now embrace is technology. While technological advances over the past two decades, such as video conferencing solutions, cloud storage applications, smartphones, and affordable high-speed internet, have made it easier for people to work remotely, it took the pandemic to truly test the practicality of a large-scale work-from-anywhere initiative. And it worked. While there is still a healthy debate about whether employees are less productive when they work remotely (companies like Salesforce and Disney are convinced that WFH reduces productivity), I am convinced that hybrid work is here to stay.
The more urgent question that needs to be answered is: why will employees want to return to the office? If not for access to the latest high-tech gadgets and printing on super digital printers, what on earth is bringing people back to the office in droves? This is a big question for property owners and managers who own real estate across the globe. Because real estate is the largest asset class in the world, the success or failure of this industry impacts the entire global economy. For reference, the U.S. commercial real estate market alone is estimated to be over $20 trillion.
Real estate is cyclical, so most owners have experienced market downturns before. This time is different, however. Unemployment is at an all-time low and the economy in general is still strong. The market weakness is not a result of the economy, but a change in behavior. While the economy remains strong, conditions are expected to get tougher as interest rates are rising sharply and most experts predict a recession later this year.
What worked to attract employees to office buildings in the past may not work now. One of the common ways landlords increase the attractiveness of their buildings is by investing in amenities such as fitness centers, game rooms, and healthcare clinics. Additionally, landlords have invested heavily in technology-enabled efficiencies such as high-speed internet, destination dispatch elevators, hands-free access control, and tenant engagement apps. While these investments have helped improve employee convenience and deliver much-needed efficiencies, they do not believe these solutions have driven employees to come to the office more frequently. Corporate occupiers have more negotiating power than they did before the pandemic and are carefully evaluating their options to ensure the office they rent meets their needs and provides the best possible experience for their employees.
Recently, I had the opportunity to meet with the Experience Management team at Hines. Hines is one of the largest privately held real estate investment management companies in the world. The company manages over $90 billion in assets, over 100 million square feet of third-party properties, and has a presence in 30 countries. In the 66 years since its founding, Hines has consistently been recognized as a pioneer in the industry. The Hines leadership team has been committed to raising the bar on tenant experience and reinventing what it means. The metric they consider is “return on experience,” which equates to the value of in-person and technological advancements that bring employees to the office and address solutions for life well beyond the office.
While technology plays a key role in Hines' strategy, it's only part of the solution. Hines has launched a comprehensive series of initiatives to set a new standard for customer experience in the real estate industry. To truly deliver a level of hospitality in commercial real estate that is typically found only in luxury hotels, requires a holistic strategy that focuses first on the human element and second (or third) on how technology can act as a tool to facilitate it. The way building staff interact with and serve tenants is a key driver of tenant satisfaction.
To understand what drives Hines' customer-centric culture, one only needs to listen to one sentence stated by the company's founder, Gerald Hines, in the early 1970s: “We're in the service industry. We must never forget that.” This idea is ingrained in Hines' people-first culture. As part of its ongoing commitment to human-centricity and customer experience, the company announced several new programs and resources designed to take best-in-class customer service to new heights. Two of them are:
To understand and evaluate these two programs in detail, I was fortunate enough to be given a guided tour by Whitney Burns, Senior Vice President of Global Client Services at Hines.
Life is a journey where the only constant is change. Change often happens gradually, but occasionally, an event occurs suddenly that turns the entire world upside down. The COVID-19 pandemic was one such event. While some companies continued with a “business as usual” mentality after the pandemic, Hines was not one of them. They realized they needed to adapt and transform to fit the world around them. Placemaking has always been in the company’s DNA and foundation. But the pandemic made Hines realize it was important for their team to be even more purposeful in how they design and operate spaces. Their goal is to challenge themselves to deliver better, more meaningful experiences while interacting with their tenants and residents on a human level. As Whitney explains in more detail below, the mission to adapt to these changes and address this shift in mindset is exactly why they created the Hines Experience Academy.
“Hines Experience Academy delivers curated hospitality training designed to transform your business, build and foster a culture of customer-centricity across your company and differentiate your property and facilities management services. It covers both advanced theory and tactics to give your team the tools they need to create memorable customer experiences across all product types. Think of it this way: We are more than just a service industry; we believe we are in the hospitality industry. We believe it's not enough to manage buildings and key contacts; it's about caring for every individual. Give your clients the gift of time and curate amenities and services that will make them more productive at work and in life. Interact with them in a way that makes them feel seen and cared for. We have an opportunity to do so much more than just get them back to the office. At Hines, we see this as an opportunity to improve their quality of life.”
As markets soften and competition for tenants reaches an all-time high, “tenant experience” is a popular buzzword in marketing and promotional materials for the world's largest real estate companies. Technology has become a central component of the tenant experience efforts these property owners and managers have pursued over the past few years. But as Whitney explains in more detail below, while technology is important to Hines, it's only one part of the company's overarching strategy.
“We put people first, both in terms of our employees and our clients. Don't get me wrong, we're not ignoring technology or apps – we're engaged, we're investing, we're testing and trialling them. But an app alone doesn't create an experience. It's garbage in, garbage out, and without incredibly talented, empathetic, high EQ humans to power the technology and create the content and connectivity, the app is useless.
We want to transform the office so that it is not just a place people “have to go” to, but a place where we can add value through services and amenities and make them more productive not just at work but in life. We want to support the whole person, not just at work. I have two young children, ages 2 and 6, and sometimes when I walk into the building in the morning I feel like I've already run a marathon. We need to think about the different personas that come in and out of our property and how we can support them holistically. This includes things like on-site vision screening, spa services, TSA pre-check. It's not just cocktails and charcuterie.
A beautiful building only goes so far, and we want to ensure that the software (service, human connection, etc.) matches the hardware of our properties (gorgeous marble, stunning interiors, functional design).”
Forbes Travel Guide is the only independent global rankings system for the hospitality services industry. In addition to its rankings, the publication has been providing insight and perspective on the luxury hospitality industry since 1958. When people think of Forbes Travel Guide, they immediately associate the publication with luxury hotels, restaurants, and spas. So, they may be surprised to learn that the publication is partnered with a commercial real estate company. However, while Hines is a global real estate investment, development, and asset management company, they consider themselves to be part of the hospitality industry. With this unique perspective, Hines decided to be the first commercial real estate company to partner with Forbes Travel Guide to ensure they deliver on their commitment to establishing and delivering hospitality-level service standards to their customers.
“Forbes Travel Guide has been extremely helpful in helping us ensure we don't just say we offer a hospitality level of service, but have the QA/QC processes in place to actually deliver it. We've created our standards by going directly to the source of the world's most memorable and extraordinary experiences.”
What really caught my eye when I met with the Hines team was the passion and excitement they showed as they detailed their plans to me. While it's not surprising that a real estate company's primary motivation is to rent space, I sensed from the Hines team that they take the same level of pride in providing their tenants (as they call their clients) with an experience that only Hines can deliver, even if the building is fully leased. Hines has pioneered many improvements in the commercial real estate industry in their 66-year history, and that trend continues when it comes to tenant experience. They are raising the bar and setting new standards, and if history is any guide, I expect many other commercial real estate companies will be watching them closely as they implement similar initiatives.
To learn more about how we inspire people at Hines facilities, check out this link.