As we open our new HqO office in Paris, we’ve had the chance to compare the U.S. and French tenant experience (TeX). Commercial real estate technology (CREtech) is transforming TeX in both countries in totally different ways, but both are now on par with innovation objectives. We’re happy to share what we’ve observed below.
Looking at office buildings and CREtech impact in France vs. the U.S., we are talking about different animals.
Real Estate: American office buildings average 150-175 square feet per person, cater to a much larger population, and traditionally focused more on the value of neighborhood retail versus amenities provided by the landlord. There are, of course, exceptions, in particular around iconic buildings like the Freedom Tower and Willis Tower.
However, the wave of amenities being added to all Class A buildings in the last few years is rapidly changing the face of office real estate. This has typically included fitness centers, shared spaces, and event programming, as well as digital hardware like mobile access control. This is giving rise to a need to better communicate all of the aspects of this improved experience to the tenant population, to have a more seamless interaction with each of the services, and to have real data to track the usage of them to make better informed investment decisions.
L’immobilier: For the French market (and European market in general), assets are typically smaller (standard space is just 5 square meters per person — or 53 sq ft — in the UK) ), more concentrated, and in a way, more intimate — the emphasis has been on users for longer in France than elsewhere. Because of employment regulations, a larger number of amenities have been required from real estate owners. One classic example is the canteen services, mandated for any organization with a certain number of employees. In short, most French businesses are required to either provide a hygienic space to prepare and eat meals, a cafeteria (that is often subsidized to some degree), or to give out “tickets restos” — lunch coupons — that split the cost of lunch 50/50 between employers and employees. With more of a focus on quality of life at work, concierge services have also been around for a while, focusing on providing convenience to occupants. Lastly, sustainability has long been a front-running concern for French real estate, with a focus on greener solutions and lower energy consumption.
While these individual services and initiatives may have been offered, though, the holistic building experience for the occupants of all of these services has yet to be truly tackled. Additionally, more and more digital offerings are being included to tenants like room control and access control, giving rise to the need for a single point of contact for them to access a building’s full value offering.
Enter La Tech
On both sides of the pond, real estate is awakening to the potential of this captive market within their buildings, and the power of tech to activate this. In the U.S., it goes by CRETech, whereas in Europe it is PropTech — using technology to facilitate processes, improve experiences and ultimately drive data-based decisions.
🇺🇸CRE Tech This month alone, CRETech and MIPIM New York brought together thousands of real estate professionals to New York to have a look at the latest and greatest available in the CRE Tech offering. Budget is being carved out not only for innovation, but especially for Tenant Experience (TeX) — a tech-enabled strategy that emphasizes amenities in the building and surrounding neighborhood, and prioritizes community, content, commerce, and control all within a mobile app on the device of every occupant of the building.
🇫🇷PropTech: Curiosity is alive and well in France, with dozens of PropTech events per month and innovation teams being formed in all major real estate organizations. Here too, budget is being put aside for innovation initiatives and structures, and RFPs are being put together to select PropTech suppliers.
Thinking vs Doing
For all the hype generated, the lag between setting up structures for PropTech and implementation is real. Per a 2018 KPMG report on real estate’s adoption of technology, 90% of CRE respondents think that PropTech is a significant opportunity and enabler of success. At the same time, more than half of people rated their business low in terms of technical innovation and maturity. In a similar finding from Deloitte, 92% of American CREs will maintain or increase their spend on tenant experience software in 2020.
So What Are We Waiting For? There is clearly a desire for PropTech, but the market seems to be waiting for the right teams to be formed to do it, and more importantly for the right solutions to come to market. Real estate is looking for PropTech solutions with defined value proposition for both tenants and real estate, with quality teams who understand the intricacies of the sector and are going to stick around for the long term.
And TeX? A recent study by Deloitte shows that tenant experience is a top priority moving forward, especially as it becomes a base expectation from tenants themselves.
Enter HqO. We saw the opportunity of the French market because of the focus on the occupants, because of the pipeline of visionary office buildings being delivered, and because of the market’s plans to change the experience of real estate. CRE leaders in France are embracing PropTech and are just as focused on the future of tenant experience as their American counterparts.
“Engaging tenants and improving workplace experience is becoming a central point for our investors clients, as they shift from a ‘product’ to a ‘product+service’ approach,” Quéro said. “Consequently, we are growing and strengthening our capabilities at JLL to be able to advise them on this journey. This includes how to implement and leverage new technology solutions.”
So how do current TeX solutions compare in France and the United States?
“In France, tenant experience initiatives are slightly more property management driven than in the U.S., which focuses more on community and engagement,” he said. “While existing tenant experience solutions can in theory work in both markets, these new TeX providers’ adaptability to market specifics will be essential to their success. Knowledge of local markets will be key.
“An open and flexible tech platform combined with local services and knowledge will become a must-have.”
While the focuses of the tenant experiences may differ on either side of the Atlantic — sustainability, for example, is a more important driver in France than in the U.S. right now — the speed of adoption is similar.
“On the tenant experience side, I would say that appetite is the same in all big mature office markets worldwide,” Quéro explained. “The category is maturing faster and we believe adoption will accelerate.”
With almost 70 employees and growing, a team on the ground in Paris, and an entire unit dedicated to creating great tenant experiences, we are excited to pair up with French Immobilier, and most importantly, to create places that tenants love in one of the most innovative markets in the world.
Our mobile app gives every person in the building full visibility and engagement with events and news, a single connection to the full technology stack of the building like access control and payments, and a true engagement platform for all amenities like gyms and food and beverage. This is all wrapped in white label form for every building to truly express its identity and create a unique brand of tenant experience, and to measure building customer success directly through data generated.
Vive la France! We are ready for launch in Q1 2020. We’re super excited to get started.
Schedule a demo with HqO for more information on how commercial real estate technology (CREtech) can make an impact at your property in the France, the UK, or the USA.