Across the world, the role and importance of physical workspaces is evolving, and Europe is no exception. While there was a drastic and rapid uptick in remote work during the pandemic, European employers have since encouraged all employees back to the office. And while a recent JLL report shows that office vacancy rates are now back at pre-pandemic levels of around 7.6%, it is important to note the clear and widening gap between prime, Central Business District (CBD) locations, and more peripheral areas. The relationship between Paris CBD and the surrounding Ile de France region is a great example. While Paris CBD saw Q2 2023 vacancy rates at 2.6%, Ile de France remained much higher at 7.9%.
To solve the problem of vacancy rates, owners and operators need to focus on delivering a first-class physical workplace experience. Moreover, offices can become ‘sticky’ with occupiers by supporting businesses in their efforts to encourage (and sometimes mandate) their people to come into a physical work location for at least part of the week. Consequently, there is a shift in how offices are viewed, emphasizing the need to deliver a first-class physical workplace to attract, retain, and motivate talent.
This shift in how the “office” is viewed has made the Real Estate Experience (REX) crucial to owners and operators. Increasingly European owners and operators understand that acting as a partner and supporting the growth of occupiers via an improved REX helps improve yields.
The importance of (REX) in Europe can be seen in the flight for quality CRE stock. Savills’ recent European Office Outlook reported a need for prime (Grade A) stock, a crucial factor in the absence of increased take-up in office space. This is further backed up by JLL data which shows 61% of European office demand is for Grade A stock. Clearly, European businesses are no longer content with settling for second-best workspaces.
Owners and operators in Europe are responding. Findings from PwC’s Emerging Trends in Real Estate Europe 2023 Report show that industry leaders are investing CAPEX to improve the quality of their assets without changing their use. Shifting assets from Grade B to Grade A, and Grade A to net zero, allows owners to improve the performance of an asset through higher rents, and generate better yields. Yet, building new high-quality, engaging spaces is only half the battle. While offering new working environments, gym access, yoga classes, and free coffee stations, for example, will provide marketing opportunities and a short-term boost in occupier and user retention, it is easily eroded by a lack of ongoing engagement.
Solving the issue of ongoing engagement not only unlocks the total value of the new services on offer but also improves a building’s overall REX. As more and more new services are added to help improve REX, there is an equal need to ease the accessibility and utilisation of each service. Without the right systems and interface for users to access new services, much of the potential value of new amenities is lost. Having the right interface such as a mobile app that users can download and use to access services, and engage with the building’s community, solves this issue.
When it comes to knowing what the next set of in-demand services are, having an app that connects to a platform and acts as a digital window into the life of a building is vital. A digital window generates and shares data on the usage of new services and highlights where there may be a need for more awareness of a feature or an opportunity to add or alter an amenity. Understanding the right amenities and how to make them easy to discover and access will unlock the full potential of workspaces and increase a building’s ROI.
How HqO Helps
At the forefront of this effort is HqO.
Just last month HqO announced its Series D funding of over $50 million (€47 million EUR), along with the much-anticipated launch of the HqO REX Platform, the first end-to-end experience solution built around the customer. The platform, putting digital connections at the center of real estate, makes it less about the structures, the walls and windows, the floors, and halls – and all about the people within them. Through a suite of powerful applications and services, HqO’s REX Platform assesses the health and performance of an end-users experience within a physical space, while providing the tools to manage and optimize it, all from one central location.
Already HqO is using its resources, experience, and technical expertise to help owners, operators, and occupiers access the full potential of their physical workspaces and create the working environments that are in demand across Europe. Working as a trusted partner to some of the most forward-thinking organizations in the European CRE space, such as Primonial, Gecina, AEW, Hines, and J.P. Morgan, HqO has the knowledge and proven track record with helping businesses across Europe enhance their REX
As the role of office space continues to evolve across Europe, and REX becomes ever more critical to gaining and retaining occupiers and employees, owners and operators need to connect real estate to the people. At HqO we have the tools, expertise, and experience to help.
To find out how we can help your business build an industry-leading real estate experience, speak to one of our REX experts today.