Expectations in commercial real estate (CRE) are dramatically and quickly changing. We have seen a similar transformation in the early adoption of enterprise Software as a Service (SaaS). As CRE goes through a rapid digital transformation, it can take inspiration from SaaS solutions. In this blog, we will uncover lessons from the enterprise SaaS industry and how they can be used to give CRE stakeholders a competitive advantage.
At Sidewalk Labs, we are committed to radically improving life in cities for all, and commercial buildings are a big part of that. We’re designing products that not only solve key pain points of our commercial real estate (CRE) customers but also remove the guesswork from managing buildings. We’ve achieved this by keeping a close eye on the ever changing user behaviour and by being open to innovation, both from within and outside the CRE industry. Prior to Sidewalk Labs, I spent my career developing many user-centric SaaS (Software as a Service) products, globally. It is clear there are parallel trends in enterprise software adoption and digital transformation in commercial real estate.
In the last few years, we’ve seen expectations from consumer technology spill into work and users became advocates for tools in the workplace. With the proliferation of the SaaS “freemium” model and extremely low switching costs, consumers and enterprise users alike could use the same solution e.g. Dropbox and G Suite. There is no difference between the “enterprise user” and the “consumer.” They are, not surprisingly, the same person. We will continue to see expectations mirror and surpass those for the home. The prevalence of intuitive, easy-to-use, consumer-centric technologies, like smart home devices, will increase tenant expectations around personalized comfort and air quality at the office.
Implications: Baseline expectations around workplaces have changed and comfort must surpass what is available at the home.
Empowerment in real-estate decision making will only amplify. In the early days of B2B SaaS, it was hard to compare pricing and compare costs between different offerings. Enter the transparent pricing page, the now-obligatory “pricing” tab on B2B SaaS websites, has brought a level of transparency to product pricing and features, often with the ability to self-serve and ‘try before you buy’. A lot of CRE solutions today claim to “improve building operations” “increase tenant comfort” and “cut costs,” but it's hard to ascertain exactly what they are selling. On the asset leasing side, websites that compare office spaces, which have catalyzed choices for smaller businesses, are still missing filters for ESG metrics and other components of tenant costs. This is important to note because 43% of tenants who took part in a ULI Proptech Survey responded they want to use technology to gain more transparency on climate and ESG-related metrics.
CRE technology isn’t quite there in terms of offering transparency, but the trends point towards reducing asymmetric information, for both landlords and tenants. Transparency in pricing, features, and environmental impact will only strengthen the quality of the offerings, whether a commercial rental space or tech product. Asymmetric information shouldn’t be a company’s competitive advantage, the product should be.
Implications: Clear and proactive communication will be expected by all stakeholders, PropTech companies, landlords, and tenants.
Mesa by Sidewalk Labs: A greener building in a box
With the explosion of big data, CRE technology has the opportunity to incorporate artificial intelligence (AI) and IoT to process large swathes of raw information and provide decision makers with critical insights. Vital connections between data from different sources such as occupancy and weather and the use of AI can allow manual actions to be automated, leading to reduced costs, improved productivity and better utilization of spaces. B2B SaaS solutions use AI to save organizations multitudes of work hours. As an example, Google Suite features like Smart Compose save people more than 2 billion characters per week. Another example is Mesa, where we’re applying AI optimization to automate HVAC settings based on data from DT’s sensors, occupancy trends, thermal feedback from tenants and external conditions such as weather. This directly contributes to energy efficiency, a better employee experience, and labour savings in the form of reduced HVAC supervision.
Implications: Expectations will rise beyond data to even helpful automation.
As digital transformation continues to usher in new expectations for commercial real estate, we can learn from other industries, like enterprise software, where consumers fueled the transition. We will see expectations set at home carry into the office; increased transparency will lead to better products and decision-making; and technology will need to go beyond information to bring about meaningful change in real estate.
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