Make 3 Friends And You’ll Renew Your Lease — Community Is Everything For Real Estate Today
Property owners of all sectors are striving to find the new Shangri-La of real estate: a sense of community. And PropTech is one of the tools being used to find it.
Fostering a sense of community can entice people to use your property, and stay there for longer once they are through the door.
“We know that if a resident makes three friends then they are more likely to stay and renew their lease,” co-living firm The Collective’s Investment Director Jill Xiaozhou Ju said at Bisnow’s PropTech event at the Merchant Taylors' Hall in London last week. “Community is very important for our figures and our renewal rates. But more than that we believe in the importance of community and it is an important reason why we are doing this. It sounds soft but it is very important, especially for people moving to a city without a support network.”
The ethos is an integral part of residential real estate and is also seeping into the world of offices.
“I don’t have a statistic to hand like that, but I’ve also read that people are 70% more engaged with their work if they have a friend in the office,” AXA Investment Management - Real Assets Head of Leasing James Goldsmith said.
“If you give people community and the opportunity to learn you are well on the way towards self-actualisation in Maslow’s hierarchy of needs,” Goldsmith said.
Goldsmith said this is directly translating into the way AXA is developing new office buildings — the new 1.3M SF skyscraper AXA is building at 22 Bishopsgate in the City of London will have more than 100K SF of communal space in it. It will be free for tenants to use and therefore not pull in any rent directly but it will contribute to attracting tenants and allowing the company to charge higher rents.
“If you look at the average corporate, then real estate only accounts for about 10% of their total costs, whereas people are 85%,” he said. “Saving a small amount on the service charge is not that important to them, whereas anything that allows them to attract and keep the best people is incredibly valuable.”
How does PropTech play into this? By allowing developers and owners to measure in great detail what the users of their space actually do and actually want.
“There is no reason why different tenants in a building shouldn’t interact,” Cluttons Head of Telecoms John Gravett said. “We can measure what tenants think and want a lot more easily today. Importantly we can learn from the negatives and improve what we do based on what does work and what doesn’t.”
The Collective is venturing from the norm in creating its own proprietary system to gather data and opinions from its tenants — most of the property companies at the event said they would prefer to buy rather than create their own PropTech solutions.
“It allows people to pay their rent easily, but it also allows us to talk to residents and gives us data about what they do and what they want,” Gravett said.
And data gathered can provide some surprising insights. Given the volume of coverage and the way WeWork seems to dominate every conversation in real estate, you might think every firm wants to move to a co-working space. You would be wrong.
“Our data actually shows that 70% of people who enquire with us want their own office rather than co-working space,” Hubble co-founder and Chief Executive Tushar Agarwal said. Hubble allows people to find flexible office space through its online portal rather than through a traditional broker.
“At the moment in a lot of cases big data is just confirming what we already knew, or providing simple insights. But as the data set increases it will become more sophisticated.”