The devastating impact of the COVID19 global pandemic has tested the limits of major companies’ BCP plans and their abilities to successfully implement work-from-home arrangements. IT departments faced challenges of last minute scrambling for equipment and quick implementation of security patches, VPNs while increasing server capacities and bandwidths to keep things running.
While the world is not out of the woods yet, the impact of the virus will undoubtedly change the way Commercial Retail Real Estate businesses operate. Here are some thoughts on how CRE Landlords can take this opportunity to future-proof their businesses for this decade.
Engage and Support Your Tenants
Before COVID19, CRE landlords and operators have been thinking about how they may extract increasing marginal utility from their tenants, thereby promoting tenant loyalty and ultimately income stability for their assets. Engaging their tenants (and their workers) more intimately through tenant engagement building (mobile) applications became the answer to better understand their tenants and their occupants. This gave birth to several tenant engagement applications that helped to provide activities such as fitness and interest group meet-ups as well as F&B and lifestyle convenience services. This helped landlords understand the wants and habits of its occupants during their working hours at the building.
With the virus, tenants will look to their landlords for additional support. Aside from rental holidays, rebates and discounts, here lies the opportunity where landlords can further engage their tenants in helping them to recover and entrench their relationships with the tenants.
Landlords-as-a-Platform or Service
Enter Landlords as a Platform or Service (LaaP or LaaS). The landlord and its platform becomes the centre of the ecosystem, where it provides its key real estate services, as well as other tenant business-related services online.
Through technology and digitalisation, Landlords will become the key coordinators of their ecosystem, allowing for other service providers (e.g. IoT, logistics / delivery, transport, FM service contractors etc.) to plug-in into their ecosystem API library.
Take for example, the retail mall scene. E-commerce and its conveniences has been seen as a steady disrupter to the conventional retail mall business. With COVID19 and the onset of social-distancing measures, e-commerce transactions have exceeded 10% of total spend in retail — this trend is set to grow and retail mall landlords are forced to evolve to do more.
Reimagining the Role of the Landlord
Retail Landlords can reimagine their role from merely a space provider, to a business deal enabler, product marketer, events coordinator, payments provider, inventory tracker, logistics coordinator and storage space provider.
Established Retail Landlords have the advantage of their brand and network as a strength to support their tenants on a digital platform. Landlords are poised in a great position to provide Online to Offline (O2O) experiences to their shoppers.
Imagine a Landlord-branded “Shopify” that carries all the brands and genres within their physical stores, complete with AR rendering, merchandise purchase options, check-out payments and delivery. Shoppers have the flexibility to purchase online from the Landlord-powered Marketplace and pick up the merchandize when they hit the malls for coffee or have it delivered to their home. All this done through a landlord web or mobile application.
Tenants with existing e-commerce presence can ride on the additional exposure and marketing benefits by plugging into the Landlord’s platform (which may be bundled as part of the Landlord’s service). Managing product listings will be a breeze through a Tenant Engagement Portal.
Tenants will not only manage their leasing administration digitally, it will also manage their product and services marketing to shoppers and relevant stakeholders within the Landlord’s digital ecosystem. The portal’s extensions will include tools for retailers’ digital inventory management and delivery logistics tie-ups. We may see logistics companies setting up fulfilment centres and taking up space in retail malls in the near future.
So for new retail business owners taking up space in the malls, it is as simple as bringing in their product / service and expertise, with the rest of the other services such as digital marketplace, delivery logistics, payments check-out and of course, retail space (and the rest of the standard facilities) to be provided by / subscribed from the landlord, as-a-service.
Moving Forward — The Changing Landscape
Owing to the unprecedented growth we have enjoyed these last 30 years, real estate is one of the key beneficiaries to this growth. Hence, the impetus to embrace digital change may not have been as urgent, until now.
International Property Consultants (IPCs) such as JLL and CBRE have led the charge in embracing Proptech in a large way, reaping the benefits from technology and providing real estate services to landlords, at a seemingly more scalable and efficient rate.
While forward-looking landlords have taken steps to launch digital initiatives to future-proof their portfolios, it is perhaps time for them to do more now, especially since space is increasingly becoming just a commodity.
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