“We shape our buildings, and afterwards, our buildings shape us.”
There are few better words than these that define the relationship between people and the places they occupy. They were uttered by Winston Churchill in a speech in October 1943, to a room full of his fellow politicians, all of whom had just weathered a Nazi bombing raid that had burnt the iconic House of Commons building to the ground. The words were used as an emotive tool to convince a grieving Parliament to rebuild the House of Commons to its original layout. And they worked.
Remember that this was in the middle of World War 2, the outcome of which was still very uncertain. The people he was selling the idea to were likely thinking about everything but the design of a room: war preparations, budgetary concerns, and how their political opponents were going to play this latest attack. They had just lost one of the most important buildings in the empire. The House of Commons, previously the Royal Chapel of St. Stephens, was given to the newly formed Parliament during the country’s religious reformation. Once a place of godly worship, it was given a second meaning as a space for the country to conduct its democratic experiment; the building became the physical embodiment of one of the defining parts of British history.
But Churchill was able to make the shape of a room the issue of the day. He explained that, “its shape should be oblong and not semi-circular […] The semicircular assembly, which appeals to political theorists, enables every individual or every group to move around the center, adopting various shades of pink according as the weather changes.” He was adamant that the room maintain its rectangular shape. The shape was not intentional, of course. It was a relic of the building’s previous life as a Catholic church: a long hall of pews that a priest could easily preach down from his elevated altar at the end. But it had become a way to divide a complicated political system into two sides. Churchill thought that this was helped lead to a two-party system that made governing more streamlined, if less democratic.
Since then there have been countless studies validating the importance of our surroundings to our mindstate. Everything from room color to ceiling height seems to have an effect on how a space is internalized. But Churchill was interested in something even more powerful. He was thinking about the way that the room facilitated communication—or opposition as is often the case for the House of Commons. How our spaces connect us dictates our ability to do what humans do best: communicate, build, argue, emote. What could be more important than thinking about the design of such an important room, even if a war was raging just on the other side of the Channel?
The idea that a room is only as valuable as what it can facilitate its occupants to do is nothing new to the property industry. Offices themselves derive much of their value, their hard monetary value, from the way that they facilitate the productivity within them. Incredible wealth has been created in places like New York’s Wall Street, London’s Lombard Street, or Silicon Valley’s Sand Hill Road, for both the tenants and the landowners.
People outside of the commercial real estate world often find it hard to believe that office is one of the most valuable commercial property asset classes. In 2018 the value of office real estate in the U.S. was estimated to be around $2.3 trillion and growing. While there is only around half as much office space as industrial in the U.S., its average market price makes it’s total quite a bit more. But the distribution of the deviation is incredibly skewed. Approximately one-third of the total value of all commercial real estate resides in “gateway” markets such as New York, Los Angeles, Boston, Atlanta, San Francisco, and Washington D.C. Offices, more than any other property type, have a huge disparity in how much wealth gets created inside of them and thus has one of the largest spreads in its leasing prices.
So how do we get even more from our offices? How can they play an even bigger supporting role in the work that we do inside of them?
There are a number of companies that think this can be done by connecting our physical workplaces with our digital lives. They think that if they are able to build a digital communication network around a building, they will be able to save building managers time and money, make tenants happier and more productive, and create a sense of community in a neighborhood.
In order to find out what the impacts of these new digital arms of the modern workspace we decided to do some investigation. We tasked our team of researchers to examine the effect of tenant engagement technology on a building’s performance and write a comprehensive report. To do so we talked to dozens of building owners and managers to understand their perspective of the benefits of using tenant engagement apps. We examine all the ways that increased tenant engagement could boost a building’s value, both immediately and over time. We took an objective approach to understand the likely future of workplace engagement technology by testing our hypothesis: that these apps are able to increase a commercial office asset’s performance.
We realized early on that direct correlation, with any sort of statistical significance, would be hard to establish. The industry is so young that only a tiny percentage of the total office space is using digital applications to increase tenant experience. The ones that do have often not been using them long enough to have gone through an entire lease cycle. This means that the way that the property industry values income generating assets, based on their cash flows and profitability, doesn’t take these new technologies into consideration.
Obviously, licensed appraisals and “official” assessments of value for properties are only estimates. What really matters to the price of a building, just like any asset, is the market for it. Companies are increasingly willing to pay a premium for spaces that will help them increase productivity or retain the talent that is the lifeblood of the innovation economy, so the future seems bright.
We also learned that there were a lot of different reasons that landlords are thinking about engagement, besides the immediate boost to their top or bottom lines. From operational efficiency to marketability, from amenity activation to data collection; everyone seemed to have an opinion about what the future of this nascent industry might be. Many have hopes that these apps might become a new channel for retail, changing the way we shop much like websites like Amazon did just a decade ago. Others think that connected workplaces will lead to better work/life balance and help create the sense of local community that we have lost to modern rhythms. Even still, the property community has its concerns. Some doubt the ability to introduce yet another app into most people’s daily routine, others worry that the cost of keeping engagement in a noisy world might be too much for their teams to handle.
More than anything, our research made me realize that tenant engagement apps represent the future in how our buildings interact with our digital lives. As our work requires more from us the lines between our work and our workplaces, between our offices and our homes, will start to blur, requiring our buildings to be as flexible, customized, and intelligent as our tech stacks.
Our spaces shape us, just as we shape them. But for them to shape us into a better version of ourselves, they will need to use every means possible, be it the shape of the room or the interface of an app. There is a war raging for our attention and our buildings are finding new ways to direct that attention to what really matters, each other.
Take a deep dive into tenant experience technology by accessing our research report here.
