The pricing strategy of bundling services together under the guise of a lower price is nothing new. The marketing push to bundle your purchases happens every time you order a value meal at a fast-food joint. Insurance companies won’t stop telling you that they do it, and many of you still have a landline because your cable provider did the same. In the property sector, bundling internet and cable is already a fairly common practice in multifamily buildings. The push for flexibility, simplicity, and cost-saving has brought these tech bundles to the office sector.
This tech bundling trend started with flex-space operators. Before the pandemic, many startups and smaller companies shied away from long-term leases and instead gravitated to flexible leasing options like WeWork and Industrious. In doing so, these smaller businesses found out that they would also get high-quality network infrastructure included in their leases.
Now, larger occupiers are considering flexible leasing options and the ability to outsource their tech needs as a younger generation of workers steps into leadership roles. “They grew up in a world where they’re just three clicks away from buying whatever they want,” said Kez Anderson, JLL associate vice president of Partner Enablement. “They’ve just negotiated a 75-page lease, and then they have to set up all the internet, cable, and any other tech they need? They’re over it by then. They know they want to be in the building, and they’re happy to pay landlords to figure out the rest.”
More money, fewer problems
Currently, the typical tech bundles offered in flex spaces are not as common in traditional offices. Tenants usually set up internet and other tech services, a painstaking process that can often take 2 to 3 months—every time a tenant is replaced or moves to a different unit, the process repeats. For the tenant, these inefficiencies are solved when landlords provide tech services with their space.
Beyond the cost savings, bundling is also a revenue opportunity. As landlords get a wholesale rate from the provider, they can offer office tenants a good deal, but landlords have a markup. The tenant has plenty of other reasons to like the arrangement. Network infrastructure for a new tenant is ready on the day they move in, and it creates a single sign-on for everything. Each tenant still has a private connection, but the building owner and network manager professionally manage everything.
Another benefit is that bundling cuts down on the ripping and replacing of wiring when tenants come and go. “When tenants leave, it requires too much equipment replacement and wear and tear on the building,” said Jason Lund, JLL’s Tech Infrastructure real estate expert. “Bundling services reduces that by a great deal.” Professionally managed networks reduce the ripping and replacing of wiring and make switching over services to new tenants easier for landlords.
The quality of the network services is also essential. Today, the number one critical factor for offices is a strong cellular and Wi-Fi signal where no calls from the garage throughout the building will drop. Office landlords need a building-wide comprehensive solution for cellular and internet signals, and they need to take the occupancy of the building into account. A space with a dozen people will require a much different signal than one with a few hundred. “The average worker in an office today has about 3 devices that require a signal or maybe more,” Lund said. “So, quality cellular signals are vital.”
Security comes from within
Tech bundling also helps cybersecurity. For example, a significant part of cybersecurity in office buildings is managing physical access to wires, switches, and network equipment. With too many people having access to these things, office tenants are more at risk. Building owners that partner with network providers can manage the physical access themselves instead of having multiple providers have access.
Several companies provide these network services, offering professionally managed Wi-Fi networks and network operations centers that work directly with office tenants and landlords. Many of these providers have security operations centers that monitor cyberthreats and respond immediately to hacks. A professionally managed network gives tenants and owners much greater cybersecurity and peace of mind.
Red Bison Technology Group is one of the companies that professionally manages office networks. “Tenants and building owners need someone to ensure the infrastructure supports bandwidth and the level of service that the tenant needs,” said Lynn Martin, CEO of Red Bison, a Network-as-a-Service provider for commercial real estate. “The network needs to be secure, and our networks are highly secure and designed that way from Day 1. We go through all the networks and lock them down.”
A smart building must-have
Network security is especially important when you factor in intelligent building systems connected to the increasing number of IoT devices in a commercial building. In many office buildings, third-party vendors have remote access through various HVAC, access control, surveillance cameras, and IoT sensors that aren’t always secure. Over the past few years, some of the most severe data breaches in commercial buildings have happened due to weak security controls via this third-party remote access.
Martin of Red Bison explained that a professionally managed network builds next-generation firewalls into secure remote access functionality. The remote access users must also adhere to specific policies when gaining access to the building network. This means security policies are unified and enforced, streamlining security policy management and protecting against any weaknesses in network entry points.
Martin said many commercial buildings operate with disparate systems and networks for every in-building technology, thus increasing deployment costs and limiting visibility into threats. A professionally managed network helps solve these issues by moving to a centralized system that enables building owners and tenants to monitor everything at once with end-to-end visibility. An additional benefit of deploying a centralized network is that cybersecurity insurance premiums for properties can be lowered to levels that match real risk based on verifiable metrics.
WeWork and flex space operators may have started the trend of bundling tech services for corporate occupiers, but it could soon become more common in traditional office spaces. Tech bundling could be the next level of the flexible work environment. More and more building owners may start installing and providing these central networks in the next 12 to 24 months. And tenants may start demanding this service at some point, telling owners they can get full, bundled tech packages from other buildings with everything they need that is cheap and ready to go from day one.
Building owners can now get a competitive edge by looking into these bundling packages. Tech players are already coming out in the space that bundle and manage services like telephone, internet, and a firewall. Mounting cybersecurity concerns are one reason to switch to professionally managed networks, but so is providing a flexible amenity that could soon be in demand. Bundling services is nothing new, common in everything from internet and cable to McDonald’s Happy Meals. But bundling could soon be much more common for office leases, providing a valuable new service for tenants and a new revenue stream for landlords.