Many CBD Office Buildings May Require Repositioning Post-COVID

Data-based insights take the guess-work out of how to best reposition an office building

By better understanding tenant customers and the surrounding market fundamentals, Asset Managers can reposition their office buildings to improve tenant retention, leasing outcomes and long-term asset value. Insights generated from big data, spatial analytics and advanced machine learning models can help optimise these outcomes. 

Successful repositioning of an office asset requires a deep understanding of the people who use the building, and the location in which the building exists.  At propella.ai, we undertake the following analyses to gain such clarity:

1.    Customer Profiling: Identifies the office workers within the subject building and offers detailed insights of  these workers’ behaviours, demographics, psychographics and how they travel in and around the building. While our data is current, it also dates back to Q3 2019, so we can understand changes in office tenant customers over time, such as what type of office workers are (or are not) returning to CBD offices.

2.    Location Intelligence: Defines a trade area for the building to understand the commercial ecosystem that the asset resides within, including profiles of local residents, workers and visitors as well as existing businesses and future developments in planning.

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Insights resulting from these analyses can be used to implement upgrades to the building, as well as marketing and tenant engagement strategies that lead to:

·     Higher occupancy rates

·     Stronger tenant retention and improved leasing outcomes (minimising downtime and re-leasing costs)

·      Higher rates of return (maximise revenue)

·      Driving property value (through market and asset repositioning)

What is ‘asset repositioning’ with reference to office buildings?

Repositioning is a property investment strategy that aims to add value to the asset by improving the tenant customer experience, drive better leasing and tenant retention outcomes, increase rents and ultimately asset value.

This often involves improvements to the internal building such as better health & wellness facilities, shared high-tech meeting and conference rooms and supply of new or additional retail amenity, as well as external building refurbishment and improved mechanical, sustainability and tech services.

By truly understanding the behaviours, values and beliefs of workers in their building, Asset Managers are able to create an environment that is tailored to the specific needs and preferences of their existing tenant customers, and/or targeted tenant customers to support their leasing campaign. Similarly, having visibility of the unique ecosystem that the building sits within, allows for confident decision-making on capital investment projects e.g. selecting sustainable future retail uses for the building, by understanding the retail supply and demand market fundamentals of the surrounding trade area.

How can we gain such insights into office building workers and locations?

 To gain these powerful insights we follow a proven methodology as per the image below. The first step is to determine a trade area for the site which becomes the area we analyse.  To learn more about how we determine an office building’s ‘trade area’, read our comprehensive blog on this topic here @ https://www.propella.ai/blog/defining-trade-areas-using-worker-movement-to-support-trade-area-analysis-for-office-buildings

Our methodology is as follows:

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In this process, we utilise both mobile data and customer profiling data. We use this data in undertaking sophisticated statistical analysis using our proprietary techniques.

We have analysed a Collins Street building as an example

Customer Profiling for Office Buildings

To demonstrate how we deliver customer profiles of office workers in the east end of Collins Street (known as the “Paris End”), analysis was undertaken of an existing office building located in Collins Street. The office workers within these buildings were analysed and assigned with psychographic profiles (called Helix Personas) in order to gain a thorough understanding of these workers.  “Helix Personas uses deep psychographic insights, far beyond simple demographics, to segment consumers into targetable groups”. Source: https://www.helixpersonas.com.au/ 

There are 54 different Helix Personas in total, which are divided into six “Helix Communities”.  

By selecting a group of office buildings containing the type of future tenants you are targeting in your leasing campaign, Helix Community and Persona distributions act as a proxy for your target tenant customers, to gauge how they would typically act, think and feel. This information can then in turn assist Asset, Development, Leasing and Marketing Managers with their asset repositioning and leasing strategy as they have a deeper understanding of their target audience. 

This is the Helix distribution resulting from the Collins St building that was analysed.  

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Caption - Figure 1: Helix Community Distribution of tenants in buidings in the East End of Collins Street, Melbourne AUS

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The Helix Community graph in Figure 1 above depicts a very high percentage of the Leading Lifestyles Helix Community which is the highest socio-economic community, followed by Metrotechs.

We then drill down to a Helix Persona level, to gain a more detailed understanding of the workers within their Communities. Figure 2 below reinforces a clear dominance of Leading Lifestyles (dark blue) and Metrotechs (light blue), except for one segment who belongs to the Aspirationals, (“Getting Ahead” persona in green). These are culturally diverse young families aspiring to create a prosperous life in their own new home.

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Caption - Figure 2: Helix Persona Distribution of tenants in  buildings in the East End of Collins Street, Melbourne AUS

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We then provide insights around demographics, values, beliefs, behaviours, preferred cuisines, likely hobbies, preferred modes of transport etc, for each of the identified Helix Personas. This creates a consolidated picture of the workers in the east end of Collins Street, to use when formulating strategies to target these tenants (companies),  and plan your asset repositioning accordingly to resonate with these people.

Let’s look at the “Humanitarians” persona in figure 3 below, which is the dominant Helix Persona in the east end of Collins St. We can see that it’s characterised by high income earners who tend to be young and upcoming professionals with a firm left leaning. They are highly educated, cultured, they embrace upper-class city living, but do so with a solid social conscience.  

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Caption - Figure 3: Snapshot of Helix Personas: 109 - Humanitarians

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Helix Personas are defined by four pillars, creating a holistic  picture of these workers. These pillars are:

1.    Demographics

2.    Technology Adoption

3.    Value Segments

4.    Likes and Dislikes

 Location Intelligence for Office Buildings

 We then conduct an analysis of the trade area to review the supply and demand of the people, infrastructure, businesses and services in the vicinity. This provides a view of the unique commercial ecosystem in which the property is located. Location intelligence includes an analysis of:

·      Land Use

·      Development Activity

·      Retail services and amenities

·      Food and beverage venues (including cuisine type, popularity, and price point)

·      Supply and Demand Analysis (is there an over or under-supply of this a type of business?)

·      Demographics, values & behaviours of:

      -Residents

      -Workers

      -Visitors

·      Preferences into Food & Beverage , health & wellness, personal services, people movement, expenditure analysis, etc.

In Conclusion…

In a post-COVID world, asset managers of commercial office buildings need a deep understanding of the people who use their building on a regular basis. They also require a profound appreciation of the complex ecosystem within which their building resides. By utilising big data, machine learning and propella.ai’s proprietary technologies, we can provide data-based insights to help determine how to plan for, and manage office buildings.  

To learn more about our Office Tenant Profiling capabilities, take a look at our 2 minute video showcasing how these insights can help you plan the right amenity, services and experiences that will resonate with your currant and target customers.  https://vimeo.com/manage/videos/567023030/6c0c9d074d

Contact us to have a chat about this or to book a demo @ www.propella.ai/.contact

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