The landlord and tenant relationship has changed over time, and we are seeing this shift take place across every real estate asset class.\u00a0 Real estate was always a transactional business, and between the time that a lease was executed and a potential renewal was negotiated, there was very little communication between parties.\u00a0 Whether it was a family renting an apartment to live in, or a company leasing an office to house their employees, or a retailer leasing a storefront to sell their goods, as long the space remained in good condition and the rent checks came every month, both parties fulfilled their commitments and everybody was happy.\u00a0\u00a0<\/p>\n
When a tenant was deciding where to lease a space, the decision really came down to location and terms.\u00a0 But as competition for tenants continues to increase, landlords have started to leverage technology geared towards adding value to their tenants with the goal of differentiating their space from their competitors.\u00a0 By creating value-added services for their tenants, landlords have hoped to increase the desirability of their assets to secure the highest price per square foot along with building loyalty to increase renewal rates.<\/p>\n
Technology has been used in the real estate industry for many years, but it was typically used to market available spaces and to create more efficiencies for the landlord to increase their bottom line.\u00a0 The latest wave of PropTech solutions have a very different purpose.\u00a0 They are designed to improve Tenant\/Resident Experience.\u00a0 Landlords are moving away from the binary mindset of simply providing space, and they are injecting a culture of hospitality and service.\u00a0 I often even hear landlords now refer to their tenants as their customers.<\/p>\n
Regardless of asset class, landlords are reevaluating their relationship with their tenants, and augmenting their offering with technology.\u00a0 In the office sector, there is no shortage of solutions on the market designed to enhance the Tenant Experience.\u00a0 Tenant Experience Apps enable a host of experiences from mobile access control, to bookable amenities, to controlling the temperature and air quality in the space.\u00a0 In Multifamily, Resident Experience Apps offer similar features, but their main objective is to build a sense of community amongst their residents.\u00a0 The thesis behind this technology is that if a resident builds strong ties to the other residents in their building, their likelihood of renewing at the end of the lease increases exponentially.\u00a0 In a prior article<\/a> I detailed the tenant focused solutions that Prologis<\/a> has deployed in the Industrial sector, including EV chargers for their tenants\u2019 fleet of trucks, dynamic truck routing software to increase shipping efficiency, and rooftop solar to help their tenants save on energy while being more environmentally friendly.\u00a0 In today\u2019s article, I wanted to focus on how shopping mall owners are leveraging technology to increase value for their retail tenants.<\/p>\n Shopping malls have been under massive pressure well before the pandemic.\u00a0 A combination of changes in shopping habits (primarily due to online shopping), paired with the fact that too many malls were built too close together, resulted in the closure of many shopping centers.\u00a0 One tactic that seemed to work to bring shoppers into the mall was to include attractions such as rides, rope courses, skating rinks, and a variety of entertainment options.\u00a0 I recently wrote an article<\/a> about the ways that entrepreneurs were reviving retail centers by layering in Art and Entertainment experiences.\u00a0 Landlords are continuing to invest in attractions to drive foot traffic to their malls in order to sign new retailers and to justify the rents that they charge.\u00a0 And in retail leases more so than other types of leases, the landlord\u2019s incentives are directly tied to tenant\u2019s incentives.\u00a0 Most leases within a shopping mall are Percentage Leases.\u00a0 In addition to a base rent amount, these leases usually include a monthly fee to the landlord based on a percentage of the Gross Sales of the retailer.\u00a0 Many landlords are turning to technology to continue to drive value to their tenants.<\/p>\n One of the leaders in this space is Hyperin<\/a> based out of Helsinki, Finland.\u00a0 Hyperin\u2019s customer is the shopping mall owners, but their purpose to add value to the retail tenants.\u00a0 They deliver this value via their platform with services that fall into 3 main categories:\u00a0\u00a0<\/p>\n