RXR Realty CEO Scott Rechler and Wall Street Journal Reporter Peter Grant.
NEW YORK CITY – RXR Realty envisions a new future for office-tenant interaction. The firm is aiming for 24 hours/ 7 days a week engagement with its office properties that extend beyond the typical 9 to 5 workday through the draw of amenities.
The New York-based real estate investment management firm is allocating 20 to 30 percent of its buildings for food and beverage, lodging marketplace firm Airbnb, and partnering with flex-office provider Convene to activate its building beyond traditional time uses, said the firm's CEO Scott Rechler at a fireside chat at the 2019 MIPIM PropTech conference in partnership with MetaProp.
Traditionally, office buildings are fixed assets that tenants have signed long term leases for that activate during common work hours five days a week. In order to step away from that old legacy approach, optimize those spaces and generate cashflows, landlords will need to create a new ecosystem of uses in the building that activate it 24/7, such as amenities, and food and beverage, according to Rechler.
For instance, on the weekends, office buildings are empty because of lack of hospitality and amenity offerings, while other venues that offer restaurants and activities such as experiential retail draw foot traffic. Within the construct of offering amenities 24/7, office buildings have the potential for activation in the same way and can generate cash flow, Rechler said. "You're just signing up for a fixed rent, but if you think about this as an ecosystem, the building in itself is a business in its own right," he said.
More and more buildings in the RXR Realty portfolio are introducing different food and beverage companies for ease of access and convenience, partnering with Kitchen United, a shared-kitchen provider that GlobeSt.com recently reported on. The off-premise turn-key kitchen space provides access to multiple food options with the option of delivery or pick-up.
RXR has also partnered and invested with Convene, a New York-based real estate startup that specializes in flexible meeting and working space, to activate in its buildings offering tenants the option of size and scale, and can access the companies data about the user experience to innovate along the way.
Other asset classes in the RXR portfolio to get an amenity injection is multifamily, as the firm tries to identify ways to introduce Airbnb into its buildings to ease the affordability problem for New York City renters who often spend 20% of the year outside of their home traveling or visiting family, Rechler said.
Initially, RXR's property management team was reluctant to the idea, but then warmed up after brainstorming ways to ease friction around noise complaints, cleanliness and managing transient visitors in and out of the building to balance the offering with property residents. And ff successful, renters have the potential to subsidize 30% of their rent through an Airbnb offering.
To grow and manage its efforts in the deployment of new hospitality offerings and accompanied property technology for building optimization, RXR set-up a digital lab at 75 Rockefeller Center that features different collaborative works stations for testing urban hospitality, living, work and experiential retail experiences. "They develop use cases of what we think we can push forward and it's indoctrinated our whole company to view the world through this digital approach," Rechler said. "That digital view has been a driver of our company."
The lab opened at the beginning of the year after RXR realized through its own proptech tech investments they had to innovate internally, Rechler said.
"Through those investments in prop-tech, we realized there's a lot of things we need to do to innovate and own ourselves, and our two primary areas of focus were data around our customers to serve them better along the way, and anything that was customer-facing and was really representing RXR in the long term."
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Mariah Brown
Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.
