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New York, NY—With the shift towards buying an experience over buying a product or service, customer loyalty is no longer guaranteed. As a result, companies have moved to offering not only stellar customer service but also hospitality-centric experiences.
Commercial real estate is no different. Today, successful building owners and landlords understand that tenant loyalty requires leveraging a building's products and services to create a memorable customer experience. This has become known as operational real estate. Operational real estate is driving meaningful change in the commercial real estate sector and more institutional capital is moving towards this as the experience economy burgeons.
"Operational real estate is a few things," says Alan Tantleff, senior managing director of FTI Consulting. "It's experiential, satisfaction of the end-user and, of course, stellar service."
Experiential
Operational real estate is focused on the experience more so than the transaction.
For example, typically hotels lease rooms to a guest with the goal of keeping them happy and comfortable. Now, other asset classes are now gravitating towards the same goal. Food service, for instance, is now an important part of retail with many stores installing high-profile restaurants within their space. Office buildings are also adding more concierge-type services such as dry cleaning, valet parking, and package deliveries, Tantleff tells GlobeSt.com.
Satisfaction
The satisfaction of the end-user is critical to the success of the operation or transaction. A good relationship between the tenant and the landlord is paramount.
Stellar Service
"Is the end-user a tenant or a guest? When you shift your mindset, it will also improve your financial situation," says Tantleff. "A lot of sectors are quickly moving towards the experiential economy as it positively affects the bottom line."
As the experience economy continues to evolve, building owners, property managers and landlords will undoubtedly determine the competitive advantages and execute them. Emotive experiences and a strategic ambiance are critical as property managers align themselves to their tenants' goals, needs and objectives. This has to occur all while creating an internal customer-centric culture which then organically leads to enhancing the value of the clients' investments.
"Operational real estate is certainly an interesting trend that will be around for the foreseeable future," concludes Tantleff.
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