Expect Office Operators to Provide Bundled Services to Woo Tenants

Office landlords looking for tomorrow’s sales team might look for people who have been at the front lines of the fast-food industry. They already know how to say, “Do you want fries with that/?”

Not that office buildings plan to add burger grills and deep fryers to common floor space. But according to JLL, bundled packages are on their way to the industry. Combining utilities, Internet access, and tech services like network, cybersecurity, and telephone, the assumption is that generational changes in tenant businesses’ management will push for increased convenience demands.

“At some point, a tenant is going to walk into a building and say, ‘Look, if I go across the street, I get a full bundled package of everything I need, that’s also cheaper and ready to go day one,’” said Jason Lund, JLL Tech Infrastructure real estate expert in the analysis. “That day is coming; mark my words.”

Coming, as in the next 12 to 24 months, according to Lund.

The trend has already started in flex space, which makes practical sense because tenants can come and go virtually at will. There are no resources and time to customize for such casual use. Instead, such flex-space operators as WeWork, Industrious, and CommonGrounds have had to wrap what are basic business services, as well as amenities, into their offerings.

The potential could go much further, as well. Vornado Realty Trust has partnered with food-ordering platform vendor Sharebite in the former’s New York City properties. Using provided software access, employees in these buildings will be able to order without delivery fees from such chains as Sweetgreen, Cava, and Dig. The service delivers the food to contactless drop-off points in the offices.

In that arrangement, no one is required to use the service and there are no financial exchanges between Sharebite and Vornado. Sharebite gets more concentrated exposure to a large audience and Vornado adds an amenity without ongoing cost.

At the more basic types of services that JLL expects, that wouldn’t be the case. Utilities are a hard cost. So is Internet connectivity, telephone service, all the hardware necessary to enable this and the maintenance, including significant cybersecurity. Skip the upkeep and protection aspects and the landlord walks into a minefield of unmitigated risk with little to no legal defense.

The pricing decisions will be tricky. Tenants will push for lower costs while landlords will have to decide on the tradeoff among additional costs, overall higher margins, and the marketing benefit of greater flexibility for companies.