Proptech Goes Industrial

From “There’s an App for That – Proptech goes Industrial” – NAIOP Magazine

By: Carrie Szarzynski, Senior Managing Director, Head of Management Services

Hiffman National launches a building app to enhance the workplace experience of warehouse users.

The tenant experience app has become a common amenity for office buildings, adding value for landlords and property managers alike. More than 76% of commercial real estate organizations have adopted the technology, according to HqO’s State of Workplace Experience report. Office property apps have traditionally been used to access the building, book conference rooms, place work orders, and learn about on-site events and nearby businesses. The app’s usage in an industrial property could offer similar features while expanding to include options for wellness and amenity sharing.

In fact, Hiffman National believes the next frontier for tenant experience apps is the industrial sector. Last July, the commercial real estate management and advisory services company launched its custom platform — Hiffman HQ — for its clients and their tenants in all Hiffman National-managed office, retail, health care and industrial properties. Working in partnership with HqO, Hiffman National created the app to focus on three pillars: education, engagement and wellness. It marked the first time the HqO platform was applied to industrial real estate.

It can be costly to develop and implement proptech, and there is often an adjustment period for end users. For example, employees may not realize the app exists, especially in an industrial building that usually has fewer people on-site than in an office property. This can be addressed by posting table tents and flyers in the break rooms with a QR code that educates employees and provides them with a download link. Additionally, one property manager often oversees dozens of industrial buildings that aren’t close to each other. It takes more time to educate these tenants about the app than it does for the on-site manager of a single office building who sees tenants daily.

Even so, drawing on best practices from property sectors that have been quicker to adopt such tools, Hiffman National has seen how the Hiffman HQ platform can enhance the workplace experience and make lives easier for industrial owners and tenants.

Enhanced marketability: Industrial owners have said the app is a differentiator as they compete for tenants, especially as the national industrial vacancy rate has risen. In Indianapolis, a client asked how to make its facility stand out from all the new industrial buildings with nearly identical features in terms of clear heights, dock doors and office space. The Hiffman HQ app offered one way to do that. Potential tenants recognize the app’s possibilities for fostering a sense of community, boosting morale and productivity, and aiding recruiting and retention efforts.

One institutional client said the app helps in meeting some of its ESG requirements because it connects warehouse workers with wellness activities such as online fitness classes, brain teasers and desk exercises. Data on app usage in these areas can be measured and reported.

Increased satisfaction: More people are working in industrial properties that are being used in a variety of ways that go beyond traditional manufacturing and storage. As a result, a more diverse tenant base has emerged, powered by skilled laborers whose wants and needs are similar to those of the typical office worker.
Several years ago, Hiffman National started organizing tenant experiences for industrial users and received positive feedback on its effect in the workplace. The Hiffman HQ app helps in communicating and promoting even more community-building activities, which typically isn’t done in the industrial environment.

Improved net operating income: The workplace experience app supports elements crucial to increasing a building’s NOI, including process improvement and tenant satisfaction. In addition to responding to Hiffman National’s formal surveys, tenants can provide feedback through the app on everything from building operations and real estate concerns to the performance of vendor partners. These insights help ensure Hiffman National’s management teams are delivering value, efficiency and reliability for clients. If the tenant feels valued and heard, they’re more likely to feel good about staying in the space, resulting in increased lease renewals.

Getting Started

Firms exploring their own custom experience apps can take the following steps to identify the platform best aligned with their needs and the needs of end users:

Gather ideas from landlords. Meet with building ownership to better understand their pain points and how to proactively address them. Hiffman National began meeting with clients 18 months ahead of the app development process to customize the platform to their needs. This led to the app’s pillars of education, engagement and wellness.

Shop around and customize. After identifying desired features, find the right technology partner to deliver them. With HqO, Hiffman National was able to white label the app as Hiffman HQ, which reinforces the company’s brand. The company also wanted the app to serve as a one-stop shop to place a work order, book a conference room, participate in online fitness classes, access lifestyle-oriented content, and coordinate food delivery and rideshare services. Hiffman HQ is tailored to each location, with a community event calendar and discounts to nearby businesses.

Negotiate pricing. Workplace experience apps began in the office sector, where the technology is priced per square foot. That model doesn’t make sense for industrial real estate because a 1 million-square-foot industrial building might have only five people who use the app. Through negotiation, Hiffman National secured portfolio-based pricing.

Consult with a technology attorney. Before signing on the dotted line, consult with an attorney who has experience with software agreements. Hiffman National engaged a legal expert to ensure the agreement protected its long-term interests and security.

Absorb the expense. An all-encompassing technology fee has always been part of Hiffman National’s management services, covering mostly other technologies in areas such as accounting and work orders. While the Hiffman HQ app adds about $30 per quarter to its clients’ technology fees, Hiffman National is absorbing most of the expense of developing and maintaining the app because the company sees it as a differentiator for its business.

Incentivize and promote usage. When Hiffman HQ was launched, the first 200 people who downloaded the app were entered into a raffle, with 20 winners each receiving a $25 gift card. The company also offered incentives for the property management team that got the most users to sign up. Hiffman National employees visited their industrial properties and showed tenants how to download and use the app. This created a touchpoint that is especially important for industrial clients, who do not typically have experience with tenant experience apps. Ongoing outreach is critical to increasing engagement and introducing the platform to new tenants or employees who were not present during the initial rollout.

Why Industrial?

Industrial landlord and tenant expectations are higher now than before, and property managers must anticipate shifting expectations. Whether a client has a 100,000-square-foot office property or a 1 million-square-foot warehouse, they bought the building as an investment.

Hiffman National launched Hiffman HQ believing that it will drive building performance and, in doing so, allow the company to scale relationships with current clients and attract new ones. While the user data is still coming in, it is clear this investment is already paying dividends.

About NAI Hiffman:

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 275 employees strategically located throughout North America.

About Hiffman National:

Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 275 employees nationally and an additional six hub locations and 25 satellite offices across North America.