The critical success factors in achieving our investment objective and implementing our investment strategy are active asset management, customer service, strategic relationship management and collaboration with PropTech start-ups and scale-ups.
Active asset management
Strong economic developments and various active asset management activities resulted in a large number of new and renewed leases, especially in Amsterdam and The Hague. The average occupancy rate in the Fund’s portfolio in 2019 was XXX% compared with 89.2% a year earlier. This will improve further upon the completion of the Fund’s new-build assets and the redevelopment and renovation of its other assets. Please find below brief explanations of the activities at a number of important assets from the portfolio.
One trend set to continue for the foreseeable future is that people are demanding ever-increasing levels of service. These trends and developments are now also being felt in the real estate market in general and the office sector in particular. Our tenants expect more from us and our office buildings on a number of fronts, including quality, sustainability and optimum levels of service. We have made the satisfaction of our tenants a major priority for the coming years, as an integral part of our wider ambition: to be more client-centric in our approach to all our stakeholders. What it means in effect is that we will be using the wishes of our tenants as a touchstone to improve the quality and efficiency of our processes, to optimise our contacts with tenants and to take a more proactive approach to how we provide our services.
Strategic Relationship Management
The Fund actively works to improve its reputation among a comprehensive network of vendors, real estate developers, real estate agents, the Dutch national government and local municipalities. To this end, we maintain professional relationship management in order to find appropriate investments, to share and gain knowledge and to exert influence. On some occasions, we partner up with lobby groups, network organisations and sector associations, such as IVBN, NEPROM, ULI and Platform31.
Stakeholders in the office real estate market are keen to work with trustworthy partners willing to accept their social responsibility. Partners that want to create future-proof, inclusive and liveable cities. This is why the Fund focuses on being a partner to its stakeholders, and tries to build reciprocal understanding between municipalities and institutional investors.
Collaboration with PropTech start-ups and scale-ups
New technologies, such as the Internet of Things, artificial intelligence, big data and blockchain can improve the quality, productivity and efficiency of our operations. We devote a great deal of attention to new property technologies and start-ups and scale-ups that are developing solutions. At Bouwinvest, we foster a culture of innovation, to stay ahead of the ever-changing demands of our investors and tenants and to safeguard the value of our investments by helping to create future-proof cities. We are working on innovative solutions in various stages of development. We usually start with pilots, but once these have been evaluated and the outcome is positive we implement them on a larger scale.
In addition, our Research department has developed a data integration solution to provide automatic data gathering and an advanced analytics platform. The solution includes a data warehouse, which is essentially a large collection of centrally managed data from both internal and external sources. The solution supports decision making at operational, tactical and strategic levels and will be expanded over the coming years to unlock more value. In addition to the data integration solution we launched in 2019, we are looking for a partner who can help us develop a data-gathering and analysis tool to measure the environmental impact of our portfolio in detail. This solution will help us to make our portfolio ‘Paris Proof’ in the long term.
Our ambition is to be part of the early majority by enhancing our involvement in technological development. We focus on three central innovation themes: Sustainability & circularity, Experience and How we work. Up until now, our focus has been on the launch of new products and the continued development of these products. Some have been scaled up and rolled out on a wider scale, while others have been shut down when it turned out they generated too little added value.
We currently have a portfolio of several PropTech innovations. For example, in 2018 we unveiled plans to set up a tenant portal. This will provide tenants with a digital channel for repair requests, complaints and all the information they need about their lease contracts, service charges and payments. The aim of this project is to increase the satisfaction of our tenants and to reduce the chance of lease terminations. We started pilots for this portal in 2019 and we are aiming to go live in 2020.
We are also testing another application, Chainels, to support community building with and between our tenants. Chainels offers a wide range of functionalities to share information and to encourage interaction between tenants. Following a pilot in WTC Rotterdam, we plan to implement this application in WTC The Hague in 2020. We are also running pilots in the field of mobility and data-collection and analysis. Together with Huub (a Pon start-up), we are offering tenants the use of electric bikes and cars at Nieuwe Vaart (Utrecht) and the Olympic Stadium Amsterdam. Data collection is up for discussion on many fronts. Firstly, we made a selection of the data we are aiming to collect in the future. Now we are specifying the technical infrastructure we will need to collect these data. In 2020, we will draw up the requirements for tools, such as sensors, so we can select one supplier to start a pilot with, also involving an external property manager and a single tenant. In principle, the collection of data should enable us to gain greater insight, so we can improve our property or asset management activities to raise the performance of our assets (i.e. lower operating costs and/ or more comfort for tenants). The collection of data related to the use of office space would be a relatively small next step, but will require special attention for the privacy of users and the development of new service-oriented business models.
Technology and innovation
Venture capital investor interest in technology solutions for the real estate sector (PropTech) is at an all-time high. In the US, Fifth Wall Ventures recently raised almost US$ 500 million for a second PropTech fund. More than five European VC funds are fundraising and big Asian funds, like SoftBank Vision Fund, are setting targets for PropTech. In addition to indirect funding, an increasing number of corporates are investing directly in PropTech start-ups. The communication gap between corporates and start-ups seems to be narrowing, with corporates increasing their focus on conducting experiments and hiring data experts to get more out of new solutions.
Corporates experimenting with emerging technologies and the availability of capital for PropTech will transform the real estate and office sectors. Corporates are testing emerging technologies, such as drones, artificial intelligence, blockchain and the Internet of Things, to directly connect behaviour to technology. This translates into a rising demand for technology-enabled buildings that can adapt to the needs of office tenants and users. Office investors are looking for partnerships with tech-companies to enhance customer experience.