Copyright: David Lawson - Property Week March 2001
Generally termed a ‘door’ onto the Internet accessed from computer screens. A corridor is probably a better analogy, off which lead many doors. Some require keys, or passwords, as they lead into secure areas like management accounts or specialist suppliers. Others are free, accessing a maze of services such as shopping, email or local transport news.
Portals are beginning to get a bad name. ‘Gateways to hell,’ is how one US analyst described the withering fortunes of big names like Yahoo, which were designed as central points for accessing an endless range of services via the Internet. Yet mini-portals are continuing to pop up across the UK and could be the single most important factor in linking real estate with cyberspace.
Portals were spawned out of corporate computer networks that give employees access to information such as internal telephone numbers, the canteen menu, local bus timetables and what’s on at local cinemas. Landlords and agents began to realise they could cast this intranet wider, serving multiple tenants within large buildings, business parks and shopping centres.
‘A true merger of bricks and clicks,’ was the enthusiastic response of one IT analyst. The irony is that ‘old-economy’ landlords are succeeding where newcomers have failed by using the Internet to add value to real assets. Many dotcoms must be rueing the fact that they did not move in to grab those assets when they had vast amounts of money to spare.
The emergence of portals is driven by a coincidence of changes sweeping through the property industry. Most tenants recognize that they will grow increasingly dependent on the Internet, which provides opportunities to nurse cybervirgins online. ‘You would be surprised how many companies still do not offer Internet access from each desk,’ says Deborah Matthews, associate director of Jones Lang LaSalle, who is introducing the firm’s PyramidOffice portal into central London office buildings.
Online services also encourage occupiers to help pay for the introduction of high-speed data cables. Landlords are feverishly wiring up buildings and business parks, worried that they could lose out in future when tenants shun unconnected space.
Andrew Farkas, US head of Insignia, has justified putting millions of dollars into portals for this reason. Despite the struggle to maintain momentum as funding dries up, he has the support of at least one Wall Street analyst, who says: ‘Without these services, it would be like trying to sell cars without petrol or TVs without programmes.’
Another powerful force is the change in attitudes within the UK industry. Landlords realise they must offer better services to tenants, who will become increasingly picky and footloose as lease periods shorten and break clauses proliferate. ‘We are not in this to make money,’ says Richard Exley, business parks managing director for MEPC. ‘It is very much an extra service to tenants.’
Benefits can spin off for landlords, however. Matthews points out that a well-run portal can do wonders for the branding of a building or landlord. Meanwhile, property and facilities management have already moved out of the era of card boxes and onto computer screens. It is only one step towards further efficiency savings to run help desks and management accounts via portals.
One factor anticipated as a potential moneyspinner was bulk purchasing, but this could play a limited role in all but the most specialised portals. Howard Bibby of Arlington, which pioneered centralised purchases of utilities like power and telephones on its business parks, admits that moving into areas like office supplies is no easy task. After working through the bureaucracy of individual firms, you then have to find a way to making their accounting systems work together.
Around 40% of mid-sized companies in the US buy online, says a study by American Express. The average office tenant spends around £46 a sq ft every year on ‘non-production goods and services’, according to research by David Pickles of Tenantools.com. It is dangerous to extrapolate these trends to the UK, however. In the US, landlords often supply fixtures and services ranging from desks and water coolers to cleaning services. In the UK, the relationship is more remote because of the arms-length relationship created by traditional FRI leases. Some observers doubt whether tenants will ever come to trust landlords as partners after decades as adversaries.
Portals being developed by management specialists outside this landlord-tenant relationship may have fewer problems. Nomura-backed Servus has already set up buying ‘clubs’ for tenants and now aims to move these online. Dozens of procurement and management portals are also emerging in the US, often funded by the parents of UK agents,so some could migrate across the Atlantic.
Not all, however. Colin Hargreaves, head of Ecommerce at Healey & Baker, points out that tenant demand rather than landlord enthusiasm will be the deciding factor. Beware of the ‘doughnuts’, he says. These are services that look appetising but have a hole in the middle where the customer service should be.
Tenants of Berkeley Square House in London’s west End can report a blown light bulb, order stationery, check rent payments or expansion space in the building, or simply see what films are showing locally, all from the comfort of their desk. They are guinea pigs in a pioneering management system could roll out to another half dozen or so buildings across central London this year.
PyramidOffice has been devised by Jones Lang LaSalle to integrate a much wider range of services than some of its rivals. It is more than an intranet, providing information to employees, says JLL associate director Deborah Matthews. It can also be used for management functions.
That means a tenant’s finance director can log into a secure area to see how much floorspace his company uses or his record of rent payments. A lowly clerk is barred from such sensitive information but can check local train information or report a fault in one of the lifts. Further up the pecking order, a department head can tap into to find office equipment bargains. Pyramid is not configured for central purchasing but runs a team which investigates and selects approved suppliers.
Not everyone will use all these services, however. One of the lessons learned by JLL, which hopes to sell the system to other landlords as well as those whose buildings it manages, is the need to be flexible. The portal is designed in modules so users can pick the bits they want. It also has to be user-friendly. Even large tenants have a tendency to use older software, which means restraining the urge to use many of the whizzy new web designs which would be unreadable.
Others may not even allow employees access to the Internet, so Matthews is thinking about touch screens in general access areas. But the next project will be in Shepherds Bush, and likely to be occupied by tenants from the Internet-savvy media community, so the content and design could be more sophisticated.
The important factor is to match the needs of users rather than impose a system, as the whole aim is to enhance the building or landlord’s image, not to make money, says Matthews. Ironically, one of the main tenants providing feedback has plans of its own for tapping this market.
Insignia RE, which is based in Berkeley Square House, pioneered portals in the US with EdificeRex for apartment blocks and RexOffice for commercial properties. These have suffered from the financial squeeze on dotcoms, however. Plans to launch the service across 300 buildings in London last Autumn were cancelled because landlords were unwilling to take equity stakes. Amended proposals are now being thrashed out which could involve joint ventures with companies wiring up buildings with high-speed data cables.
Insignia-RE head of Ecommerce Simon Stretch says potential customers are still interested and expects around a dozen buildings to be online by the end of the summer. Meanwhile RexOffice has merged with SiteStuff, an ecommerce operation in the US. ‘We will provide the front end and SiteStuff the eprocurement functions,’ says Stretch.
This provides another link with RE’s London landlord, as JLL has already bought into the US operation with Hiller Parker parent CBRE and Trammell Crow via Octane, a joint operation set up to develop ecommerce. This kind of alliance is common in the US for a different kind of online service run from a central portal rather than linked to specific buildings
Arlington Securities has taken the concept of portals further than anyone in the UK, offering services ranging from local information for individual staff to business supplies and management help desks to companies. It has not been all smooth sailing, however. Finding the right people to make a decision is hard work, says Howard Bibby, MD of Arlington Business Services. Buying can be handled by anyone from IT managers to finance directors. It also needs a ‘champion’ within a company to make progress. But a pilot operation with 20 tenants has made progress and he is expecting online buying to swing into action by the summer.
The biggest challenge is not showing tenants you can get together bulk suppliers, says Bibby. Large tenants can often do that themselves. ‘The real revolution is showing you can cut administrative costs. Each invoice can cost a company between £50 and £70.’ Online ordering also has to be compatible with each tenant’s accounting system. It is too early to tell how many tenants use the service but statistics like this will not be important anyway. Centralised help desks have been running for more than six months, yet Arlington is not collecting usage figures. ‘People can use it or not as they wish,’ says Bibby. It is there to support the company’s brand by offering high service levels
MEPC has made this simplified this decision by leaving e-procurement off the agenda while it concentrates on employee services. ‘People may be getting too excited about online eprocurement,’ says business parks MD Richard Exley. ‘It will happen but probably not quickly and maybe not on the Web.’ Online buying has been the most popular service on its portal at Bedfont Lakes near Heathrow but this is by employees rather than companies. MEPC has a special deal with Waitrose and even provides a cold store set aside for groceries.
This may not be the pattern adopted on other MEPC parks, however. The main lesson so far is that services need tailoring to local needs. ‘People come here from long distances, so we give them a lot of local information,’ says Bedfont Lakes MD Hugh Richards. But at Milton Park in Oxfordshire, they will live more locally, so the emphasis will shift to information on facilities within the development.
This concentration on employee welfare is not just a extra service but an extension of the central philosophy of Chiswick Park in west London. Developer Stanhope has even brought in a hotel and hospitality expert, Kay Chaston, as head of management. ‘It is about taking the hassle out of life by organising things like buying groceries, or showing where you can take a bike ride in the lunch hour,’ says Chaston. The whole park is designed around the idea that making work more pleasureable will attract the best employees and therefore help tenants
A different kind of approach which offers ‘web enabled’ services is emerging in parallel to those tied to specific property. These range from groundbreaker.net, an advice portal set up by Drivers Jonas to more specialised self-assessment programs like HealthyOffice.co.uk, developed by Liverpool John Moores University.
Facilities management is increasingly being moved online through software such as the aptly-named Facility, which transfers information between offices, and Active Project, a US-developed program marketed in Europe by Law Gibb
Remote property management is an integral factor in many portals. KnightFrank paid £500,000 for web-enabled MRI Property Accounts and is looking at Maximo, an asset management package, Many of the online ‘plugins’ to portals offered by UK consultants were developed in the US. Constellation, a consortium which includes names like JLL and CBRE, has invested in FacilityPro.Com, which manages procurement for more than 100m sq ft of commercial space in the US. Insignia is one of the backers for another FM service called Workspeed.
Healey & Baker is already promoting an ‘e-commerce marketplace’ in Europe developed by US parent company Cushman & Wakefield and software company Zeborg. CBRE bought MyContracts.com asset management software for US clients but has a potential UK outlet in its subsidiary, Hillier Parker. Trammell Crow is seeking European business in partnership with Savills to offer a ‘concierge’ service aimed at organising anything from house cleaning to health checks for staff locked to their desks. Home-grown suppliers are fighting back, however. Fraser Williams has made its property management software accessible online at propertydesktop.com, which is another kind of portal called an application service provider (ASP), and expected to be the next big step forward in online services.