Dean Mozrall for RBJ: Live-Work-Eat-Play Realty Emerging as Reality

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Dean Mozrall's Advancing Business column, as seen in the Rochester Business Journal on September 9, 2021

Live-work-eat-play realty emerging as reality

We used to associate luxury and relaxation with getting away. We traveled to far-off destinations to indulge in the comforts of top hotels, resorts and spas. Comforts that were confined to hospitality and tourism packages offered by tour agents.

Today, we have come to expect such comforts closer to home and in the office.

This movement has been evolving for more than a decade and the pandemic has only accelerated it. Maybe best defined by the term Resitality® (a potential Sniglet, made popular by the 1980’s comedian Rich Hall), trademarked by Waterton Property Management and defined as “a management culture that represents the convergence of the multifamily and hospitality sectors.”

Some of us may recall over 25 years ago, hotel chains started to rely more heavily on amenities for a competitive edge. This initially started with higher quality bedding and then quickly turned into a race to provide the best showers, bathrooms, televisions and more. It has since grown to include items outside the room itself. Hotels now provide better pools, gyms, spas and complementary breakfasts.

The movement evolved as the cost of housing increased. About 15 years ago, amenities became a key feature of the multi-family residential market, where currently over 50 percent of renters live in multi-unit housing. With a red-hot market, residents became more demanding and landlords scrambled to provide more amenities to compete for occupancy rates, therefore advancing the Resitality movement.

More recently, the movement has progressed to include office and industrial property assets. In some cases, companies are building their entire brand around blended hospitality. Capital One’s “Redefining Banking” campaign is a perfect example. Out with the old stuffy bank and in with the new bank featuring comfortable lounges with Wi-Fi and charging stations. They’ve also introduced the Capital One Café, merging two industries to help capture, educate and introduce their services to a “younger, tech-savvy and sophisticated consumer.”

Offices now need to help businesses attract and retain its employees. Flexible work arrangements are here to stay, however, according to JLL’s Worker Preference Barometer, many are experiencing “homeworking fatigue.” In June, it cited “69% of people highly satisfied with their office environment strongly miss their office, whereas it is only 5% among those who are not fully satisfied with their usual office environment.” No longer is the focus on employers paying the best price per square foot, but rather, providing the best environment to serve employees.

“In fact, post-pandemic planning is reversing a decade old trend in workplace density,” says Mark Zettl, president of Property Management at JLL. Citing JLL’s annual Occupancy Benchmarking Report, Zettl shares, “average rentable square foot per employee in North America fell 14.3%, from 228.2 to 195.6.” Before, space efficiency was key as properties sought to get the most use out of every square foot. Now, “the next ‘new normal’ will include less dense offices, and living spaces to allow for more social distancing to meet new protocols and safety concerns of tenants.”

There is also a movement to less dense zip codes. The pandemic may allow some to permanently move to rural areas, but others will continue to seek better work-life balance in cities by spending time in functional live-work-eat-play spaces, where fitness, dining facilities, work spaces and other amenities are on-site.

The property management industry is now all in, with industry projections predicting big growth. This movement is converting our homes and offices into our go-to destinations more than ever before. Multi-family, office and industrial asset classes continue to develop. Fortune Business Insights projects the global property management market to grow “9.3% each year from $15.10 billion in 2021 to $28.21 billion in 2028.”

This is creating an emerging need for a new generation of property managers. ManageCasa.com reports that “property ownership and management business models are growing in complexity as are the types of worker roles needed.”

Engineering and construction management skills are still important, but property managers now need more experience and training in hospitality services and management. Financial management skills are also becoming more important as real estate concerns grow and become more reliant on complex investment vehicles such as pension funds. And, as the industry incorporates new services and introduces new technologies to create smarter buildings and safer experiences, a familiarity with these tools is vital.

As this movement continues, properties are now looking for ways to integrate new technologies such as augmented reality (AR) and virtual reality (VR). How will these assets enhance property value and services? Many AR/VR services are already in use in the high-end real estate market to help buyers visit properties remotely and visualize remodels, new furniture or even different wall colors.

Many of us were introduced to augmented reality via Pokémon. Now, as friends display virtual graffiti digitally on walls around us, property managers may find ways to use this technology to sell advertising space or provide enhanced services.

As this movement continues, properties are now looking for ways to integrate new technologies such as augmented reality (AR) and virtual reality (VR). Many of us were introduced to AR via Pokémon. Now, as friends display virtual graffiti digitally on walls around us, property managers may find ways to use this technology to sell advertising space, provide enhanced services or simply protect their virtual assets. But how will these assets enhance property value and services?

As property managers continue to pursue these enhancements, we will see our beloved vacation accommodations become our everyday realty reality.

Jacqueline Mozrall is dean of Saunders College of Business at Rochester Institute of Technology.