Until recently the $6 billion global market for office space ($100m in Australia) has played the ‘poor cousin’ to residential real estate listings online. Australia’s Jagonal stepped in to make a change.
Officially launched in February this year, Jagonal is a powerful search engine that allows tenants and investors to find office space using 50+ search criteria such as parking, showers, bike racks, natural light and child care facilities.
Based in Sydney Australia, it can tailor searches as closely as ‘office for 20 people on George Street’, ‘small office for 5 people’ or ‘budget office for 15 people’, ‘office for 10 people near Wynyard station’.
“We started by cataloguing 4,000 buildings to really understand the features and make them searchable,” says COO and co founder Andrew Brown.
“In addition to this, we created a 3D model of the city that is used by tenant representatives to show tenants the “lay of the land”, where competitors’ offices are located and allowing tenant representatives to demonstrate their knowledge of the city.”
Jagonal started in beta 12 months before it launched, raising seed capital of $2.3 million through the input of friends and family who believed in the concept. It now commands 64 per cent of vacant office space in Australia.
“Forty two major landlords supply office vacancies to us through 44 commercial real estate agents,” Brown says.
The company has grown SEO 742 per cent year on year, has 17 paying clients the likes of Lend Lease, Investa and Charter Hall and 20 major tenant representative groups who submit 500 briefs a year through the platform.
The company is now seeking funding from private individuals and venture capital funds in a new round of Series A capital to accelerate expansion into Singapore and Asian markets.
Brown, with co founders Serge Kotlyarov and Max Sim have a background in the real estate portals having worked together at REA Group for several years in the CRM product side, technology and marketing respectively.
“While we were at REA we were all aware of the gaping disparity between the amount of resources the group ploughed into the residential and commercial sections of the business,” Brown explains.
“REA prioritized residential property advertising, because it brought in 93 per cent of revenue. As a result, the commercial property side lagged behind in terms of innovation.
“Commercial property portals were simply retrofitted versions of the residential sites. They did not supply the level of detail needed by prospective tenants and investors. At the same time the prevailing pay per ad pricing model locked smaller advertisers out of the market.”
Ripe for disruption
Brown says he and his co-founding partners listened to the criticism leveled at the commercial office sites by real estate agents, owners and tenants and were inspired to create something better..
“We understood that the industry was overdue for disruption,” he says.
Principally Jagonal generates revenue by charging property owners for listing their vacant offices on the portal.
“Under our disruptive pricing model advertisers are charged according to the size of the property in square meters and the length of the campaign in 30, 90 or 180 days,” Brown explains. “Additional revenue comes through banner advertising.
“We are bringing previously unadvertised office space to the market. Another exciting feature for owners and agents is that we offer unlimited subdivisions/splits of office space.
“This means, for example that a 1000 square metre (SQM) office space can be split into 2 x 500 SQM offices or 10 x 100 SQM offices at different rents, showcasing all the deals the owner is willing to consider.
Other revenue streams the business is working on include adapting the 3D city model for use in the hotel industry and as an asset management and financial analysis visualisation tool.
Lever in the war for talent
For tenants and investors Brown says Jagonal offers a more convenient, accurate and engaging search experience.
“We start with the facts; over 4,000 catalogued buildings with more than 50 searchable features including building grade, street location, office layout, parking bike racks, views and more - so that users can zoom in on the right office quickly.
“With a simulated 3D view from every window in the city and enhanced "Google Streetview style" virtual office tours, investors and tenants are armed with the information they need before arranging an inspection,” Brown says.
He says increasingly the business is seeing a growing trend of tenants asking for more from their office.
“The office has become a lever in winning the war for talent and tenants now want things like cutting-edge interior design, parking, bike racks, shower facilities, child care facilities, proximity to talent and sustainability,” he says.
“These are all elements that can help retain a talented and a stable workforce where employees are engaged.
“NABERS, the Australian environmental rating agency has begun rating indoor air quality and we can’t wait to have that as a search criterion on the site,” he adds.
Office space in demand
According to Brown, Jagonal’s short to mid-term plan is to extend the platforms lead from a user experience with a focus on, data and search engine technology in order to ride the trend of users demanding more from commercial real estate sites.
“Regionally, our longer-term strategy is to use Singapore as an entry point to the burgeoning Asia Pacific market – particularly Malaysia, Hong Kong, Indonesia, Philippines and Thailand.
“We also plan to expand our product offering to include industrial and retail property. As the recent $751 million REA Group purchase of iProperty shows, the region is growing - there are 300 million people on our doorstep and that’s a lot of businesses that need offices
“Some $73 billion of Chinese investment is expected to flow through our sector by 2019 and we want to be positioned as a one-stop-shop for comparison of commercial property deals in the region.”