Moving from asset-first to customer-first: NSI's post-COVID blueprint

Bernd Stahli

Bernd Stahli works as CEO of NSI, and he has been leading the company since 2016. Prior to that, he worked as a Managing Director, Head of European Real Estate at Kempen & Co Securities as of 2016 and, before that, as Head of European Real Estate Research at Merrill Lynch London for seven years.

The outbreak of COVID-19 over the past year sent shockwaves through Europe and will likely continue to have a considerable impact on the economy in this new year. Many organisations have been forced to adjust their strategies and products to meet changing demands in order to weather the economic storm and, in some cases, simply so they can stay afloat.
One sector that has felt the force of the current crisis is the office sector. Lockdowns across Europe in the Spring saw a sudden shift to remote working and, even today with restrictions eased, many remain at home questioning when they will go back to their office or if they ever will.
Bernd Stahli, CEO of NSI NV, was sat speaking from his office in Amsterdam and remained optimistic about the prospects of the sector. With the Autumn holidays in full swing and four children back home, he admitted, “My kids aren’t as enthusiastic about me running NSI as I am,” with a wry smile.
This will strike a chord with working parents everywhere and is a stark reminder that there most certainly is a place for the office for most people, at least from time to time. It remains a space for productivity and collaboration, and sometimes focus, which cannot simply be replicated at home.
Stahli does not shy away from the reality that offices have been hit hard. “Of course it’s been an incredibly tough few months,” he says. However, he is equally quick to point out that “as long as you have the right office in the right place, the demand will still be there”.
And when we consider the continued urbanisation that was taking place before the COVID-19 outbreak, this assessment that the right office will still be in demand does not feel too far off the mark. The next six months will not likely see the return to offices en masse, but, come the Spring, will five days working from home still have the same appeal?
“No,” is Stahli’s emphatic answer.
Instead, the balance between home and office working will centre around providing the right product in the right place, and this is very much the driving force behind NSI’s business strategy. But what is the right product?
Stahli provides a simple answer in his native Dutch: “ontzorgen”. It means ‘unburden’, and is an articulation of the reality that, for most, real estate is a means within which to do business. It is a hassle, and the best real estate businesses find ways to efficiently accommodate doing business in the least onerous way possible.
At NSI, this means shorter leases, catering for remote and office working and an increase in services such as tailored, flexible working spaces and serviced meeting rooms. “Businesses are not static most of the time,” says Stahli. “They are usually either shrinking or growing, so locking a business into a long deal for a fixed space makes no sense. It isn’t a good service.”
And the current crisis appears only to have increased the appeal of this sort of offer, but it would be a mistake to think that the industry has not been working on this approach long before COVID-19. Many office providers have been developing flexible offerings within their business model over the last few years. In the case of NSI, its flexible full-service offer, HNK, is more than eight years old and remains a fantastic platform for testing new concepts and designs to improve the customer experience. It is a sort of R&D department that aims to push the boundaries of existing assets and alter the development of new ones.
And this is good news, according to Stahli, as he explains that it is likely that we will now see greater pressure to adapt existing assets within office portfolios to ensure they can best cater to the needs of the occupants.
Glass House, Amsterdam
Regaining focus
Adapting existing assets to account for changing tenant requirements will present a challenge for the business, but Stahli is no stranger to change. Back when he joined NSI in 2016, the company had office, retail and residential assets in its portfolio, and it had 82 employees. Within a year and a half, Stahli had nearly halved the team and NSI had set out in a new direction to become the leading Dutch office player. So, what happened?
Stahli explains that when he arrived at NSI, he “came into a company that was top-down. Every decision was going through the CEO and CFO”.
At the same time,he found an organisation that wasn’t united by a single purpose. The portfolio was vast, yes. “But what made it unique? What was going to make people think of NSI first?” Stahli asked.
The answer was simple: the company needed focus. Focus both in its portfolio and its purpose as well as its staff.
In terms of the portfolio, “we decided to concentrate on one sector,” Stahli jokes. “The world doesn’t need another Dutch retail company.” So, the decision was made to focus on offices.
Though there is some truth in Stahli’s point; there is indeed a saturation of retail developers in the Netherlands. He goes on to explain it was a slightly more nuanced decision: “Our retail portfolio was complicated. We were operating in the high street, shopping centres, furniture malls, the lot.”
The issue was that the variety of NSI’s retail portfolio meant if it were to focus on one, it would still involve selling the majority of its portfolio, “so why not sell the lot,” says Stahli.
The other contributing factor was talent. “The expertise within the company was overwhelmingly in the office sector,” says Stahli. “We needed to ensure we utilised the brilliant resource that already existed in the company.”
In terms of his staff, Stahli’s goal has been to empower employees, ultimately allowing people the chance to make and take decisions, to grow and to make mistakes. “As CEO,” he says, “I cannot be in control of everything. Trying to would be a mistake.”
There are obvious practical business benefits to this philosophy. Through empowering employees to take greater responsibility, Stahli believes they are much better placed to make quick decisions. This is something that particularly important, Stahli stresses: “The real estate industry is constantly changing, it’s not about slow processes anymore, but quick and agile decision making.”
New wooden office building
A future driven by ESG and innovation
If Stahli knows that quick and agile decision making is important to the industry now, he is certain that the long-term future of real estate and of offices is anchored in Environmental, Social and Corporate Governance (ESG). As with all things at the moment, ESG efforts have been spurred on by the COVID-19 crisis in ways that could not have been foreseen, and it causes him to continue his learning curve every day.
“Every day I am asked about ventilation,” he says. “Twelve months ago, nobody asked about ventilation, and now it is the first thing I get asked about whenever we meet a new or existing customer.”
Ventilation is just one of the many ESG considerations for office developers, which Stahli feels is simply a hygiene factor for businesses. Everyone should be doing it and making sure it is done well. Back in 2017, NSI began working with GRESB, the ESG benchmark for real assets. An initial survey of the business scored 49 out of 100 in 2018.
Since 2017, NSI has been working tirelessly to improve in this area, and its dedication is clearly paying dividends, nearly doubling its 2018 result with this a score of 88 in 2020 as well as moving from two stars to five in the space of a year. This is in addition to being awarded the EPRA Sustainability Best Practice Recommendations (sBPR) Most Improved Award in 2019, marking a quite incredible performance in this area over the last 12 months. Behind this improvement sits NSI’s three sustainability priorities: Future Proof Buildings, Energy & Carbon and Health & Wellbeing.
And it is these priorities that are influencing how NSI now looks at future assets, with an assets ability to be developed and maintained sustainably being a primary concern.
Stahli does not shy away from the fact that it is not a cheap approach, but points out that “requirements will continue to change and of course anticipation is costly, but it will save you in the long term”.
One development that feels like the embodiment of this anticipation is its new wooden office in Amsterdam, with a possible start date not earlier than H1 2022, followed by a built period of circa two years. Covering 22,000 m2 and sitting at 86 m tall, it will be one of the tallest wooden offices in the world.
The office itself will be sustainably built using reusable materials, whilst considerable attention is being paid to factors such as the indoor climate as well as outdoor and open spaces to benefit the health and wellbeing of its occupants.
But this building is about so much more than just its environmental impact; it’s a real piece of innovation. “We created an opportunity where no one else saw one,” Stahli declares.
And he is right. The building is a truly flexible asset, designed as a state-of-the-art sustainable office with the ability to be transformed into something completely different. “Requirements are always changing. Today it is an office, but in a few years’ time, it may need to be residential. We are trying to introduce the necessary flexibility upfront,” Stahli continued.
This development will undoubtedly be a landmark achievement for NSI, though Stahli is not getting ahead of himself. “It’s too early to be proud. When I see it standing, then there will be a reason to celebrate,” Stahli says.
Although Stahli is keen not to pop the champagne too soon, the importance he is placing on sustainability should be celebrated. He clearly understands that the importance of ESG for businesses is going in one direction, and they have a responsibility to meet this demand.
Whether it is improving the flexibility of their offer, increasing the number of services they provide or ensuring their buildings have a minimal environmental impact while improving occupants’ wellbeing, NSI’s approach is the same: the customer comes first. At a time when many people are feeling burdened by the pressures of this crisis, Stahli’s push for ontzorgen seems a welcome tonic.
Q-Port, Amsterdam