I first started talking and writing about #SpaceAsAService several years ago: Duke Long and I have ‘debates’ about who got there first! Either way it is gratifying that today the phrase is commonplace and barely a day goes past where it doesn’t crop up somewhere or other.
What isn’t commonly understood is that this is the single biggest flashing red sign that #PropTech is at a watershed moment. #SpaceAsAService is only an everyday term because technology, in the widest sense, is fundamentally transforming the real estate industry. As Sundar Pichai, CEO of Google said recently, we are now in an ‘AI First’ world.
And this matters hugely to everyone in Real Estate.
In our industry what really matters, above all else, is what our customers want and need to do within the spaces and places we create. Everyone has a ‘job to be done’ and it is that that AI and other technologies is fundamentally changing. The bottom line is that anything ‘Structured, Repeatable or Predictable’ will be automated. Not might be, will be. The incentive to do so is too great to be ignored: regardless of whether that suits us as individuals.
In early 2017 McKinsey wrote: “Overall, we estimate that 49 percent of the activities that people are paid to do in the global economy have the potential to be automated by adapting currently demonstrated technology.” And in July 17, in a report, published by the RICS no less, it was stated “Surveying appears to be an industry in which 88% of the core tasks are ripe for automation to a greater or lesser degree.” In this world the purpose, function and form of the spaces we create, as an industry, has to change. And that is why PropTech and #SpaceAsAService is at a watershed moment: the days of digitising the past are over. Either the industry embraces the ethos of #SpaceAsAService and leverages an emerging breed of #PropTech to catalyse this change, or we’ll all suffer the waves of destruction that follow losing ‘Product/Market’ fit.
#SpaceAsAService is a deceptive phrase; it is often used simply as a proxy for space that is available on demand, but it embraces far more than that. It is a actually a philosophy of space, a foundational way of thinking about the spaces and places we create, manage and occupy. It represents an attitude of mind, towards colleagues, clients and suppliers and between ‘landlord and tenant’. It is about thinking about Service not Product, long not short term. About networks, ecosystems and lifetime relationships with customers. In many ways it is the antithesis of the traditional real estate mindset.
Ant therein lies the problem, for the industry. To become a true #SpaceAsAService operator incumbents need to be transformed; organisationally, culturally and financially. A #SpaceAsAService real estate company needs to think like Apple does, who despite only having a 17% share of the smartphone market make 85% of all the profits. Why? Because they have embraced Steve Jobs’ mantra of marrying technology with the liberal arts, of controlling both hardware and software, and thus being able to create a uniquely desirable user experience, which their customers are prepared to pay uniquely high margins to acquire.
As with the iPhone I do not think #SpaceAsAService will be for everyone. Make no mistake about it, the iPhone is designed, branded and managed for a specific target audience. It is globally the smartphone for the upper end of the market, and everything Apple do is predicated on that market positioning. Within real estate I believe #SpaceAsAService will not be as ‘tribal’ as Apple is, but it will be for the most creative, innovative, progressive and knowledge based companies.
It will be for companies that invest in their ‘people’, respect their skills and want to provide them with ‘Space’ that serves them up what they need, when and where they need it. Space that understands who they are, what they need and desire, and how to help them become as productive as they possibly can be. It will be for companies that are prepared to invest to make this possible, but who also understand that, like software, a workplace is always but a work in progress. It will be for landlords that can breach the tenant demise and instead of simply providing a functional shell for their occupiers to occupy as they wish, partner with them to provide a range of very domain specific skills that enable them together to create exceptional workplaces.
Space needs to become #AsAService because in a world where the ‘structured, repeatable and predictable’ is taken care of by technology, creating a flexible, agile, activity based workplace is significantly more complicated than it used to be. The largest occupiers may have all the skills and resources to create these spaces but most companies do not, and cannot be expected to acquire them.
These companies are not after an office, they are after a productive workforce, and a true #SpaceAsAService operator (be it Landlord, 3rd party or partner) could be their route to achieving just that.