Is the real estate industry really about real estate?

May 2015

Yes I know; you’ve heard it all before. The office is dead. Yawn. They’ve been saying that for twenty years but here we are in 2015 with office demand on a roll.

Well sorry, but Ernest Hemingway had it right. “How did you go bankrupt?” Two ways. Gradually, then suddenly” he wrote in The Sun Also Rises. And the office market will be hit in just the same way.

Over the next 5-10 years perhaps 40-60% of companies will find they no longer have a need for offices as we use them now.

We tend to think of big companies when we think of offices but the reality is, most businesses are small. The City of London issued a report at MIPIM showing that 98.6% are SME’s, and 80% have fewer than 10 employees. There are just 205 firms in the City with 250 or more employees. 72% of occupied units are less than 10,000 sq ft.

Now factor in the rise of ‘contingent’ workers (part time, contractors, self employed) whom in the US are expected to be 40% of the workforce by 2020.

Now add technological change to the mix and bang, it hits you like a brick; what is the point of a conventional office for this type of worker?

They don’t need an office to access their computer. Their works files are no longer in the office. They likely don’t have a boss who cannot function unless they are in line of sight. They don’t have big company bureaucratic meetings. And most of the people they work with are ‘somewhere else’.

So why on earth do they need the cost of an office and the daily inconvenience of getting there?

The answer lies in what it is that we humans can bring to the party, when the party has been automated and robots are everywhere.

Make no mistake, everything that can be automated will be. If you can codify it, you can automate it. And will.

Which brings me to The Imaginarium, which is what will replace the office for many. This will be a place, a space, that allows, forces even, humans to do what computers can’t. And that is: to define, design and refine the world around us. To imagine, inspire, empathise, innovate, be ingenious and creative.

The real estate industry is moving beyond real estate. We do need to congregate, we don’t need offices. It’s ONLY as an Imaginarium that the office retains value. That providing the toolset, physical and virtual, to enable people to unlock their creativity is their purpose.

People can and will work anywhere. And for much of the time they can, in fact need to, do this alone, in peace, and at maximum concentration. But creativity, without which your future is bleak, requires regular doses of collaboration with other creative people, in spaces that inspire.

We all need inspiration. We no longer need an office. The real estate industry needs a new product.

Antony

This first appeared in Estates Gazette on the 9th May 2015

When physical real estate isn't enough

Anyone involved in real estate should take note of the Amazon Dash Button. This little physical object, not much bigger than a USB memory stick, is a harbinger of huge change, and a stroke of genius.

Place it. Press it. Get it. That’s the line from Amazon. Stick a Tide dash button to your washing machine at home and when you’re running low just press it and bingo, a replacement will be on the way. Exclusive to Prime members it brings the ease of one click ordering to the real world. Bounty, Olay, Huggies, Gillette – think of a brand that you buy regularly and then think how easy this makes replenishing your stocks.

Then take it a step further, as they say they are. How about a washing machine with this functionality built in? Or a coffee machine that prompts restocking as the beans run low?

And then go one more step. What if this little button becomes even smaller and just ends up as a sticker, and the one press ordering option becomes a standard feature of any ‘consumer packaged good’? Then, instead of visiting the supermarket you simply tap on your product of choice to re-order. How about that for friction free capitalism?

And that is the point. The Amazon Dash button is an indicator of what becomes possible when you add a digital layer to the physical world. It shows how the physical world can be aligned with our digital lives. How making the physical world ‘smart’ can improve our lives.

In the real estate world we try and build physical spaces that transform the emotions of the people who use them. We aim to create environments that people enjoy being in, that make them happier, or more productive, or more relaxed, or more excited. Or any combination of emotions. But to date, these environments are dumb. They are simply what they are, lumps of concrete, or stone, or steel or glass. What we need is for these spaces to become smart, to offer up information on ‘the space around us’.

As the washing machine with a dash button prompts you for a refill, so in the workplace the same intelligence could apply. The meeting room should know it is not booked, the reception barrier should know you are allowed through, the air conditioning unit should tell you it’ll break down in five days and the lobby should tell you (as you like classical music) that there is a recital starting at 1 O’clock.

And then in retail a whole host of technologies are coming available that make the experience of shopping so much more pleasurable, entertaining, informative and rewarding. For it is becoming ever more true that in the same way we don’t need an office to do our work, we don’t need a physical shop to do our shopping. Only if the employer, or the retailer, can add another dimension, and provide something only available in the office or in-store will we bother to go there.

So whilst the retail industry believes it has found a saviour in ‘click and collect’ (especially in the UK but increasingly in the US) and one often hears talk of ‘I told you so – you need shops’, dash button type technology argues against complacency. Whilst variants could help make in-store shopping more enticing, this technology could enable people to luxuriate in the convenience of not having to schlep to the store.

When my home becomes smart enough to give me whatever I want pretty much on demand, why should I visit a store? The answer of course, is that a great store, with great merchandise and a rich digital layer, is the ultimate shopping experience. And a great office, full of bright, engaging and engaged people, is the ultimate work environment.

But the bar is getting ever higher. As life becomes more digitised, unless your space is great, it simply won’t be required. Physical real estate, without a digital layer, is dumb; and dumb isn’t enough anymore.

To the digital, the spoils.

Antony

How technology will impact property developers

April 2015

In his ‘Conference of Undertakers’ blog post, British Land CEO Chris Grigg asks three questions regarding technology. Here’s how I would answer.

First, how it is changing the behaviour of our customers? 
Technology will impact the behaviour of customers in the same way that Ernest Hemingway described how one goes bankrupt ‘Two ways. Gradually, then suddenly.’ Where now one can see outliers, who work wherever they wish, in and out of the office, with all their data in the cloud, via mobile devices plugged in to online applications with little stored locally, within a few years this will be the norm. They may still be in the office, but they won’t spend much time fixed in front of a desktop monitor. More likely, and give this a few more years, they will only be in the office when they need specialist tools and/or environments to collaborate face to face with colleagues.

Structurally companies are likely to become more and more Shamrock like, in Charles Handy’s parlance, where a small core of full-time in-house staff coordinate activities with outsourced partners or autonomous subsidiaries and ever more on-demand contractors. Technology will enable this trend to spread ever faster, and repurposed central offices will act as the community glue not the day to day workplace.

Second, how can/will it change the way we interact with our customers?
The process of morphing, from quarterly senders of rent demands to corporate infrastructure partners, will speed up. A sense of place will develop to incorporate ‘the digital layer’ where through sensors, contextual data and ultrafast broadband the online and offline worlds will meld to provide a richer, more engaging built environment. Relationships with customers will become real-time, open and more trust based, and in doing so will open the doors to a level of service that is but a pipe dream today.

Thirdly, how will it change the way we develop and operate our buildings?
In a word, profoundly. The best developers will not be selling physical assets, they will be selling ‘Offices as a Service’. Their buildings will offer services that people need, emotional, physical and digital, and they will be selling them on demand, and in a fluid manner. The new breed of lightweight companies will have requirements that ebb and flow dramatically. Buildings will operate in a way that accommodates this. 20% of the market may remain as long term fixed occupiers, the balance will flex.

The success of WeWork has been striking. Is this the new form offices will take? We’ll see how things pan out over a full property cycle but regardless, their understanding that they are selling community as much as office space is prescient. When you do not need an office to actually get work done (and few do) what point do they serve? The answer, and what defines the fundamental impact of technology on developers, is that it is not in providing a desk to sit at.

Antony

PS. First published in Estates Gazette 4th April

Essential tech for real estate: Apple Watch

April 2015

For property people, wearables, or computing devices that one ‘wears’ on one’s body via smart clothing or eyewear or jewellery, should be of great interest. For it is through interaction with the built environment that these things will find their killer application.

Today these devices, which the Apple Watch will explode interest in come its launch on April 24th, are mainly of use for those looking to track their exercise routines or for easy access to email or social media notifications. On a day to day basis they are not of great utility.

At the Apple Watch launch though we saw a couple of prototype applications which show where all this stuff is going. First off was an example of remotely opening a garage door to allow a delivery in. Fun but just as easy using your phone. The W Hotels app however nails the value. With this you would be recognised immediately upon entering your hotel, shown your room number and then, through your watch, be able to access your room. Now that removes a number of pain points we all recognise.

And it is in this interaction with ‘the space around us’ that wearables will flourish. Where now we need keys, or codes, or have to fill out paperwork these devices will simply deal with it.

The Apple Watch needs the Internet of Things. CISCO reckon 50 billion sensors will be installed by 2020. When cities are made smart it’ll be wearables that help unlock ‘the digital layer’. The Apple Watch will be huge; just not yet.

Antony

PS. First published in Estates Gazette 4th April 2015

Essential tech for real estate: Brain food

March 2015

I am firmly in the camp that agrees with the Oxford Martin study ‘How susceptible are jobs to computerisation?’ that 47% of jobs are at risk. Given the clear pattern in technological development this seems inevitable. As discussed opposite the world is changing fast and with consequences. What we do, and how we do it will naturally morph as we allow computers to do what they are good at, and focus on how us humans can flourish in partnership with the machines. And we will on two conditions: first, we must be cognisant of technological developments and secondly we must be permanently learning. Well fed brains are needed to create the jobs that will be destroyed.

And it is technology that can facilitate this feeding. Concurrent with the rise of smartphones and broadband has been the uptake of Podcasts and MOOCs (Massive Open Online Courses). At no cost you can study at many of the Worlds greatest universities. Google Coursera or Udacity to be amazed at what is available.

Similarly Podcasts are brilliant for learning. I am an addict of EconTalk by Russ Roberts of Stanford and Exponent with Ben Thompson and James Allworth. One provides in depth conversations with brilliant economic and business minds and the other exceptional insights into the role of technology in society at large.

The negative attitude towards these types of tools is that they are no substitute for face to face learning. But the reality, and the positive appreciation, is that they enable many more people to be much better educated than ever before. And that will be our saviour.

Antony

This first appeared in Estates Gazette on the the 21st February