by Sonny Masero, Chairman, Demand Logic
At the JLL HQ in Warwick St this evening, ULI hosted a panel discussion on Asset Optimisation. The focus was on how technology is changing the game for corporate real estate. Standard Chartered Bank, EY, The Collective and JLL formed the panel. The discussion ranged from optimising global property portfolios down to operating the building services efficiently. There were some unifying themes: the importance of data; people and how to engage them in property decisions; and WeWork. WeWork as an example of how to run assets so that they create value in a new way.
It was clear from the technology examples that the future for Asset Management is different. That we don't have all the answers yet, but the way we manage assets today is fast becoming defunct. Everyone is looking for new models.
The parting shot from Alex Edds at JLL was for the technology providers to look beyond the traditional business case. To not dwell on the easily measurable benefits like metered energy, but make the case for the more valuable benefits to the people who use the properties. Their comfort, their well-being, their productivity in creating business value.
Breaking out of a traditional budget discussion is not easy. Energy can be metered and easily converted to pounds. There is an energy budget and it needs reducing. The budget cycle is clear, as is the process for sign off. If you can save energy with a good ROI it should be an easy sell. Albeit a highly competitive and low-value sell focused on the bottom line.
The impact on people is different. Whilst it is subjective and dispersed, it can mean top-line growth. However, there is often little operational connection between the HR/talent management team and the FM/corporate real estate team, beyond space planning. Staff might complain about their office and those calls should be logged by the FM team, but it's rare for that data to be used to measure the impact on staff well-being and particularly productivity. Even though temperature, humidity, air quality, noise and lighting can all get us down and disrupt our work.
So where should a technology company look for how to break this mould? Apple is the obvious example of successful high-value selling in a crowded market - an enviable consumer brand. WeWork follows in this vein as they've created a consumer brand for property. A brand underpinned by a service which works. Not a "serviced office" brand, but a brand which crushes competitors like Regus, and also major REITs, in terms of value creation. It may be a bubble which pops, but in the mean time it is not a simple business case argument for taking space in WeWork. There is something more to this decision, an inherent desirability - staff want to work in a WeWork. WeWork is a brand, like the world's best, which people talk about even when they are not in the room. In fact they talk passionately about when they're not in the room, even if it just about the free beer.
Innovation which has this buzz will change the market. Is changing the market. WeWork is not the only example. Do keep your eyes peeled because some of this innovation isn't even in the real estate market yet.
