Our Regional Head of APAC, Jon Lesquereux provides his thoughts on the role of technology in post-pandemic real estate.
Consuming daily prop tech circulars and updates is relatively new for me. It's a fascinating area which links urban development, productivity, experience and psychology. But a lot of the commentary seems to assume that we're already benefiting from digitally enhanced, living real estate. Of course, the reality is different to this futuristic view — although tech adoption is all the rage in real estate, it's also notoriously slow to play out.
Digital solutions after COVID
It's sometimes questionable whether more knowledge is helping. We have more information at our disposal than ever before, but the US election is a stark reminder that the lines between what is real and what is not have become increasingly blurred. It seems that rather than delivering a clear picture of where the future may lie, this abundance of information has simply increased the prevalence of the counterpoint — introducing uncertainty over clarity. Within real estate, we can see this in many of the discussions around COVID-19 and returning to the office. On the one hand, commercial property has changed forever and a work-from-home, or hub-and-spoke model will prevail, while on the other hand, things will pretty much return to how they were pre-pandemic. The answer, of course, lies somewhere in the middle, but that middle is large and could accommodate any number of different outcomes.
The speed at which the property sector adopts new technology is accelerating but it remains slow compared to other industries. A good example would be the convenient proposition of using mobile phones to access buildings. Despite this being something of a focus for several years, it remains in its infancy. Don't get me wrong, this isn't straightforward, but it also isn't putting man into space.
Given the uncertainty of how the commercial sector will pan out, you could be forgiven for thinking that a conservative adoption of technology is not a bad thing, except this argument is trumped by the fact that end users — corporate tenants and individual occupiers of space — work on a faster cadence and are demanding vibrant, productive, interesting, flexible, digitally-enabled spaces now. They are expecting to live in a world of user-responsive services and are impatiently waiting for real estate to arrive. As we all know, these trends have been significantly accelerated by COVID-19.
Interestingly, the barriers to entry and risks associated with digitally-supported solutions are relatively low and it's a fairly certain bet that whatever trends prevail, technology will play a much bigger role going forward.
It seems like a no-brainer - so why do the wheels of technology often turn so slowly in real estate?
It's fair to say that most owners and tech providers would ask the same question. And the answers are complex. Among them is the "language barrier" that still exists between the tech and property industries, the use of traditional real estate methodologies to assess the viability of tech projects, the complexity of decision making and the speed at which new solutions are emerging.
Property technology businesses like Equiem are breaking new ground and it's great to see many of our clients trialling new technologies and accelerating their thinking around the utilisation of tech to support greater flexibility, safety, sustainability, efficiency, service, experience and data collection. For many in the industry however, a decision still needs to be made as to whether they empower the corporate world by granting long term triple net leases and stepping away, or confront the structural changes happening head-on, reassess their views on risk and reward, and invest more heavily in digital solutions to support the changing workplace.
Building occupants and their tenant companies will ultimately drive performance in this area, but the best investment returns will be secured by those owners who are early adopters and take their customers on a journey to give them a glimpse of what that world of responsive technology could do for them.