Jonathan Avery, head of platform technology and change – real assets, Legal & General Investment Management
While the world was embracing the technological revolution in the early 21st century, it was passing the real estate industry by. Today, consumers are accustomed to easy-to-use software with straightforward navigation, the immediacy of the internet and the simple interface that we see with the likes of Google Search.
In the past decade, we have seen a seismic shift. The real estate sector has come to realise that its archaic systems are no longer sufficient and fail to meet the needs of the modern user. In order to provide improved streamlined services, operational efficiency, insights and reporting to our clients, occupiers and employees, we need to do more than catch up; we need to innovate.
Challenge assumptions
So now, like many in the sector, Legal & General is on a journey to educate, challenge assumptions, trial technologies and accumulate feedback while maintaining the essential flexibility to pivot when change is needed. As emerging technology companies have focused on real estate products and services, traditional real estate firms have had to readdress their business models and respond to changes in the sector.
Collaboration and flexibility are essential. Without them, success will be restricted. To achieve our goals we should not be looking to reinvent, but to implement smart innovation that can optimise existing resources. We have a lot to learn from the innovation that comes from tech start-ups, but there is no one-size-fits-all solution for real estate.
To stay ahead of the game in this continually evolving environment, tech projects must be aligned with the business strategy. We cannot risk adopting tech because it looks “cool”; it has to provide a solution to a proven business need.
A good example of this is WiredScore’s Wired Certification. At Legal & General we are working with WiredScore across much of our office space portfolio. Connectivity continues to be one of the most important factors for tenants searching for new office space. WiredScore provides a standard rating for the infrastructure, connectivity and technological capacity of commercial buildings that allows us to promote and improve our buildings’ digital infrastructure.
To move forward as an industry, the balance between innovation and “getting the basics right” needs to be equal. There is a need for order within the vast swathes of data that already exist (and continue to be captured every day). We have to standardise our historic data and use this as a platform to develop and modernise, making it work for a future that depends on smart, qualitative insights. Helping with this collection and curation of our data is a team of data analysts who digest, analyse and overlay our Big Data in a smarter way.
In truth, the solution often comes from implementation of a more centralised approach to the collection and analysis of data. Across our retail portfolio we are working with a number of partners to collate data from information points within shopping centres that had previously collected independently (this includes information such as car parking, footfall, sales, event activity and weather). We can provide our occupiers with comparative metrics that can help establish what drives sales, helping them build and shape events and promotions at the most profitable times.
Environmental factors
As responsible investors, we require more granular information on environmental and social factors, alongside quantitative data with which we can demonstrate the broader societal benefits an asset creates when it is built and throughout its lifetime. The collection of data, with the support of the Social Value Portal, during construction, development and upon completion is essential in measuring the social value the asset generates. This will help us put a monetary “value” on the social benefit; a concept that will allow us to measure the life cycle of an asset, improve targets and maximise the benefit.
Increasing our data management capabilities will allow us to:
- enhance customer service to the end-users of real estate;
- make better strategic decisions; and
- form an analysis on previously unforeseen insights.
As leaders in the sector, it is our obligation to make the best use of technology. Embracing this disruption is a strategic priority. Through investment in and collaboration with technology companies, we can access innovative solutions that are right for us, rather than trying to develop these internally or fit square pegs into round holes. When considering the long life cycle of a real estate asset and the continuous development of technology, what is relevant today will not be so in perpetuity, so adaptability and flexibility during the asset life is key.
The winners will be those who adapt and maintain a focus on the primary driver for embracing innovation – an improved experience for our stakeholders.
