Real estate professionals from across the globe descended on Amsterdam last week for the annual CoreNet Global Summit.
The Hotel Okura, with its marble façade overlooking the grey waters of the Amstelkanaal, was a fitting location this year’s conference, which explored the theme of building experience into real estate.
Delegates heard speakers from organisations including Microsoft, IBM and HB Reavis reveal the strategies they employ to create beautiful workspaces to inspire – and retain – staff. That and how they navigate the complex issue of gathering data on people’s interactions within their buildings and portfolios around the world.
When it comes to creating an experience, innovation is key, said keynote speaker Fons Trompenaars as he kicked off the two-day conference. The author and consultant, known for advising Fortune 500 chiefs on leadership skills and business issues, proclaimed that “to innovate is the art of combining opposites successfully”. But, he added, this is something easier said than done.
The trick is to learn from those who have already made significant in-roads in combining opposites in the quest for innovative workspace. Here are four key takeaways from the event.
1. Microsoft’s mega-office model
Imagine a workspace where coffee beans are roasted on-site, where an in-house bakery makes fresh bread with your company’s logo baked into golden loaves and where the floor looks like a waterfall. These are all a reality at Microsoft’s Dublin Office, One Microsoft.
The software giant has consolidated its four hubs in Dublin into one colossal purpose-built office. With more than 376,000 sq ft of office space, as well as over 15,600 sq ft of basement space over two levels, its new hub is vast, with the capacity to house a 2,200-strong workforce.
Some 18 months after the office opened in February last year, the organisation has already seen the business benefits from investing in the mega-hub, said Jeff Schumacher, senior real estate portfolio manager/area lead at Microsoft.
One key driver of productivity was increased collaboration. After consolidating 80 business divisions together under one roof, and with only one area designed for private meetings across the four floors of office space, the company has seen teams from all areas of the business coming together.
“You see people connecting,” said Schumacher. “And that is what it’s all about – it’s about creating a culture of one Microsoft. We used to be divided into silos; this building was for operations, this one was for engineering, and nobody cross-connected. Now we’re getting that cross-connection.”
The purpose-built mega-hub has been so successful that Microsoft is creating similar spaces around the world: one in Singapore that is earmarked to open soon, and two others that are currently being constructed in Israel and Ireland.
“A number of buildings are pivoting towards creating an experience for employees that is more than just an office – more than just a creative kind of space, and more than just floors in a building,” said Schumacher.
2. Watch and learn
If innovation is the combination of opposites, then Marie Puybaraud, head of global research at JLL, gave a masterclass on looking to unexpected places for inspiration.
You might not think that real estate has a lot to learn from the fashion industry, for example, but JLL looked outside the property sector in order to conduct research into establishing a new system of asset management metrics.
“There’s no doubt that CRE leaders actually need to learn from other industries,” she said. “That was the first step of this study. What are others doing when we talk about performance? What are they measuring, and how are they measuring performance?”
Puybaraud and her team discovered 450 new metrics that real estate “didn’t have any idea about”, narrowing these down to just 50 that JLL has put together to form a new metrics system.
Why is there a need to create such a radically new way to measure performance? As Puybaraud said, real estate has a lot of “bad apple” assets that it does not necessarily root out. To measure whether your buildings are bad apples or luscious green ones, the agent looked to create a fresh list of 20 to 50 top metrics that landlords can apply to their assets.
These are clustered under three key measurements: business excellence, human experience and future proofing. Landlords can pick and choose which metrics are most important to them and apply them to their portfolios.
“The idea is to get four, five or six metrics that demonstrate not that you are good at delivering an operational account, but that you excel in it,” she said. “That is where the metrics really matter.”
3. The privacy problem
A key message from almost all of the sessions was the crucial role that tech plays in creating great experiences. John Monaghan, technical solutions architect at Cisco, gave insight into what technology solutions major occupiers are looking for in order to create, and safeguard, worker and workplace interactions.
“Big corporations are looking at a number of key objectives and priorities,” he said. “Security, arguably, is number one. There’s never a day that goes by without something appearing in the media about some sort of security breach or problem.
“Other priorities we’re seeing is how we can help our customers optimise their real estate and the workplace experience [for example, meeting room allocation and desk usage]. And don’t forget about the savings we can make via energy optimisation, such as by switching on and off lights.”
Ultimately, the use of artificial intelligence in real estate is gearing up to the emergence of smart buildings, said Elo Ofodile, head of business development at VergeSense.
Huge amounts of data can be gathered about a building, and through the use of AI, this data can be handled by a computer system that can handle the facilities management of the building digitally. Eventually, buildings will be able to look after themselves and operate autonomously.
“The applications [of AI] are huge,” said Ofodile. “You can walk into a building, and the building knows you are there and it can adjust to you.”
But adopting this new technology must be handled with caution, Monaghan added, and companies need to ensure that all parties are made aware if any data concerning them is being collected. “You wouldn’t believe the amount of situations where end users have found out that there has been a new technology introduced that is potentially collecting personal data,” he said. “You have to be completely transparent, not just with the stakeholders but with end users as well.”
Ofodile says there’s an “ethical question” that needs to be asked about whether we are using this technology in the right way. “I don’t think legislation has caught up with the capability of technology,” he said. “It is incumbent on anyone using this data to use a moral and ethical lens to say what good can come of this and what bad can come of this, and vet your thinking with industry peers, leaders and your legal and HR departments.”
4. The future is flexible
From technology to enable autonomous buildings to innovative building metrics systems, there is no doubt that there is the technology and expertise out there to revolutionise the real estate industry.
John Williams, head of marketing at the Instant Group, said this signifies an “evolution” in property, especially in the office sector, where the industry is responding to service businesses such as WeWork which have disrupted the market.
Williams said WeWork is “fundamentally more akin” to Apple or Amazon, as it tries to “own the client and the services behind the client”. He estimated that by 2024 flexible office space could account for 30% of the market if current growth rates are anything to go by.
But where exactly is commercial real estate sitting? Is it ahead of or behind the curve when it comes to tech adoption? Williams said that when WeWork announced its IPO, it represented “a peak of inflated expectations” over the viability of the flexible workspace sector, which will go downhill from here onwards. However, he added that the flexible workspace revolution will eventually level out as the sector matures after the WeWork disruption.
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