Property managers are the last to be credited and first to be vilified players in the real estate industry. No-one notices them when properties run smoothly, but come any sort of problem they are the first to be blamed. Whenever a budget needs tightening, they are at the front of the queue. They are the poor cousin to the dashing developer/owner.
These positions in the pecking order of real estate are about to be reversed. Why? Because the real estate industry is no longer about real estate. A few years ago this notion was easy to scoff at, and many did, but today the reality is sinking in. Business for asset owners is set to become as predictable as a Deliveroo rider’s income.
The purpose, the point, the utility of real estate is changing, and changing fast. Shops, shopping centres and offices are no longer really needed, at least not for the purposes that have been understood for the past 30-plus years.
Amazon is now the 4th largest retailer of clothing in the US (remember all those property people saying you need to touch clothes before buying them?), and the smart physical retailers are speedily turning their stores into experiences.
At the bottom end, shops are serving much the same function as before (too cheap to ship) and at the top end the Apples of this world are configuring their spaces as brand-building lust factories. The middle, though, is being hollowed out, desperately hoping click and collect is enticing enough to get people into their stores but not distinct, or profitable, enough, to find their life anything but tough.
The crashing footfall of this year’s Boxing Day sales is a precursor of where this market is going.
In the office market, an amalgam of forces is influencing the demand side. The rise of the gig economy, both full-on freelancers or the ever-increasing hordes of contract workers working for one or more employers on a daily, weekly or monthly basis, is reducing the need for permanent desks. Companies are moving to one or the other end of the barbell, either huge and mightily powerful (such as Facebook and Google swallowing 85% of online advertising last year) or small, nimble, and highly skilled.
Small- and middle-sized enterprises, employing 50-250 staff, is dying. Only 205 companies employ more than 250 people in the City of London ; 80% of all companies there employ fewer than 10 people.
The reason for all of this is technology. While most people concentrate on new ways of working, the real action is in the changing nature of the work we do. Simply put, technology is moving further and further up the ladder of competencies and, as McKinsey reported this month, “49% of work activities could be automated using already demonstrated technology”.
And this attack force is gaining power faster than ever, with advances last year in machine learning, computer vision and natural language processing that surprised, if not shocked, many in those industries. Google “generative adversarial networks” for a taste of this.
So how can this take property management from zero to hero? The answer lies in what the real estate industry is now about: services.
We are moving to a post-consumer world where we are less bothered about accumulating stuff and much more interested in being provided with services, experiences and ephemeral pleasures.
This will lead to space as a service being the future of real estate-on-demand and providing exactly the features and services you need, when and where you need them.
Now imagine what types of spaces we are going to need in a world where the work we do is rooted in the most human of skills (empathy, design, collaboration, imagination), and what types of services we are going to require to engender this. It is going to be much more flexible, fluid, and customisable. Multiple types of spaces being will be available on-demand, and these will offer varying configurations of seating, facilities, desks, screens etc. Atria and other communal spaces will be much more intensely utilised, probably by many more people on a daily basis, but with many of them congregating or dispersing as networks come together and interweave with each other. Think of a social network as opposed to a traditional organisational hierarchy.
This space as a service requires an entirely different property management approach, involving much more human management than anything else. Yes, the physical asset still has to be maintained and function effectively and efficiently, but the robots will help with a lot of that anyway. What is required now is people with all the skills required to enliven a space, and make the user experience of that space special. After all, it is the user experience a space delivers that determines the financial results that physical assets return. Ultimately, it will be the data about a space (UX can be quantified), rather than the space itself, that will matter.
Who can deliver this? You guessed it, the property management team. And that is how you get from zero to hero.
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