With swathes of the global population on lockdown, remote working looks set to kick-start rapid and widespread digital upskilling. For real estate this won’t just mean employees become more tech-savvy – it will fuel a change across the entire sector, from the way buildings are managed to the future of our offices. Can the sector keep up? Emily Wright reports.
There is plenty to be anxious about when it comes to the impact Covid-19 is set to have on real estate and the wider world. While there is no silver lining bright enough to entirely eclipse the worries many people and businesses are currently facing, as we start to settle into a new way of working in a world that has been turned temporarily upside down there are some more positive trends emerging.
Apart from a refreshed fundamental appreciation for what, and who, we have in the midst of these strange times, the situation will also spark some major cultural shifts in the way we do business. One of the most notable of these across many sectors, and within real estate specifically, will be sudden, widespread digital upskilling – something experts and the technology sector have been urging the industry to address for years.
The need to upskill
In November last year, Lisa Picard, chief executive of real estate investment company EQ Office, delivered some stark home truths in her keynote at New York Real Estate Tech Week. “Half of all global employees will need upskilling by 2022,” she warned. “This will be a huge challenge for the real estate sector because there is no immediate need, or desire, to ‘relearn’.”
Since then, society and the world of work as we once knew it have changed beyond all recognition, and that need to relearn has not only come to the fore, it has never been more pressing. “The situation we are in is unprecedented,” says Charlie Wade, UK managing director of leasing platform VTS. “What’s clear is that we are in a place where we are all having to understand and simultaneously adopt technologies so that we can work effectively because we simply have no other choice. While this is all second nature to technology businesses, most of the industry is having to quickly implement and adopt these technologies.”
From fresh, informed approaches to remote working and the future of the office to new, more efficient ways of doing day-to-day business, real estate is likely to look quite different on the other side of the current crisis. Experts warn that while the change should be widely viewed as a silver lining, an industry shift like this won’t be without casualties.
Those with the right culture and drive to move with the times as lockdown speeds up adoption rates will emerge more powerful than ever before. But for those who struggle to keep up, it will be hard to hide as the difference between the adopters and the laggards becomes increasingly pronounced. So, what can businesses do to ensure they emerge from the coronavirus crisis on the right side of the upskilling curve?
Forced to change
In terms of how significant the impact of rapid digital upskilling is likely to be within real estate, the consensus is that it will be substantial. “The industry could save itself three years, maybe even five, in terms of how fast things change,” says Dror Poleg, author of Rethinking Real Estate and co-chair of the Urban Land Institute’s Technology and Innovation Council in New York.
He adds that, apart from widespread adoption of digitally enabled remote working, the sector has been forced to rethink the way it operates more widely. “Over the past few years, we have seen the development and maturation of all sorts of tools which allow property and asset managers to have a better idea of what’s going on within their buildings and portfolios without necessarily being there.
“There have been issues with adoption, partly because of cost and hassle but also because of complacency. Landlords have tended to think: things are going great, why change now and force employees to learn new digital skills? Now people have been compelled to embrace these tools and technologies – they are effectively being forced to go through the learning curve. I hope many of them will realise that they have a better view of their business and that they have their time freed up to do other things.”
It is really hard to instigate change without fear or threat fuelling that change
Lisa Picard, EQ Office
Poleg’s argument aligns with some of the wider points Picard made back in her New York Real Estate Tech Week keynote. She said that when an industry has been making money doing things in a certain way for so many years, there was no incentive to change.
She added, now hauntingly prophetically, that where change isn’t forthcoming it will eventually be forced by fear as a result of an external threat. “It is very hard to unlearn something that has brought success in the past,” she said. “It is really hard to instigate change without fear or threat fuelling that change.”
There can be no denying that the current threat we are all facing has been more than powerful enough to fuel widespread change, and not just because it has forced swathes of people to better understand technology to enable them to work from home.
It has forced the sector’s collective hand because the fear is very real. “Broadly speaking, the biggest hindrance to adoption of new tools was the fact that times were just too good,” says Poleg. “People said, ‘Hey, rents are high, occupancy is high. Why do I need to spend money on anything else?’ This is over now. Anything that can cut cost will be crucial, and we will see people who don’t change getting wiped out.”
Survival of the fittest
Poleg’s thoughts are echoed by Tripty Arya, founder and chief executive of Travtus, who says that those who were already geared up to adopt technology before the near worldwide global lockdown will emerge in a stronger position than those who were already lagging.
“I am sure we will see a widespread change across the entire sector, but I don’t think that is because everyone will suddenly do things differently,” she says. “I think we will see the change so rapidly because a lot of people won’t survive. There will be plenty of companies that really struggle with the fresh start and, because so many others will be doing things differently, they will get left behind quite quickly.”
Arya adds that, with the right attitude, however, there is still time for those who want to catch up to do so – if they keep it simple. “If you are a good business and were doing well before this situation, and you have the right set-up in terms of technology, then you are likely to continue to do well. If you weren’t doing so well in terms of your digital skills before, then just adopting technology quickly is not the answer. You must make sure it is the right technology for the current climate.
“Businesses will need to really analyse what is changing in the market as a result of coronavirus and the new normal, and think to themselves: as certain things change, the tech will need to change, so what are the new relationships likely to be? Who is our customer? What will they need? There will be a lot of disruption in the coming weeks and months, and people really need to listen and watch what’s going on to get it right.”
Now that we are making it work well in this new normal, we are starting to think: do we even need an office anymore, or just a place to congregate occasionally?
Tripty Arya, Travtus
She adds that digital upskilling doesn’t need to be that complicated if the right thought has gone into the strategy. “Just as an example, real estate talks about AR all the time. But that’s not the right route for you if you aren’t already set up for it. It takes time and you need to train your staff. But take something like video Skype viewings instead. These will be invaluable going forward. It doesn’t have to be sophisticated technology; it just needs to be the right technology.”
When it comes to digital upskilling, the real estate sector is likely to see widespread wins in areas such as day-to-day team communications and “business as usual” – or as usual as is possible in these unprecedented times – activities. This is because they require a big mindset shift but only a simple change in behaviour in terms of technology.
Once everyone has got their head around Zoom or Microsoft Teams meetings, has located the mute button and has got used to video calls, it is straightforward. As Arya said, simplicity is key. The big question is what this will mean for the future of both the sector and the traditional office.
The end of the office?
“We were in a WeWork before all of this happened,” says Arya. “Our lease was flexible; we could get out easily, and when we did our costs halved. Now that we are making it work well in this new normal, we are starting to think: do we even need an office anymore, or just a place to congregate occasionally?”
It is a sentence likely to send shivers down the spine of many the world over given the industry’s massive reliance on the buoyancy of the commercial office sector. The good news is that we are very unlikely to witness anything near a complete annihilation of the sector. We are social animals, and our intrinsic desire to connect is likely to prevail.
The current crisis has proven that there are plenty of things that technology can’t replace – real, human contact for a start. “Not interacting with people is really hard,” says Concrete VC venture partner Angelica Donati. “It’s moments like this that remind you how important social contact is, and also how crucial a role technology can play when we are forced apart.”
Gabrielle McMillan, chief executive of tenant experience platform Equiem, agrees: “Physical human interaction is incredibly important for all of us, and in some ways technology has actually been a factor in many of us feeling more isolated and less connected over time. My view is that people will be thankful for the technology at this time but will also start to appreciate just how important social interaction is. Office buildings are not going to go away, in my opinion. I think this will make people realise how much they need to come together.”
That’s not to say that the post-pandemic office won’t need to adapt after a prolonged period of remote working. And this comes down to the health and happiness of employees above all else.
“Flexible working and the issues around uptake have never been about the technology,” says Dan Hughes, founder of Alpha Property Insight. “It has been down to the culture. Real estate is often managed via presenteeism, but now people are being forced to see things differently. People have traditionally assumed that if someone is in the office very early and leaves very late then they are doing a great job. But we should be much more focused on basing that judgement on output.
“Up until very recently this was a very modern and progressive way of thinking, where there were people who believed it, people who pretended to believe it and people who didn’t buy into it. What has happened in the past few weeks has changed all of that. Everyone is in the same boat, and I hope we will see a culture shift around flexible working within this sector as a result.”
Poleg goes so far as to say that the sector simply won’t have a choice. “A lot of things won’t ever be the same after this. The office will be very different. I don’t think everyone will work from home all the time, but demand will be lower and expectations will be higher. Bosses and landlords alike are going to have to think about that very carefully.”
There can be no denying that, for the industry in its entirety, accelerated digital upskilling is a bona fide silver lining in an unprecedented and difficult situation. The sector needs to change, innovate, evolve and adapt to remain relevant. And yet there will still be losers as well as winners from a coronavirus-fuelled culture shift.
Ever the optimist, VTS’s Wade argues that, with the right attitude, more people can ensure they are on the right side of that adoption curve: “Perhaps this situation will see technology companies like ours really open the eyes of the rest of the sector, and they will think: well, actually, this is possible.
“I do believe this could be an industry-wide shift. I know these times are incredibly tough, so I am determined to focus on a really positive thing that could come out of it.”
To send feedback, e-mail emily.wright@egi.co.uk or tweet @EmilyW_9 or @estatesgazette
