could shape the
future of commercial
Is the industry poised for a change?
Owners and operators will need to offer differentiated services and flexibility to compete in a post-pandemic world where there will be increased competition for corporate tenants. It is still too early to tell whether other large-branded operating platforms will evolve and whether properties will no longer be assets but instead could serve as inputs and components of other operating businesses.
In the past, traditional real estate operators have been reluctant to change and have not taken advantage of the vast amount of property technology (proptech) developed. They have been playing defense in an environment where innovation and change was not necessary for success. Why? Often, there is an “if it ain’t broke, why fix it” mentality, but the paradigm may shift from playing not to lose, to playing to win.
For example, coworking could come back with vengeance, and landlord built-out speculative space could likely see greater demand, as some corporations might not want to commit to long-term leases and desire office space alternatives with shorter and more flexible lease structures. These tenants still expect fully amenitized buildings with state-of-the-art technologies that improve employee comfort, safety, productivity and quality of life.
Institutional real estate capital will flow to operators that have the brand, expertise and demonstrated ability to adopt technology to provide exceptional tenant experiences while simultaneously reducing capital and operating costs, thus positioning them be nimbler and more aggressive in retaining and attracting new tenants.
Additionally, operators are facing greater environmental, social and governance (ESG) reporting requirements such as GRESB and building health certifications like Fitwel, RESET and WELL. Luckily, operators that embrace these requirements have a growing array of technology to evaluate and implement for each facet of their business.
Remote transaction technologies, robotics, sensors, spatial monitoring, smart buildings and energy management information systems are all examples of proptech that are quickly becoming more relevant. They each involve specialized tools that decrease touchpoints, increase efficiency, lower the risk of virus transmission and attract talent and tenants. Some work to increase a building’s bottom line, all while adding to the safety and comfort of building occupants and property management teams.
The adoption of technology across all industries and geographies has been fast tracked and pulled forward throughout 2020. The number of citizens who now have paid online subscription programs has grown tremendously, and the number of employees who have adopted remote conferencing platforms for their preferred means of communication continues to increase. The ability to adapt, evolve and show a willingness to be flexible is more important than ever, and for commercial real estate, this pandemic could be the long-awaited catalyst for change.