Commercial real estate without amenities - the big short?
What does the future hold for the commercial real estate market - especially with the many disruptors and challenges constantly driving evolution and innovation in the sector? The first GRI event focusing solely on the commercial sector; senior office owners, operators, investors and fund managers took place at GRI Offices in London last week to discuss strategy, share insight and answer complex questions.
The event kicked off with a keynote from digital strategist and influencer in the PropTech industry Anthony Slumbers, who shared his opinion on how technological development, especially AI, is embedding itself deeper in the office and serviced real estate markets and what partnership strategies might develop as a result. He suggested that the growing demand for flexible workspaces and how it might affect the relationship between asset owners and operators in terms of sustainable returns.
The conversation on technology in offices touched upon how as automation begins to consolidate unskilled, repetitive tasks, “new work” will become more apparent and future offices will have to further catalyse skills. This is incredibly important as it’ll help shape our future workforce.
The second day began with a presentation which outlined just how important it is to understand occupier needs - and addressed whether or not customer truly was king. The most prevalent one at the moment, participants say, is how millennials and Gen Zers becoming of working age has really driven the need for offices to have the latest technology, as well as modern design and an emphasis on socialising.
Attending occupiers agreed that utilisation and flexibility of space are always regarded as paramount, for both employee satisfaction and productivity. However, measuring this with tangible data remained a difficult task at hand.
The leading decision makers present also talked about co-working and the key challenges facing the sector, such as a change in demographics making it challenging for operators to fully understand the end-user, especially as that element essentially drives the subsector. As coworking operators increasing trying to distinguish themselves by building a strong brand with a unique identity, find ways of promoting loyalty with tenants in order to mediate the risks of short term leases likelihood of swapping operator have never been higher. This also affects funding from banks, as constraints on capital mean that the raw marketability of an asset is much more important.
From an operator point of view, it was said that they had to be more mature, think more about their revenue structure, and bring income from provided services. One did question however, if there was actually any proof of flexibility and technology making people more productive - results of which are conflicted, but it certainly improves retention rates for both offices and tenants, as well as mood, health, and a better working environment.
The attendees then shared their opinions on whether having operators can lead to higher valuation of the property, as well as how growing appetite of landlords to manage their properties might change the market.
Offices & flexible workspaces will be discussed extensively at upcoming GRI events across the Globe. Espana GRI, France GRI and Deutsche GRI will collate senior European real estate leaders to participate in collegial and informal discussions regarding their respective countries.