- Scott Homma of JLL and John Sekaitis of Avison Young explore how data is changing the real estate industry, and what that means for the future of Flex.
- Scott Homma said that before the pandemic, the real estate industry’s application of data was “too far behind.”
- John Sekaitis added that in order to “make the data relevant,” two factors are required: technology and human expertise.
This week, the Global Workspace Association (GWA) hosted an event “The State of Resilience: A Deep Dive into the Data” that looked at how data is transforming the real estate industry, and what it means for the future of resilience.
Speakers included Scott Homma, Senior Director of Research at JLL, and John Sekaitis, Chief Innovation Officer at Avison Young, both of whom have experience with the emergence and evolution of the flex office industry in the past few years.
Historically, the real estate world has lagged behind in terms of data usage.
As tech companies, social media platforms, and even restaurants have mastered how to properly use data analytics to improve their businesses, commercial real estate has stumbled learning how to apply these findings.
However, over the past couple of years, the rise of flex desks has helped launch a new campaign across the entire industry.
By learning how to access this information, everyone from modern co-working operators to traditional landlords have new insight into how their space can be used and, most importantly, how it can be improved.
Data usage in the flexible office industry
Sikaitis noted that data is not a new concept, and in fact it has the potential to address the gaps in knowledge that the commercial real estate industry has struggled to fill.
However, with data collection continually intensifying, he noted, this is just the beginning for flex desks.
“Data is something that will not go away,” Sekaitis said.
However, he added that in order to “make the data relevant,” two factors are required: technology and human expertise.
Correct technology allows operators to comb through results and identify effective strategies in making real estate decisions.
While these tools undoubtedly have an impact on finding concrete insights, it is humans who can provide well-researched opinion and expertise about how this data is essential to current strategies.
“From a resilience perspective, and even real estate, I think there is a huge opportunity to shift from a human-based environment to a semi-data, human-based environment,” Sekaitis said.
Flexible space operators have used data to understand how people interact with their space by tracking footsteps, using meeting rooms, and more. However, Sikaitis claims that the data can also be applied to aid site selection and negotiations.
Homma agreed, noting that the way the real estate industry applied data before the pandemic was “too backward.”
Most real estate companies have tracked common data points expected from the industry: absorption rates, vacancies, new leases, and lease renewals.
Homa says the pandemic has helped companies look beyond these factors and focus on “real-time data sources that are predictive in nature”.
How operators can use data for the future
Data collection is only half the work.
Knowing how to properly apply these findings could transform the flexible office industry in a way never seen before.
The best way to deal with this? View from the point of view of the occupier.
“No occupier gets up in the morning and says, ‘My top priority is to find real estate,'” Sekaitis said.
Although offering a product is often seen as the quickest way to attract new prospects, Sekaitis notes that the most important strategy a real estate company can take is to identify demand.
For example, if a flexible office company is expanding its reach in Boston, does that mean that all operators should flock to the area? Does the application require it? The answer is probably no; The area was satisfied and it was time to look elsewhere.
Data can help with this. But rather than using these results interactively, Seketis says the data is supposed to be proactive.
Homma adds that JLL’s research shows that there is a clear scattering pattern, supporting the need for a ‘axis-and-talk model’.
“The new era we’re in now is ‘gather and disperse,’ which means it’s okay to be on a short plane ride if you’re going to get together for these team meetings,” Homa said.
He adds that while some industries require a full-time office presence, the past few years have proven that many other companies can do their job adequately with laptop computers and reliable Wi-Fi.
Because of this, central areas and secondary and tertiary cities are seeing a sharp rise in demand for flexible offices, or the “work near home” option.
However, professionals do not want to be tied up with even a short-term lease. This has led to the growth of more on-demand products, such as WeWork’s All Access Pass, a monthly membership that gives workers daily booking options on a more flexible basis than their standard membership.
Traditional owners should take this into consideration
Traditional office buildings have a long way to go. Marble lobbies and aquarium meeting rooms aren’t what the workforce wants, according to Sikaitis.
Convenience means meeting the needs of a particular area. For example, Washington, D.C. is largely a government and not-for-profit marketplace, not a hub for institutions. Landlords need to take these ideas into account when considering incorporating flexibility within their buildings.
Homma points out that the owners have already begun to reconfigure their space, moving away from the design and layout that has been normalized in their buildings.
Some are beginning to offer a variety of work spaces, such as collaboration rooms and private offices, as well as replacing pantries with full kitchens.
In short, owners are slowly understanding what a flexible perspective is, and as such are willing to make changes in order to keep up with market demand. However, in order to effectively inculcate these new environments, data will be essential for a sustainable and agile future.
“One piece of data is just an opinion,” Sekaitis said. “Data layers bring confidence and certainty.”