Data, not lease expiries, drives real estate decisions
Businesses are making relocation choices when they want to, not when they are forced to
Companies are no longer waiting around for property contracts to expire before starting the search for new space.
With data on costs and locations, as well as what the competition is doing, readily available in real time, decisions are increasingly being made when the time is right, rather than when a lease expires.
“Property decisions can be made like an Airbnb booking - based on factors most important to individual business, at any time they like,” says Andrew Campbell, head of Tenant Representation - Western Australia, JLL. “Technology and data is giving businesses transparency over costs and charges, as well as demographics, mobility and access to talent.”
This is a sharp shift from the old days when companies used to start the hunt for office space in much the same way as people look for new rental accommodation: When they were forced to.
When property decisions hinge on lease expiries, and with little or no consultation with data intelligence, organisations leave themselves exposed to real estate cycles with little control over costs.
While the new way of doing things is benefiting companies, it has taken some adjustment for the industry as a whole. Brokers have had to become much more nimble in how they work with clients.
But increasing volumes of data, driven by transparency in the real estate market, is helping companies balance the cost of breaking contracts with the benefits of acting on data intelligence - be it expanding or shrinking their property footprint, moving to a new location, or moving into coworking space.
“Across businesses, the relentless focus is on speed, adaptability, problem-solving, cost-saving and creative activities, and there is increasing recognition of the role of commercial real estate in meeting these objectives,” says Campbell. “Technology is removing the process and duplication that once went with the territory.”
Tech and precision
Businesses now know what they need from their real estate not just what they want, says Campbell.
Two factors are enabling them to get a better grasp of these needs: the advancement of Internet of Things – the technology that connects physical devices in a building to help them function as a unit, and low-cost point solutions - software that addresses specific business functions, such as room-booking systems.
As adoption of the two becomes widespread, businesses are becoming custodians of data that, when analysed, can reveal patterns in how their employees prefer to work, and therefore help find real estate that is the optimum fit.
Beyond that, it can link property needs to industry business cycles.
In some cases, building owners are helping their tenants gather data where it is mutually beneficial. Australian property company Mirvac has an app for tenants in its office building at 200 George Street, Sydney, that tells them how much power and water they are using, in real time.
“When space utilisation data is analysed through applications such as Utilisation IQ, businesses can answer questions that will help determine the base-level requirements of a new building, including how many people it is for, what times they will be using it, and what tasks will be conducted in the building,” Campbell says.
Increasingly, tech platforms are looking for ways to immerse prospective tenants in buildings without them physically being there.
An application called Foyr assists businesses in the decision-making process by creating a virtual office fit out to verify a space actually meets its needs before signing a contract.
Next Office, inside the London headquarters of JLL, is a 360-degree studio with wrap-around screens that can call up properties meeting defined metrics.
Applications such as MapIT for location analysis, and QLOE, which can provide financials or leasing scenarios for any new location – including historical tracking and predictions - are helping businesses act fast and stay competitive as factors such talent and community soar up the priority list.
MapIT harnesses GIS Mapping (Geospatial Information Solution), which can visualise current and future available sites across locations in 3D map view, enabling businesses to focus its search on talent hotspots, new urban developments, transport infrastructure, existing and future amenities.
Innovators are responding to companies demanding speed and transparency as the world they operate in moves at pace, says Campbell.
“Data and technology is redefining the rules of real estate, allowing organisations to manage their interests on their own terms and rewarding them for it. It might be the new way of doing things now, but is quickly becoming the only way.”