About 2 years ago we were set the challenge by a client managing a substantial portfolio of property to help him understand what was actually going on inside his estate. He had line of business managers putting pressure on him to increase the volume of business services delivered from the estate, and intuitively he knew there was space and time available within the 300 buildings he managed- but he lacked the data on where and when the space was available. Without it he couldn’t unlock the potential tied up in the portfolio - the potential to be more productive, efficient and flexible. To do more with the investment his business had already made.
This is a very common scenario, because the actual use of buildings by people in the real world is one of the least understood aspects of real estate. Real estate equates to about 10% of business running costs. This investment by businesses is managed using assumptions, rules of thumb, anecdotes and rough estimates. There is very little objective data on how people and buildings interact daily. This results in architects designing new buildings without feedback on the use characteristics of previous designs; in businesses invariably acquiring more space than they truly need; and in highly valuable assets with high running costs being used to a fraction of their design capacity.
In the world of the past, where landlords and long leases ruled, it was only a problem for the occupiers. They ended up paying rent for space they didn’t need or no longer used. However, in the world today, with the emergence of Space-as-a-service driven by real estate service companies like Regus, WeWork and Knotel, occupiers will only pay for what they use. So, as a landlord, it puts you in a very different position. You have valuable, expensive assets and you need to make sure they are delivering a healthy return on the investment. Without the certainty of long leases of the past, how are you going to do that?
Perhaps landlords need to start thinking more like airlines - about use patterns, buying behaviour, load factors, yield management, external factors, demand pricing and resource planning. Space is a perishable resource after all - just like a seat on an aircraft. Each square metre, if not used each moment, is lost potential. The airline industry has spent decades refining data systems to fully understand how assets are used. Data is just an important as pilots, aircraft and airports. If there is no data, there is no way for an airline to operate efficiently and generate profit.
It is into this world that real estate industry is embarking. A world where power has shifted from provider to user. A world where choice is omnipresent. A world where demand and supply of space will meet much more frequently. In short, a world where data will determine the winners and losers.
It is for this world we created Beringar. We have always believed that good data drives good property decisions and have made careers helping our clients to acquire the data they need. Today, that’s more important than ever. With advances in IoT, machine vision, machine learning, artificial intelligence, cloud computing and connectivity, it finally becomes possible to understand how people and buildings relate on a daily basis.
From the data collected, insights will emerge that will help architects improve designs; ensure occupiers waste less and allow landlords generating higher returns. It will be these insights that will allow the assets to increase in value, not because of where they are, but of how productive they are. It will be these insights that will help businesses be more productive, efficient and responsive.
Welcome to the future. Today.