The office is dead, long live the office: PropTech’s golden opportunity

Five things we learned from our recent webinar

The genie will not go back in the lamp

“Trends that we were expecting to happen over the next five to ten years, happened over the past 18 months,” says Hugo Silva. Senior Investment Manager of Pi Labs. Flexible leasing for mass retail is a good example. For years, it failed to gain traction; landlords were comfortable with easily understood business models and retailers were reluctant to share revenue data that could push up rents. Now, the situation is changing. Flexible leasing has become common and data that was previously considered business sensitive is more openly shared.

While necessity has increased the pace of adoption, it has also resulted in PropTech reaching a tipping point. “There has never been an industry that has gone through a digital transformation process and then gone back to quill and ink,” says Eddie Holmes, Co-Founder of Unissu. Digitalised culture shift is sticky and marked by constant improvement. The pandemic has improved the ways in which work is conducted and created a new set of baseline demands among employees. Greater flexibility to work away from the office, and new expectations as to what in-office work is for are chief among them.

This is a golden opportunity for the people behind the PropTech

Over the past 18 months, there has been a notable increase in demand for PropTech expertise within real estate firms. In many cases, major real estate firms have fast-tracked PropTech consultants and experts into positions of influence. As these champions of innovation have rocketed up through the ranks of the profession, PropTech developers and providers have enjoyed corollary benefits. The sector has become more lucrative and more attractive to talent that might previously have been drawn to different industries.

The PropTech boom is a boon for commercial real estate

The past 18 months have been memorable for many PropTech vendors. Large and long-term contracts have been inked as the business case for adopting technology has become undeniable. So says Nikki Greenberg, Founder of Real Estate of the Future and Founder of Women in PropTech. As workforces return to the office and hybrid-working takes root as the favoured solution, much development work has been done on office optimisation. The overall quality of commercial real estate can be expected to improve.

“This,” believes Eddie Holmes, “is the real estate sector’s opportunity to transform the way it does business.” New market-entrants are disrupting and energising the scene. In the UK, for example, retailers John Lewis and Boots have broken fresh ground by announcing housebuilding programmes.

While the real estate sector has been frequently tagged as a late adopter of technology, it is possible to point to examples of genuine experimentation. Many real estate players are demonstrating a renewed appetite for PropTech investment. Nonetheless, real estate is an industry that remains heavily guided by interpersonal relationships; changing entrenched attitudes and prejudices could be the biggest challenge.

Hybrid working: a question of balance

“However good the technology is, everyone is going to have different requirements and different red lines when they start coming back to the office. It is going to be a bit of a learning curve”, says Susan Freeman, Partner, Real Estate, Mishcon de Reya. Already differences of opinion between some corporate employers and their employees are emerging. While many staff are happy with current remote- and hybrid- working arrangements, some bosses have aired misgivings. David Solomon, CEO of Goldman Sachs has described remote working as “an aberration”. Meanwhile, his counterpart at JP Morgan, Jamie Dimon, has publicly stated his own reservations. Most recently, Eric Grossman, Chief Legal Officer at Morgan Stanley, suggested via a client memo that legal service providers returning full-time to the office could enjoy a market advantage. Susan Freeman believes that he may have a point. Tough or adversarial negotiations will likely favour to those around the conference table. New meeting technologies are already in development that aim to close the gap between those present and those calling in.

At its heart, most work remains people-centric. Tech related to payments, internal and external comms, and various HR functions is, by now, well-matured. But tech that enables the cultivation and maintenance of company values remains rare. For hybrid work to truly take, this need must be serviced.

The office – flexibility and productivity

The industry is slowly coming to terms with flexible rather than fixed-term leasing. While uncertainly lingers, flexibility will remain desirable. Many employees are equally opting for flexibility in their work surrounds, flitting between the office, home, and public venues such as libraries and coffee shops. Such freedom, though, should be caveated with the need to ensure confidentiality.

For employers and employees alike, the challenge will be to strike an optimal balance between productivity, wellbeing, convenience and a further range of factors. If the office is to prosper again, it must restate its merits.

“What we really need to think about is the purpose of the office”, says Nikki Greenberg. “It needs to be profitable for businesses and preferable for employees.”