2023 is already seeing a fundamental shift in the Commercial Real Estate industry as disruptions to the market such as working from home, evolving workforces and ESG regulations become more polished and more accepted by the mainstream. All headwinds are blowing favourably in the direction of PropTech, and it is now time for businesses to embrace this inevitable evolution.
In this episode of The ChangeMakers in CRE, we talk to Raj Singh, Managing Partner of JLL Spark and Carolyn Trickett, Growth Lead - APAC at JLL Spark to discuss how JLL is delivering the technology advantage to the real estate world, industry trends and how they believe these will play out over the coming years.
Watch the full episode
How JLL Spark is getting ahead of the game
Tech is here to stay and JLL Spark has adopted a strategy towards this with the ultimate goal of building JLL Spark into a tech-enabled service provider for the real estate industry.
"Real estate has been an insanely profitable place to be for centuries, and what is happening now is that the landscape is changing. Technology is eating other industries, and we believe it will come for our industry as well."
- Raj Singh
Their strategy is simple in nature but forceful in result - to create technology that they believe is important to have and will serve their clients better. They are all in.
“The train is leaving the station and you really need to be on it because technology is not going to change, and one part of the industry will adopt it and the other part will have to catch up. JLL wants to be ahead of the game.”
-Raj Singh
What is driving the uptake of PropTech in 2023?
To date, a lot of the tech being delivered to Commercial Real Estate is perceived to not be vital, or crucial to its day-to-day running, which explains its slow adoption.
Raj however believes that there are trends in play, that may have been around since before the pandemic, but are now becoming commonplace that are going to push businesses to adopt tech whether they like it or not. Those being:
- People now know that they have choices when it comes to where they work from. Telecommuting has always been around, but the realisation that productivity may be better when employees don’t have to commute hours per day is changing the office environment permanently.
- The nature of the workforce is evolving. Low-paying, high labour roles such as cleaners, maintenance engineers and landscapers are becoming harder to fill as people simply don’t want to do them anymore. In order for building owners to be able to continue with these jobs at an affordable rate, they are going to have to look into automation.
- There is an ongoing consolidation within the industry, with many businesses owning thousands of buildings, the scale of which needs technology to complete their business activities. Excel spreadsheets simply do not compete at this level.
- Sustainability and ESG regulations. The incoming freight train.
Until now it has been sustainability that has been the primary driving force in the uptake of technology within Commercial Real Estate. It is a known entity, with well-understood consequences of inaction. The impact of the rest at this stage is relatively unclear, but nonetheless necessary.
The evolving nature of roles in the CRE industry
Deployment of tech creates a significant shift in the required skill bases of many roles within Commercial Real Estate, not only in the office but also in the field.
“People out in the field now need to learn new skills in order to use the tech they are being given. For example a role in facilities management, which would have been a very practical skilled role with a screwdriver in the back pocket, now turns into a role where you now need to wrangle with a different type of solution to manage all of the work that needs to be done.”
-Carolyn Trickett
As the years go on new roles are created to support and maintain this new way of working, all of which now require a certain level of digital literacy in order to effectively meet the needs of the workplace.
Given the speed at which tech is changing the nature of business, it’s fair to say that we can’t even guess what roles will be commonplace in the future.
Where are we at with ESG?
Despite flying relatively under the radar, it is now understood that real estate equates to approximately 40% of global carbon emissions which is driving the need for change within the industry.
“Things really move when the money talks. Now you are seeing tenants not signing leases unless they can commit to a certain standard.”
- Tom Wallace
It is not only the building of buildings that emits carbon, however, but maintaining the building and energy usage of buildings all combine to make up this huge, reported fraction. This knowledge has now put the industry into “measurement mode” whereby businesses are now feverishly trying to determine what their number actually is as of today.
3 simple steps to tackling the incoming ESG requirements:
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Know your baseline measurement
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Plan how to get where you need to be from where you are
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Track the plan
The future of work and the return to the office
The amount of office space we have is more than we need for the immediate future, and it is not configured in a way that works for us going forward.
“The reasons why we go to the office may have changed, which means the office itself must change to adapt to that”
- Raj
One group of people who are keen to be in the office however are the younger generation who want to come in and learn and experience the informal aspect of the office, so this must be considered. There is some responsibility from the older generation to provide this, so building appropriate amenities to satisfy all parties is imperative.
Ultimately however there is a mismatch between what we in the industry are looking to sell, and what our customers are looking to buy, which will need to be worked through in order to reach a long-term solution for the industry as a whole.
