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hen Lee Arnold talks about the impact of the Internet on corporate real estate executives, he uses phrases like “fast-moving flexibility,” “blurring of the lines,” “bandwidth access” and “the barrier of inertia.” With Arnold, information technology chairman for global service provider Colliers International (www.colliers.com), the concepts of speed and transition aren’t just fodder for buzzwords. They’re his job.
So how do you design a global information technology strategy for a company as vast as Colliers International (8,000 employees in 251 offices, spanning six continents and 52 countries)? For starters, you climb Mount Everest. Two years ago, that’s exactly what Arnold did as part of the Colliers/Lotus Notes Everest Expedition, a month-long journey that was reported — as it happened — on the World Wide Web.
Though Arnold ventured “only” as far as Base Camp (nearly 20,000 feet [6,096 meters] above sea level), he learned a great deal about himself and his team, which included two other associates from his Clearwater, Fla.-based Arnold Cos. (www.colliersarnold.com). Among his lessons? “It was the hardest thing, physically, I have ever done.”
OK, so it’s not profound, but it does make his current job — digitally tying together a global giant as geographically and culturally diverse as Colliers International — a lot less intimidating.
In a recent interview with Site Selection, Arnold discussed the challenges corporate real estate executives face as they try to unravel the mystery of the Internet Age.
SITE SELECTION: As the Internet takes over certain functions of traditional real estate operations, more companies are turning into so-called “e-businesses.” For years now, we have heard that the benefits of this transition are improved connectivity with customers and suppliers, and greater ability to streamline organizations and control costs. But isn’t there more than this to the Web-based revolution? Aren’t the fundamental models of how we do business changing?
LEE ARNOLD: From 1997 to today, we have seen the adoption of the Internet and Internet protocols in virtually every aspect of business. We’ve seen people go all the way from not using email to expecting me to communicate with them via email. So what we have really been doing is translating existing business practices. Up to this point, our industry has merely focused on translating certain activities that we have done for years. As we enter the decade of the 2000’s, we will see a lot more client focus. The watchword for today is client reporting. That is, can your clients get whatever information they want, anywhere in the world, any time of day, 24-7? I think the game is only beginning.
Deliver what your clients want, not what you want to give them, says executive
SS: How is Colliers International adjusting to the new digital economy?
ARNOLD: We are taking our vast stores of data and making them more readily available to the practitioners. For our clients, we now offer a service, called My Colliers, that allows them to capture data and report that information in unique Web pages. Two years ago, people were talking about their internal Web sites, called Intranets. Today, we are talking about the capability of putting true uniqueness at the fingertip of the professional. We have focused on looking at our disparate data stores and then asking ourselves, how can we make that data more readily available in all browser formats? Today, you can access real estate market data from any of our Colliers operations anywhere in the world. We have also rolled out individual Web sites for specific properties and property managers. What we have found is that our employees and our clients can never get enough information. The challenge is integration. It is speed to market. It is capacity. It is an awareness that we are in a knowledge economy. We all talk about core competencies, but the bottom line is defining what you do and what you are best at in the world. The challenge for our industry today is to take our “best of world” practices and then use Web architecture and strategies to leapfrog all other competitors.
SS: Has the advent of the Internet leveled the playing field for corporate real estate service providers?
ARNOLD: Not really. The larger service providers like Colliers still have a much broader base of information and access to markets to draw that knowledge together. The difference now is that we must listen to our customers and then exceed their expectations. Just providing market data isn’t enough anymore. We must tell them how it all relates. For example, our clients are wanting more equity assistance and other money tools. We have to get out of the vertical and start looking horizontally and then deliver only what our clients want, not what we want to give them. What this relationship really comes down to is a trust model. Everyone today has to do more work in less time over a larger geographic area, but the corporate real estate executive still must have a relationship of trust with a service provider. No matter how good you are in real estate, there is nothing like going into a market and having that level of trust. My favorite expression today is, we have to think digital and act analog.
SS: As office space users increasingly contract out certain business functions to both Internet service providers (ISPs) and application service providers (ASPs), how is this trend changing the need for office space? Are centrally located telecom hotels and data centers the wave of the future or a passing fad? Given the rapidly changing environment of the software and hardware being developed to service this industry, how can a corporate real estate decision-maker reasonably plan his or her company’s space needs?
ARNOLD: The whole idea of ever-increasing bandwidth leads me to believe that we are in a period of time in which that problem — shortage of bandwidth — will eventually be cured and won’t figure into our thinking. Power lines, for example, could become widespread sources of bandwidth. Scientists are tripling every six months the amount of bandwidth in the fiber. And in the optical sector, the current research leads me to believe that bandwidth will become less and less of a factor. Obviously, the widespread use of ASPs is where we as an industry are going, but whether it really saves any money, that remains to be seen. For example, we are ASP-ing the My Colliers software, because that appears to be the best thing to do for small business. And then there is the whole wireless revolution, which is only just beginning. At Colliers, we will soon be able to allow all of our clients who have Palm VIIs to get instantaneous information on any of our buildings wherever they may be.
SS: What are the critical factors in planning space needs today?
ARNOLD: There are three critical factors in planning your company’s space needs: bandwidth access, parking flexibility and facility configuration flexibility. If you have the flexibility to adjust your internal space to meet your needs, and you have the bandwidth and the parking space you need, then you will be able to adapt. Having more people in less space today is the watchword. Things like fiber optics are important. The future is about fast-moving flexibility.
SS: Does this mean we will see shorter lease terms?
ARNOLD: That would seem to be reasonable. However, if the space you are going into allows you to have subleasing, then cutting your lease down to five years may not be the way to go. A lot of things can happen — consolidations, etc. If I own the space, I can get out of it a lot easier than if I lease it. If I own it, then I can at some point sell it.
SS: What are some of the issues affecting occupancy costs?
ARNOLD: For one thing, we are seeing a real blurring of the lines between space users. Another factor is parking, which can be a real issue in terms of controlling costs. And what happens if I can’t afford to get the bandwidth, or it isn’t available? Suddenly, all of those questions go to the top. The high-tech firms I am working with are asking for shorter-term leases and incredible flexibility in the use of their space.
SS: How close are we to the truly paperless commercial real estate transaction? What steps need to be taken to get us to that point, and what will be the benefits of achieving this goal?
ARNOLD: That move is by definition disruptive innovation. The existing incumbents who make their living by paper will go out of their way to make that hard to do. The question is how do you make that digitized information closer to a specific client? That has a lot to do with customer relation management tools. There are many good reasons to try to go paperless. It allows you to get closer to your client.
SS: What are the main roadblocks to going paperless?
ARNOLD: The barriers to all of this paperless change are inertia, complexity, complacency and price. It is not free. There is a lot of channel resistance from people who identify their income with handling paper. Lots of people will fight revolutions and stay the course. A lot of people are afraid of the revolution.
