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n increasing number of executives in the property market across Europe are convinced high tech will reconfigure relationships in the entire real estate community, from users and providers to contractors and owners. The recession, many feel, will even accelerate the use of technology to help companies downsize, and real estate may be among the first to go.
Says Mark Dixon, chief executive officer of Regus: “There will be more technology-driven change in real estate in the next five years than there’s been in the past 50 years, and the recession will accelerate this revolution.”
U.S. professionals agree. Says Samuel Borgese, president and CEO of BayLogics: “The new technology will bring corporate real estate (CRE) professionals to higher ground in implementing globalization and virtualization of company operations. They will be called on to improve management of facilities worldwide to make a significant contribution to corporate profitability.”
Builders, Owners Brimming
With Techno Excitement
Information technology is seen as a welcome balm for builders. “Construction company margins are barely one percent,” says Maastricht University’s Piet Eichholtz. “Technology can impact failure costs for replacing things that don’t fit like staircases, which account for 5 percent to 10 percent of total turnover. If using Build-on-Line can reduce or eliminate these, you will see a doubling or tripling of gross margins and maybe a decline in prices. Everybody will benefit.”
Eichholtz also sees technology streamlining the interchange between broker and users. “Tenants, owners and brokers have been living inefficient lives through wasted visits to poorly presented properties,” he explains. “Now the tools on the Web allow users or buyers to learn everything about the building including a virtual visit. If they still want to see the broker, it’s more than likely to sign a deal. There will be a minimum of time wastage for both sides.”
The speed of change in technology is posing daunting challenges for owners of property as well. Says Terry Rees, director of Global Services for Atlanta-based Staubach Tie Leung: “Building owners face some tough decisions. If an owner wires up for cable transmission and WAP becomes the standard mode of operation, how does he get back his investment?”
As the U.S. recession impacts Europe, and Webster marketing gathers pace on the continent, European firms are also using the new technology to help downsize their need for staff and buildings.
Says Tim Caiger, U.K.-based vice president corporate real estate for the Web’s major software supplier, Oracle: “The new technology has made real estate costs highly visible and has also given us ways to reduce them. In the UK we have a 1,000 consultants working out of s 40,000-sq.-ft. (conversion) building so there’s intensive hot desking. Three or four persons share each touchdown space. That’s pushing the ratio.”
“In the new corporate framework CRE execs will decide the path to adopt,” says Dixon. “Info-tech people will enable and finance will bless the transaction with money.”
Adds BayLogics’ Borgese: “The workplace is becoming a function, not a place. Interactive portals create a virtual workplace, enabling staff to access all the business processes and collaborate with colleagues from wherever they are. With the spread of work to home and elsewhere in the next three to five years, CRE executive and the info-tech group will have to collaborate to manage the integration of virtual workplaces and remote workplaces.”
Notes Oracle’s Caiger: “I live in the Thames Valley, 5 miles (conversion) from the U.K. headquarters instead of two hours by train. But others are based in Northern Spain and Scotland, and they come into the offices only when they need to.”
The experts see outsourcing and homeworking expanding exponentially in particular for corporate real estate management.
Says Regus’ Dixon: “Companies are getting out of real estate via sale-leasebacks. Real estate will evolve towards a service business tailored closely to the needs of the customers. In three to five years, you’re going to have a combination of outsourced hardware, software and staff all on the same platform. All of this will be done through management contracts on a global scale with site flexibility and transparent pricing offered on a daily basis per person whether for the day, the week, the month.”
