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Real estate is a people business. We’ve all heard the iconic phrase: Location, location, location. And yet today, where people live, work, and invest in real estate has moved beyond convenience. After decades of living by the location mantra, people have shifted their focus and values from where they live and work to how they live their lives – and the real estate industry must adjust accordingly.
The great RE-evaluation
As we’ve discussed throughout our Real Estate Movement series, people play a significant role in the real estate ecosystem. Everyone impacts and is impacted by industry investments and investment strategies; as just one example, consider how today’s work-from-anywhere lifestyle has reshuffled the decks of commercial real estate. Similarly, shifting preferences, motivations, and expectations have led businesses to reassess corporate cultures, systems, and processes.
In our 2019 series focused on “Putting People First,” we delved into ways the industry needed to harness disruptive technology for improved, connected, people-centric experiences. Fast-forward nearly four years, through a global pandemic that turned the industry upside-down, and while many things have changed, many prove to remain the same. The industry now resides in a reevaluation mode, causing businesses to scrutinize previously well-accepted strategies as they seek out new opportunities to create value for people, from building owners, operators, developers, and investors to the employees and tenants who fill those buildings to members of their surrounding communities.
Beyond location to a new set of “-ations”
The concept of location has taken a back seat to a new set of “-ations:” Sophistication, anticipation, and diversification. Use these three lenses to reevaluate your real estate strategies – and as you do, remember to put people at the core.
Sophistication
Technology should be used to make your business more agile. With regard to your real estate operating or investment business, technology should elevate the value of work performed by your employees – not necessarily replace them. Analyze operational models to determine which repetitive processes can be automated, and invest in more sophisticated operating tools that automate the simple tasks that take time away from more important work.
When it comes to the buildings themselves, sophistication entails enhancing tenants’ experience with technology. Occupiers of buildings want technology to blend seamlessly into their lives to automate simple tasks. With new construction projects (and some retrofits, where funding permits), look for opportunities to incorporate “smart” capabilities that users can control from the palms of their hands, from booking amenities and screening visitors to calling elevators and turning on lights. Just remember to balance tech with touch, so that automation does not come at the expense of customer service. When it comes to services such as concierge and security, the human element is crucial.
Sophistication isn’t all about technology. Increasingly, real estate organizations are taking a more nuanced, higher-level view of the role their assets play in the world around them. Building owners, operators, and developers are adopting environmental, social, and governance (ESG) initiatives to demonstrate a commitment to corporate responsibility and sustainability, and to show investors and the public how they are working to address issues like climate change, social equity, and diversity. Investors, for their part, are taking a more sophisticated view of return – looking for the kind of sustainable, long-term value that requires a focus on metrics that are not purely financial.
To create real traction for the ESG movement, real estate organizations need to look with clear eyes at their current ESG efforts. Do they measure up to what’s important to the people who live, work, and invest in their buildings? To better understand how to meet these varied expectations, companies need to do their own research into what a strong ESG plan looks like, how it is implemented, and what it can mean for the value of their portfolios and assets.
Remember: ESG is not one thing, or even three things. It’s a filter you should put on everything. It’s a way of being more proactive and thoughtful about where and how you create value and for whom.
Anticipation
While traditionally a laggard in the technology space, the real estate sector has propelled its data game. Today, platforms, applications, and subscriptions offer a wealth of comparative data to either stack your organization against or supplement and support the insights you’ve uncovered.
Dig into the data you own to better understand human behaviors and preferences – when and where people live and work within your buildings, which amenities they use, where technology is improving their experiences (or, conversely, prohibiting efficiencies) – and compare your insights against industry data. Understanding patterns and behaviors can point to what types of space users want today and in the future.
That said, when it comes to giving people what they want, it’s best to simply ask them. Employees, occupiers, visitors, surrounding community members – they all want to know that your organization cares about them, and one of the simplest, most effective ways to do that is to start a dialogue, then use those insights to improve their experiences and keep them engaged and motivated to live or work (or both) within your space.
Diversification
While multifamily and industrial have been the darlings of commercial real estate investors for the past few years, that may change as rents level out and industrial demand begins to cool. It’s time for investors to go outside their comfort zones and examine asset classes that are on the rise to create a more diversified portfolio that can better withstand a possible recession.
As you seek to diversify, remember that people are seeking a sense of community and connection. Beyond focusing on making life better in each individual unit or office space, consider also offering a wider range of amenities that cater to today’s preferences and expectations. Creating more common areas, hosting building-wide events, and teaming up with local businesses are just a few places to start.
And don’t stop at just diversifying your assets. There is perhaps no more important diversification than the diversity of thought. As you look to hire, do not limit your talent pool to only those with deep roots in the industry. Consider interviewing individuals with experience across diverse industry sectors – for example, logistics and transportation – as well as different identities and backgrounds. Explore how diverse perspectives can enhance your talent pool and management teams. Then, once you bring in these new groups of talent, be sure to give them the tools and support they need to succeed and grow by implementing a culture of mentorship and sponsorship.
Moving on
As we’ve explored throughout our Movement series, the real estate community is circular and connected – with people at the foundation of each and every structure.
There’s no one-size-fits-all approach to the real estate business. An effective strategy must always consider the needs and perspectives of all your unique stakeholders. As you think through the many facets of today’s challenges and opportunities, invest in a team of advisors and research tools to help you keep pace with today’s state of constant movement.
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Subject matter expertise
Ira Weinstein
Managing Principal – Real Estate, Cannabis Industries
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.