Real estate must undergo a wholesale repackaging process

COMMENT Property used to be a simple business, at least the operational part. Long-term leases, low touch and low service was the norm for landlords as recently as 10 years ago, and it suited them just fine. Fast forward to 2021 and real change is upon us. Flexibility, services, amenities, F&B, community, ESG, technology, workplace strategy, building health, end-of-trip, hybrid work, remote work, density, events… the list of considerations for the modern property product seems to be endless, and that’s before you add Covid return-to-work policies into the mix. This overwhelming complexity not only adds significant cost but reduces responsiveness and performance on the part of operators and landlords. Looking at other industries, it’s clear that the solution to real estate’s complexity problem is digitisation. This is not just about collecting data (although data is important) or building an app. It is also about reframing and repackaging analogue processes to reduce complexity and enable responsiveness in the face of rapid change, before using data to guide responsive outcomes. No simple solutions In a bid to keep their business simple, landlords have sought to find simple solutions to the emerging complexity. Real estate is not alone in this. Every industry that has been disrupted has tried sticking plaster solutions to manage complexity. Ultimately though, a wholesale repackaging of the sector’s offering is required to make it responsive in a digital world. Tenant engagement isn’t an app, it is an outcome, driven by the ability of the landlord to respond to the customers’ (tenants’) needs (demands). In a post-Covid world, the significant changes reshaping the industry are going to require an enormous amount of responsiveness and a great framework to facilitate it. There is so much hype about data, but it is only useful if it is driving outcomes. You can collect all of the data in the world, but if you don’t have a framework through which to deliver change then that data is actually useless. You can build a lot of dashboards, but you won’t build success. Once the industry comes to the realisation that a repackaging of the product offering is essential to tackling complexity, there needs to be a framework for packaging, pricing and distribution. Elsewhere, this created boom industries and great catch concepts like “e-commerce”, “multi-channel”, “subscription economy”, “SaaS”, “streaming”, “marketplace”, “the Uber of…” and “the algorithm”. All of these frameworks revolve around the packaging, pricing and distribution of products and services in the digital world. At Ility, we think that the framework for digitised property should be “rights management”. We aren’t talking about landlords changing their fundamental business model, or offering more flex or more services or hybrid work, although it may be any or all of those things. Instead, it is about responsiveness. We are talking about shifting from a diverse range of complex offerings: rent, services, amenities and more, to a homogenised offering, distributing defined interactions between humans and the building –or rights. The right to occupy, the right to access, the right to see your bill, the right to book a meeting room, the right to see your ESG data. The list is endless and the framework extremely responsive. Responsiveness is critical By using a robust framework, landlords become much more responsive. They have the ability to define what their product offering is and to whom it gets distributed. They have the opportunity to create products and distribute them to the community that they have created. They can manage a broad array of products complementary to their traditional business. It is critical that the industry doesn’t try to bolt on complex solutions to a non-responsive legacy business. They need to repackage the entire offering to respond to digital transformation. Rather than the new workplace being a threat to the property industry, it actually creates significant opportunities for product development and revenue growth. Landlords simply need to have the right framework in place. Marcus Moufarrige is CEO and founder of Ility