On this episode of REALtalk, Antony Slumbers joins Michael Brooks, CEO of REALPAC, for a discussion on the relevance of the office, the need to reimagine office spaces, and what owners and operators of real estate need to do to stay relevant.
The episode covers:
- Understanding “what work is and how work is done”
- How office owners can make their product useful and relevant
- Rethinking who the customer is
- Understanding what customers’ needs are today
- Considering an office space vs a productive work force
- Why sustainable buildings matter
About Antony Slumbers:
Antony is a globally recognised speaker, advisor and writer on proptech and space-as-a-service. A serial entrepreneur, he has founded and exited several proptech software companies and now consults real estate boards on their transformation, technology and innovation strategies. He writes an influential blog at antonyslumbers.com and is a prolific Tweeter (@antonyslumbers). In 2020 he co-founded the online training company, the Real Innovation Academy, and teaches the #FutureProofRealEstate course to participants from around the world.
Michael Brooks (REALPAC): Hello, everyone, thanks for listening and welcome to REALtalk, the show that brings you unique insights from leaders in Canadian and international commercial real estate. I’m Michael Brooks, CEO of REALPAC.
I’m pleased to be joined today by Antony Slumbers. Antony is a UK based, globally recognized speaker advisor and writer on prop tech and space as a service as a serial entrepreneur. He’s founded and exited several prop tech software companies and now consults to real estate boards on their transformation, technology and innovation strategies. He writes an influential blog at AntonySlumbers.com and is a prolific tweeter at @antonyslumbers. In 2020 he co-founded the online training company The Real Innovation Academy and teaches the #FutureProofRealEstate course to participants from around the world like me. I’ve taken the course – it’s excellent and will get you challenging your own long held assumptions about our business. Antony, I’ve also seen you speak. I think it was maybe 2018 in MIPIM that you were presenting. I don’t know. It’s a long time ago, but always, always enjoyed your presentations. Always well researched. Always thoughtful. Welcome, Antony.
Antony Slumbers: Thank you, Michael. Thank you for the introduction and I’m glad you like this meeting. It’s I’m very much looking forward to being able to get back to it in in real life.
Michael Brooks (REALPAC): Yes. Well, we all are. So today we’re going to talk about the global office sector and competitive strategy and what new opportunities there might be for differentiation. And obviously, we’re all looking towards and anticipating the subsidence of this pandemic. And given what appears to be a widespread adoption of a hybrid work model for offices, where to office owners go from here in terms of continuing to make their product useful and relevant.
Antony Slumbers: Useful and relevant absolutely are absolutely the key words here. Well, sir, what we have discovered during the last two years. Is something that many people did know, but was not widely accepted, and that is that working remotely by and large works over the last two years, we were we’ve learned what does work and we’ve learned what doesn’t work. And as I say, by and large, most people are pretty comfortable for most of the time where they are and where they’ve been the last couple of years. But there are very clear, gaping holes on what would work better, being back in being back in the office. And I think what we’ve got to really look at is how in what way do we make our offices useful and relevant? How do we make them places that are the best place to go to do X, y z? And I think we’ve got to really, really dig down into this because people are not just going to go back and do exactly what they’ve been doing the last the last year. Certainly people who are sitting at their computer today and typing away on the on their keyboard are not going to commute in and just sit at another desk doing exactly exactly the same. The whole use of an office is going to become much more deliberative and much more purposeful, and it’s incumbent upon the real estate industry to really dig deeply into what it is that makes the office a better place to do something that at the moment, people are doing elsewhere.
Michael Brooks (REALPAC): Let me jump off from that because that’s a fascinating point. And it suggests that office owners need to better understand: what work is and how work is done? And work is what you do, not necessarily where you do it from. Do you agree with that? The owners just can’t say, here’s my building and of course it’s going to fill up because it’s in the great location now. I got to understand more about my tenants.
Antony Slumbers: I think there’s a very fundamental change that has happened and that is historically and this is something the retail industry found out a decade or more ago that historically people needed an office. So we in the industry were selling our products to people who needed it. That is where they had to go in order to do their work. What’s the situation now is that our customers have got to be made to want to come to our space. We don’t have a customer that needs us anymore. We’ve got to make them want us. So we have got to completely upend and rethink and change the way we look at our customer in the sense of we need to know our customer much, much better, but also who our customer is completely changes. So our customer, historically, if you are a developer, was probably frankly the investor. You weren’t that interested in the people, it was the investor. But let’s put that to one side. But even if you were, you thought of the customer as your tenant. That dreadful words. But you know your customer is the company occupying your space. But really, your customer now is every single person who’s coming into your space because if you cannot enable every individual in your space to be as happy, healthy and productive as they are capable of being, they have no need to come to your space, they can go elsewhere. So it’s an upending of the fundamental dynamics of the industry where historically we used to be selling a selling a product. Our business is now in delivering a service. Our business is in creating a space that, as I say, enables people to be happy and productive as they are capable of being. We can’t affect whether our customer is a good company or not or has a good culture. But there are things we can do in terms of real estate to make the space that we put people in as good as it is possible to be. And then that’s as far as we can go. So we need to put people in spaces that are environmentally provide very good environmental conditions and enable them to operate a maximum cognitive function. That’s the best we can do in real estate.
Michael Brooks (REALPAC): The line about happy, healthy and productive is interesting, and certainly they’re not all office owners are going to get this because this isn’t what they’ve always done. They’ve got the change. What do you think of the opportunities for those enlightened office owners to do some brand differentiation by focusing on what you’re talking about, the more space as a service and attracting people back to offices?
Antony Slumbers: I think it’s very important to think about who owns the relationship with the customer and if we start thinking of the as being every employee of the company that signs the signs are lease, who owns the relationship with them, who is responsible for their user experience of the building. And this is something that particularly landlords are going to have to be very careful with because they have to make a decision. Do they want to own that relationship with the individuals who are in their building? Or do they just want to do what they’ve always done? And we are in the real estate building. We let space. I don’t really care what you do with it. That’s my job is to let to let space, let someone else be responsible for the user, the user experience. So what I think you’re going to find is that the value of the operator in space is going to is going to rise dramatically. And that, of course, is going to be going to mean there’s an extra cost to the landlord because the customer wants a great user experience. Somebody has to provide that to them. Now that might be the company does it all themselves, but more likely, the company is going to do it in collaboration with the operator and or the owner of that building.
Antony Slumbers: And the very the very best companies, I think, are going to start to understand their client base in terms of the type of user experience that their clients, their clients require. And that is going to differ by industry. You know, if you’ve got a if you have occupiers in the media industry, they’re different to people who are accountants who are different to people who are lawyers, who are different to people or management consultants who are different to people of blah blah blah. It it doesn’t really matter. Each type of company probably has very particular needs. And I think what you’re going to find is that offices are going to start branding themselves or rather the landlords and or the operators are going to start branding themselves as the type of space for you. And I think if you start thinking of it in terms of luxury cars, so you think of a sort of BMW, Mercedes, Audi who is the most important customer for each of those companies, it’s the person buying their first luxury car because if they can persuade someone to buy into my brand and you’ll find that people are have very long term relationships with particular brands and the ultimate aim within real estate, I think, is to create a brand that to your particular market that you are aiming at is absolutely where they want to be.
Antony Slumbers: I don’t want to be in that building. I want to be in their building because they’re my type of people there. They were BMW building. No, I do like BMW builders. I want to go in a Mercedes building or didn’t like an hour to go. You know, this is a sequel to me, and this is going to become incredibly, incredibly important because it’s an off. It’s a second order. Consequence of the need to understand your customer really well by understanding our customers really, really well, we are going to understand what type of places and spaces and facilities and services they need in order for them to be as happy, healthy and productive as possible. If I could just say something about the happy and healthy and productive. The reason I phrase it like that is because the first to the happy and healthy sounds very fluffy. It sounds like I’m not really that interested in whether you’re happy and healthy. I just want you to do your job. But my thinking is. People who are happy and healthy most of the time are the productive ones. You will get outliers and you’ll get very unhappy people who happen to be incredibly productive.
Antony Slumbers: But by and large, a happy person who’s healthy is going to be the most productive. So even though it sounds fluffy, it’s really pure Adam Smith. Your job here is your customer does not want an office. Historically, the real estate industry has always sold offices because that’s what we have to sell. No customer wants an office. What they want is a productive workforce. So what is it that we can provide as real estate people to enable our customers employees to be as productive as possible? And that’s what we’ve got to find out. And if we can do that, then that has in my mind. Very considerable value, because if you’re if you are enabling someone to genuinely be more productive, that has to has to have a higher value. And what I mean by productive is cognitive function. It’s as I say, we can’t make a bad company good. But what we can do is provide an environment that enables people to operate at their maximum cognitive function. So in this space, this is perfect for me. It’s the right temperature. It’s got the right equipment, it’s got the right air quality. I’m functioning at my best. That’s what we’ve got to do.
Michael Brooks (REALPAC): Your fellow Brits would be horrified for you to associate top brands with German car companies, so let’s call them. Let’s call them the Jaguar buildings to stay close to home. Antony. So we want to we want to have the jaguar of buildings. And the last point you made about cognitive function and environment is an interesting one. You and I have had a few conversations about this. But what demands in relation to happy, healthy, productive, what demands could we anticipate the jaguar of office buildings to want to provide around indoor air quality, environmental credentials and maybe even, you know, net zero carbon emission plans going forward?
Antony Slumbers: It’s interesting you mentioned net zero in there because we need we need to decarbonize real estate and that fills or can feel separate from everything else. But frankly, if we provide if we can create sustainable buildings with low carbon emissions, we are actually going to be solving a lot of the environmental conditions at the same time. So it actually by solving one problem, which is a necessity, we’re actually solving another problem which potentially offers us a lot of benefit. But it’s essentially in terms of the environmental conditions without going into the details of it. You know, carbon dioxide levels need to be at a certain between a lower and a higher level. Noise needs to be between this level and that level temperature needs between this level and that level lighting needs between that level. Now these each of these variables might change from the particular job that is being done in that in that space. So a space for, I don’t know, a sales team is probably going to have different environmental conditions for the accounts department because doing that sort of job means you, you need in an optimum situation, slightly different environmental conditions than another party. So it’s going to be a case of, as I say, breaking, breaking, understanding the jobs to be done of the different individuals and teams within your customer and then working back from there to what type of environment they need and to what extent can you continually optimize it and continually optimize thing I think is really important.
Antony Slumbers: So in so many situations in real estate, we’ve had we’ve had the routine of we build a new building, we get it certified, we get all the certificates and it’s brilliant and it’s fantastic. And as long as you don’t put any people in there, you’ve got an absolutely optimum building and then people go in. And a year later, someone comes in and does another survey and says, Oh, well, this is this is how well the buildings are performing, but we can’t do. You can’t really. You can’t optimize space based on yearly surveys. We need to be thinking of all of our real estate and our workplaces as if they’re software where they’re continually monitored and by continually monitoring them, it’s going to enable us to optimize them. I mean, this is this really is very much this is top end Jaguar. Jaguar doesn’t talk talking about here, but the absolute pinnacle of what we can do is to completely understand the wants, needs and desires of the customer, what their job to be done is and put them in the perfect space to do that.
Antony Slumbers: And if we can do that, what I’m thinking would do is we will enable people to operate at their maximum cognitive function. They will want to be in the space and they will be most satisfied with the space because if you take, this is a historical thing. We all know the elephant in the room with office buildings half the time they are empty or half the time they are half empty. And if you ask people, are they satisfied and does their workplace enable them to be productive? About 40 plus percent people say no, so we’re not actually creating spaces that are particularly they might. Efficient, all effective. So what I’m saying is the game here is to take a building that is 50 percent occupied, be safe, 50 percent satisfaction from the employees and trying to get it to 70 percent occupied with 70 percent satisfaction. Now cost you money to do it. But the value, the value of a space to your customer, whether that is 70 percent occupied with 70 percent satisfaction, has to be dramatically more than 50 50.
Michael Brooks (REALPAC): Absolutely. Those are great words to maybe finish on Antony. And of course, much of this we discuss in your course Real Innovation Academy, which I can recommend having taken it. It’s been a pleasure to have you on today, Antony, and we look forward to speaking with you very soon.
Antony Slumbers: Thank you, Michael. My pleasure.
Michael Brooks (REALPAC): Well, this is Michael Brooks, and that’s it for this week’s episode of REALtalk. Be sure to visit us at realpac.ca/REALtalk and subscribe wherever you get your favorite podcasts. If you have an idea for a topic or a guest, please send me an email at firstname.lastname@example.org. And if you like what you hear. Give us a 5-star rating. Thank you for listening and tune in next time.