by John Salustri — Originally published in the November/December 2017 issue of BOMA Magazine — Here’s a question for you—or at least those of you working for commercial real estate firms with long, rich and sometimes disabling legacies: How different would your company look if it were launching today?
Since you—or the generations before you—first joined the workforce, there has been a world of change in how corporate America views the white-collar workspace and how commercial real estate providers should respond. Much of the credit for this change goes to millennials, who are now the dominant generation in the workforce. In fact, Pew Research Center reports one in three American workers are millennials. But, that’s not the full, nuanced picture. There are people of all age cohorts, as researchers like to call them, who embrace modern tools and methods of work and who can come up with innovative solutions.
Nevertheless, hiring and retention are increasingly focused on millennials. So, it stands to reason that many of the answers to client questions are coming from an industry that seems to have no problem relating to young professionals: technology. Happily, there is much commercial real estate has learned from tech in recent years. But, there also is much more to learn.
Hiring for Modern Times
There was a time when job recruitment was at the whim of the hiring company. Job candidates were focused on “Did I get the job?” rather than its modern adaptation: “Is this company a good fit for me?” The empowerment implied in that second question has commercial real estate providers scrambling for answers in order to win the race for top talent.
Crucial to that “fit” these days is a collaborative workplace. “The technology sector is leading the charge in renewed workplace design,” according to JLL’s recent white paper, Forget the Beanbags: Here Are the Real Workplace Trends to Steal from Tech (see the sidebar on page 35). “Tech has catered to the emerging collaborative workstyle and defined what the modern workplace looks like….The idea that the workplace can and should evolve to better support employees is resonating across industries.”
Clearly, the beanbag reference alludes to the over-the-top, cushy approach to workplace design epitomized by Google. But, not every real estate company has the culture, the room or the budget, for that matter, of Google.
“Creating an energized and creative office environment does boost productivity,” says Nick Romito, CEO and co-founder of the rapidly growing real estate technology firm VTS, part of the burgeoning sector known as “proptech.” “There is a reason Google and Apple spend tens of millions of dollars on their offices to make them places where your employees want to work. But, to attract young people, you do not have to go out and buy foosball tables.”
If it is not nap pods and ice cream carts, what does it mean to be a modern workplace? “It means an environment where your people can do their best work and collaborate,” he explains. “And, collaboration is key.”
VTS, with some 215 employees (average age: 30), puts its TI capital where its productivity is. For instance, says Romito , “We have 12 different whiteboard areas that are surrounded with comfortable couches and coffee tables where an eight- or 10-person team can brainstorm and whiteboard all sorts of issues. It puts you into a different frame of mind. You know you’re at work, but in a much more creative environment.”
By comparison, many real estate firms still fall way short of the new, collaborative ideal, at least in the eyes of the tech firms servicing them. “A good portion of real estate operating firms are conservative when it comes to embracing technology,” notes Alex Stanton, commercial industry principal for real estate software giant Yardi Systems Inc., which has an employee roster of 5,500 with an average age of 40. For those legacy firms, “it is all about business as usual—leasing space and collecting rents with the same processes that are decades old. Those models and processes are due for upheaval.”
Firms that display both an affinity for tech and an understanding of new modes of working—and have spaces that showcase that understanding—will serve as magnets, not only for new talent geared to more collaboration and freedom of movement, but also for clients seeking the same.
Cushman & Wakefield is taking a page from the technology playbook. “We have studied tech companies and developed models for attracting and retaining talent, no matter what age,” reports Dan Pufunt, executive managing director of Asset Services in the Americas at Cushman & Wakefield. “We have hired a new head of recruitment to spearhead those efforts. We are also expanding our college recruitment efforts to additional markets this year.”
Aligning Talent and Client Solutions
Getting talent in the door with gee-whiz spaces is one thing. Keeping them there—retention—is another, and open offices and coffee bars are simply not enough. New mindsets also are part of the equation.
JLL, which counts some 46 percent of its 80,000 global workers as millennials, applies a technology and millennial focus to its own workspaces, those it develops for clients and to the real estate solutions it creates. JLL recently launched a new venture called JLL Spark, headed by CoCEOs Mihir Shah and Yishai Lerner, both of whom have deep roots in Silicon Valley. They are charged with launching “new technology-based products and, along the way, we might make some strategic investments in proptech companies,” Shah explains.
“What great tech companies do is figure out client pain points and use technology to reimagine new solutions,” he continues. “Real estate firms can follow this same approach by interpreting client wants to create unexpected, amazing, modern experiences. We need to think about our clients and how to define that experience specifically for them. We do that by enhancing our offerings with technology, rather than simply doing what we have always done.”
How to Make Your Office Look More Like Google
When recently appointed JLL Spark Co-CEO Mihir Shah (read more on page 36) first walked into the newly revamped Chicago spaces of his new company, he tells BOMA Magazine, “I thought I was in a tech startup.”
Of course, a collaborative culture goes far beyond modern design trappings, as the firm’s white paper, Forget the Beanbags: Here Are the Real Workplace Trends to Steal from Tech, points out. Nevertheless, there are physical applications that can make your real estate firm look like it is run by tee-shirted, 20-something entrepreneurs. Here are six trends the paper offers:
- Tear Down the Walls. But Only Some of Them.
“Open spaces can be beautiful, energizing, flexible, collaborative and cost-effective, and make a statement about your corporate culture,” says the report. “However, designing an effective open office is far more subtle and complex than just sitting everyone at tables in one big room.” Lack of privacy and distractions can be addressed with low-height workstations. “A series of small, personal work booths with walls no taller than ear-height feels communal and personal at the same time.” - Zone Out in a Good Way.
Non-territorial neighborhoods, or zones, can be organized by function. “The most productive workplaces are no longer one-person-per-desk,” according to the white paper. “Diverse settings support the different ways [individuals] work, whether that’s alone, in pairs or in groups of various sizes.” - Plan for the Future.
Even If You Can’t Predict It. Furniture on casters and movable partitions can be a big help for companies that are growing, cutting back or simply changing models. “Workspace and construction decisions are often permanent,” notes the report, “which is why your furniture and layout shouldn’t be.” - Remove Barriers to Technology.
Technology needs to be innovative, which means cutting-edge, and it needs to work. According to the white paper, “You have to stay connected. Strong, reliable mobile reception and wireless internet access are a must. No excuses.” - Be a Brand Ambassador.
“Whatever makes your brand stand out in the l marketplace should be seen and felt in the workplace, too,” say the writers. “You don’t have to plaster your logo on the walls, but a great company workplace should…be aligned with its values. If not, you’re losing your best first impression: the one you make internally.” - Finally, Go Beyond Recycling.
The green movement of a decade ago has grown up to encompass sustainable, healthy environments that support wellness and productivity. “There are ways to be sustainable that simultaneously support comfort and health,” states the report. “Look for the sweet spot where green and productive overlap. Within it, you’ll find reduced absenteeism and boosted engagement.”
You also do that by enriching the work experience of the teams charged with delivering those spaces. Here, too, real estate can learn much from tech. “Vacation policy is a big one,” says Romito. “We have unlimited vacation, just as long as the work gets done and you are respectful of the policy. If you abuse that, or any policy for that matter, there are obviously repercussions. But, people are really respectful, and I think they actually end up being more productive. “We also have an education budget,” he continues. “We incentivize people to grow at their craft. We want them to be world-class and are willing to invest in them to do that.”
Clubs to unite workers with similar interests, such as surfing or climbing, are an important part of the VTS culture of team building, too. These clubs all fall under the bailiwick of the VTS Employee Experience team, part of human resources. “It’s a six-person team responsible for measuring the engagement of our employees,” explains Romito.
“Today, retaining top talent demands that you also be responsive to the needs of the new generation,” says Cushman & Wakefield’s Pufunt. “It is important to be sensitive to the things that are important to them. There is a war for talent, and we provide our employees with technology that allows them to work remotely or on-the-go, if necessary. This helps us retain younger and more diverse talent. We also have more seasoned veteran employees who mentor newcomers to the business and will remain mentors as they progress.”
Apparently, the effort is bearing fruit. Cushman & Wakefield boasts a 45,000 worldwide employee base, 55 percent of whom are under age 40.
And, much like VTS, Pufunt continues, they have a strong onboarding program that incorporates the customer service skills necessary in commercial real estate. “We train our people to come up to speed on our technology, but this is still a people business and we remain focused on our clients and customers. Through technology, our employees can be more productive, ultimately harness more data to make them better real estate professionals and increase their ability to make decisions using a broader set of data than was historically available.”
And, while retention is everything, the aforementioned gee-whiz spaces also are part of the strategy for major commercial real estate firms, from JLL and Cushman & Wakefield to CBRE and Colliers International, all of which are in the midst of massive reinventions of their own offices.
Underserved No Longer
It was a long-held belief that real estate providers were woefully tech-averse and lagged other industries in adopting modern tools. If it was true once, it is no longer.
“That would have been true before the financial crisis of ’08,” says Yardi’s Stanton. “After employment losses and cutbacks, the only way for real estate companies to grow again was through technology—and they have done a really nice job of adapting.”
To some, though, it was not so much a matter of tech aversion as it was a matter of being overlooked. Commercial real estate “was historically underserved by the tech industry,” agrees Shah. “It simply was not a magnet for entrepreneurs—but things are changing. If you look at the amount of venture capital invested in property technologies over the past few years, you would see it is growing rapidly. In the past few months, we have met with so many CEOs of proptech companies that the rapid growth is evident. It is a very exciting time to be in the industry.”
In fact, according to data from software, research and analysis company PitchBook, there was a cool billion in venture capital invested in real estate tech in 2016. This year is on pace to at least repeat that frenzy.
One obvious result of that growing push toward more technology is the attraction of a more tech-savvy clientele. “There was a day when general ledger, accounts payable and accounts receivable were all separate subsystems,” says Stanton. “These old business processes get fixed in people’s minds, despite how they have evolved. The operations of more forward-thinking service providers are becoming part of the information ecosystem, and that will continue to grow.”
If, at one extreme, there is the belief that real estate was tech-averse, at the other is the notion that real estate companies are actually now in the tech business. Not everyone agrees with this assessment. “Yes, the world’s largest real estate companies are very focused on becoming more tech-savvy, but they are and will remain real estate companies,” says Romito. “Real estate, at its core, is a relationship business. But, if you think about relationships in general, 50 percent of them happen online now. So, maybe they are missing a piece of the puzzle. But, that is why they turn to firms like ours: to help them make those connections and make them better at what they do.”
All the global players are taking a lesson from the tech world and in one way or another addressing the need to enhance their suite of digitized offerings. For JLL, it is Spark. At the time of this writing, Shah explains, “We are only three months in and taking a look at the landscape to learn the business and determine where we need to focus.”
Shah agrees that real-estate-as-tech-firm overstates the case. “But, there is an incredible opportunity for all of us to embrace technology to make our people more productive and produce better results to increase value for our clients,” he says. “I see young people coming into the business with new ideas, and we need to embrace that. We need to give them a forum to express those ideas, especially if it adds value that we can deliver to our clients.”
Real estate will always be real estate, agrees Cushman & Wakefield’s Pufunt. “But, it is good business to rethink traditional models and what is available that can be applied to better serve our customers,” he adds.
ABOUT THE AUTHOR: John Salustri is editor-in-chief of Salustri Content Solutions, a national editorial advisory firm based in East Northport, New York. He is best known as the founding editor of GlobeSt.com. Prior to launching GlobeSt.com, Salustri was editor of Real Estate Forum.