This year has been a dynamic and exciting year in real estate with an array of topics, trends and projects coming to the forefront of public discourse. With sustainability, rapid urbanization, the infrastructure gap and the future of work taking top billing in the public sphere, there’s an opportunity for global thought leaders to propose tangible solutions to these challenges to help inform public policy and build public confidence.
RICS sat down with two newly appointed members of the RICS Americas World Regional Board — Maureen Ehrenberg, FRICS, global head of facility management services at WeWork, and Alexandra Faciu, MRICS, executive director of asset management of Cominar Real Estate Investment Trust in Canada — to discuss what they see as the most important issues of 2019 and what is on the horizon for 2020.
Looking past the news cycles, what was the dominant issue underlying the real estate industry and built environment in 2019?
Maureen Ehrenberg: The dominant issue ultimately is technology. We are seeing tremendous amounts of investment in technology that’s making the buildings smarter and the workplace more intelligent. In order to capture the data from these systems and successfully compete in the digital environment, companies are prioritizing their data strategies.
What isn’t talked about enough in mainstream media is the evolution towards smart ecosystems. This is first happening within buildings and will eventually evolve to smart cities. Columbus, Ohio, is a leading example of this smart ecosystem. The speed and capacity of 5G is enabling the evolution of these infrastructures. As a result, we will see many other private and public organizations making the push to change how buildings and cities interact with people.
Alexandra Faciu: The strength of the job market is having far-reaching effects on real estate, affecting all levels of players, from landlords and investors to tenants. There is less than 6% unemployment in Canada, and under 3% in parts of Quebec. This brings a new dynamic to real estate users and owners.
Employees have more choice, so employers have to be more desirable, and this ultimately impacts buildings. Amenities and office design are immensely important to creating more dynamic and healthy working environments that empower employees. In turn, this leads to building upgrades and changes in the ways owners, architects and engineers design new space.
Future-proofing and sustainability are at the front of people’s minds. To what extent do you believe the industry will prioritize resilience and the circular economy in 2020?
ME: There’s still some confusion by people with how they use these terms. Sustainability needs to be thought of more broadly. Besides addressing environmental programs that conserve water and energy consumption, that manage waste and eliminate waste (what’s called the circular economy), sustainability also encompasses matters of social responsibility and includes diversity, inclusion, human slavery and business ethics. We are seeing businesses increasingly understanding this and addressing it as a part of their corporate social responsibility programs. A recent Deloitte study shows these issues are important for millennials and determines whom they work for and how they invest. Sustainability applied widely is how we’ll future-proof how we work and where we work.
AF: In 2020 and beyond, I see companies seeking a return on their people-investment by being more strategic in evaluating how they design and operate their workplaces. This new focus will bring more intentional investments in those elements in order to provide the optimal environment for their people. Their recruitment and retention strategies are relying on the success of these strategies for reducing turnover, increasing employee engagement and reducing sick days, just to name a few positive outcomes sought through better design and more people-focused practices.
They are also creating common space that brings people together and designing building systems that will improve employee productivity. For example, having a sufficient number of elevator cars to move traffic, and introducing smart dispatch controls on the cabs to do it intelligently, will reduce waiting time. This seemingly small thing can have a huge impact on productivity and employee satisfaction.
Essentially, I see employers removing barriers that make people less productive and dissatisfied. Another example is bringing more fresh air into the workspace and increasing the air exchange rate. While these actions might increase HVAC costs, the productivity payoff through improved cognitive functions far exceeds the costs. Plus, people are happier and healthier.
How do you see anxiety about a looming recession and housing downturn affecting the industry in 2020?
AF: We’re still not seeing many effects of that anxiety in the investment management sector. Investors remain confident, especially in Canada. Companies are preparing assets for a recession, which means taking a long view with tenants, by optimizing and diversifying tenant mix and quality. But that’s what owners and asset managers should be doing regardless of the economic temperature because it’s sound strategy.
What project, trend or initiative inspired you most in 2019?
AF: Co-working has been an exciting force for companies and entrepreneurs. When I was starting my own business 12 years ago as a start-up entrepreneur, I missed having people around. Co-working spaces have a really positive effect on young companies because that atmosphere helps energize entrepreneurs. People feed on each other’s energy.
Co-working also provides health and well-being benefits, along with the financial and space flexibility, to help companies grow because they don’t necessarily have the resources for real estate. This shouldn’t be a hindrance to growing a business at first.
ME: Technology and the shared economy have been game-changers, in particular, with how businesses are learning to do more with less. Technology has transformed real estate incrementally, but it’s advanced to the point that proptech is its own industry, and it’s allowing real estate investors to develop alternatives to drive value outside of traditional leases.
This is happening concurrently with paradigm shifts in global population — in particular population growth and urbanization — forcing firms to think about how to conserve resources (think sustainability). CBRE created Hana, a flexible space solutions brand. Brookfield and mall owners are introducing similar co-working and shared service initiatives, as are Office Depot and Staples.
The public is interested in sharing, and technology allows us to do that efficiently without negatively impacting business. Technology and sustainability are creating a stronger circular environment.
What projects, trends or initiatives are inspiring you for 2020 and beyond?
ME: The advent of smart cities is incredibly exciting. New infrastructure, amenities and engagement with communities are changing how citizens engage with the built environment through technology. You’re also seeing mass transit reinvestment and more advanced emergency response centers. Cities are reconsidering water consumption and lighting. Essentially, we live in a global environment. We work in a global economy and real estate is a global asset class. Consequently, our cities are starting to think about their built environments globally.
AF: Being part of the RICS Americas World Region Board is exciting because of the global good the professional body is doing in the land, infrastructure, construction and real estate spaces. I’ve been a Chartered Surveyor for 18 years, and it’s a compelling professional organization with a great mission. I’d like to make people aware of the depth of knowledge that RICS provides.