We are almost a year into the global pandemic and offices are largely sat idle and empty. With lockdown now a reality until spring, the question on many industry leaders’ lips is: what does the future hold for commercial offices?
Prior to widespread home working, remote work was usually viewed as a nice perk rather than an organisational priority. Just 5.1% of the UK workforce primarily worked from home in 2019, despite the steady proliferation of technologies that made it easier than ever.
Given that 82% of real estate companies are looking to invest in home working and digital meeting tools in the immediate future, according to Property Week’s 2020 Power of Proptech survey, we can be confident that remote working will continue to be a common workplace reality in the post-Covid era.
It’s no surprise, then, that demand for offices is suppressed right now, with some consultancies estimating the average firm in London now has 20% more office space than it requires.
We are in all likelihood in for a prolonged economic downturn, which generally impacts office take-up. However, experience tells us that those who turn to innovation during a recession often outperform their peers.
With this in mind, we firmly believe that Covid-19 will be for real estate what the Global Financial Crisis was for the financial services sector. There is a real opportunity to drive innovation and more widespread technological adoption. Much of this is long overdue, given how resistant to change the commercial real estate industry has always been.
Our view is that proptech adoption will be quicker as a result of this downturn, with acceptance of tech-driven transformation much more widely accepted than previously experienced. As office owners and developers explore how to adapt their operations and assets to remain competitive, 89% of proptech investors believe the pandemic will accelerate real estate technology adoption across the industry, according to MetaProp’s Global PropTech Confidence Index.
The emergence of user-focused, big data in the occupier markets, combined with the digitalisation of letting, financial and legal processes, will allow the new wave of proptech adoption to reshape the real estate industry with their innovative business models. There will also be a pressing importance for office owners and developers to stay ahead of the curve and understand the business value of the data generated in buying, renting or managing real estate. That will enable them to select the best technological solutions to ensure that they remain agile within this changing world.
The foundations are already being laid so that 10 years of proptech adoption will now take place in just two. For instance, tenant and employee engagement platform Office App has experienced a sharp uptick in enquiries as corporates turn to technology to overcome some of the hurdles of returning to the office.
Office App brings together the data and digital systems used by buildings into a single platform to measure crowdedness, manage hygiene control and store all Covid-19 employee information in one place. To date, the software has been adopted across 300 buildings in Europe and is proving to be an indispensable tool as companies plan how to safely get employees back to the workplace and facilitate face-to-face collaboration.
Further evidence that Covid-19 has boosted the transition towards a digital commercial real estate market comes from VTS’s latest successful innovation. The New York-based unicorn, a modern tech platform for commercial real estate, launched an online office marketplace during lockdown enabling owners and brokers to see office listings, take digital tours and, eventually, complete an entire leasing transaction virtually, unhindered by any lockdown or logistical restrictions.
These are the types of solutions that we can expect to thrive in the post-Covid-19 world. At Pi Labs, we identified and completed 11 new investments last year, realising that such technological solutions developed by the next generation of entrepreneurs will shape how and where we work for years to come.
Faisal Butt is founder and chief executive of Pi Labs