Covid-19 has led to largely empty offices worldwide. The silver lining, if you can call it that, is that the pandemic is pushing real estate players to embrace technology more rapidly than they might have otherwise done. While not long ago smart office technology was seen as a ‘nice-to-have’ feature to attract talent for tenants, it has now become crucial to bringing people back to work safely. The real estate sector, traditionally slow when it comes to innovation, is now awakening to this new reality – and starting to change its attitude toward technology.
“Covid-19 will be to property and proptech what the great financial crisis was to finance and fintech,” says Faisal Butt, founder and chief executive officer of London-based property technology venture capital firm Pi Labs. “Health and safety and wellbeing since covid-19 has become a major theme and, for office buildings in particular, owners and operators want to create an environment which encourages tenants to come back to work.”
The sector’s appetite for technologies to improve the office experience has only grown in response to the crisis – something hard to imagine only a few months ago. That is not lost on Harry Badham, UK head of development at AXA Investment Managers – Real Assets, French insurer AXA Group’s global multi-asset investor.
Badham recalls the industry’s skepticism when the firm specified the tech system at 22 Bishopsgate – London’s newest skyscraper – which included opt-in facial recognition for staff entry, QR entry codes for visitors and a smartphone app that can control ambient temperature, ventilation, operate the blinds or even order coffee.
“The immediate reaction a few years ago was really defensive. It was almost like any technological innovation was perceived as being in some way sinister, but it was more a psychological challenge than a technological one,” Badham says. “Technology has been here for a while, but for some reason people felt uncomfortable about the concept of it in a commercial or even a residential piece of real estate. Since the outbreak of the pandemic, however, people have become more open to accepting technology as a solution rather than being resistant to it.”
Time to turn to technology
Dan Drogman, chief executive officer and founder of Smart Spaces, the firm delivering smart technology on behalf of AXA IM – Real Assets at 22 Bishopsgate, agrees tech adoption by office managers has accelerated as a result of the pandemic.
“Covid-19 comes along and all of a sudden contactless has become top of the agenda,” Drogman says. “We have seen inquiries for our technology increase by around 400 percent from March to October compared with the same period a year ago.”
Industry participants canvased by PERE concur that touchless technology, such as facial recognition and voice-controlled devices, are in high demand amid the pandemic.
Other sought-after technology solutions include: sensors to measure workplace occupancy, which aid social distancing and reporting; QR codes to track timing and frequency of cleaning; indoor sensors to measure air quality and trigger increased ventilation or the cleaning and replacement of dirty filters; bipolar ionization technology integrated in HVAC systems that attach to and neutralize harmful substances like viruses; and software to book meeting rooms or desks according to social distancing guidelines.
While these tools can help deliver healthier and safer workspaces for owners and occupiers, industry sources highlight another key benefit of these technology solutions: access to reliable data which allows for a better use of space and adjustment to this new normal.
“By introducing these technologies, office managers can access data points to understand the actual utilization of their spaces,” says Akshay Thakur, head of technology consulting for EMEA and APAC at real estate brokerage firm JLL. “It is not just about safety and security, but also about being more data-driven from an operational standpoint, driving efficiencies in the management of the buildings.”
Some firms have spurred proptech innovation by creating custom tools to respond to the covid-19 pandemic. PwC, for instance, has developed a 3D behavior and mobility simulator to help office managers make decisions about the return to office, when lacking historical data. The tool simulates covid-19 transmission by building a virtual office environment and configuring a transmission model using variables like percentage of staff, team mobility or critical social distance.
“One of the biggest obstacles to reopening safely is the uncertainty around people’s behavior and movement in a physical space,” explains Jonathan Lucas-Lucas, risk assurance partner at PwC. “By simulating movement instead of making assumptions, we can model infection rates and see how they might change significantly with just a minor adjustment – for example, by making a corridor one-way; or even how infection rates might not change at all in the face of a significant change, such as doubling occupancy as long as it stays below a specific threshold.”
He continues: “We can also see how different covid safeguards can work together in a specific workplace or public space. And we can explain and communicate the reasons behind these important decisions.”
Innovation is here to stay
Although technology is increasingly perceived as a means of survival for office assets, one of the key challenges highlighted by the industry is a reluctance to invest in innovation at a time when covid is prompting them to minimize costs. There is, however, a recognition that those organizations already using these tools will likely be quicker to adopt more innovations and have a smoother transition in these changing times.
Long term, the outlook for technology investment remains encouraging. According to the Urban Land Institute and PwC’s 2020 Emerging Trends in Real Estate report, which surveyed 905 people, nearly 90 percent of European property investors that took part said the use of technology in their operational businesses will continue to grow over the next five years.
The survey took place before the pandemic, but this crisis has proven to be an accelerator of this trend, acting as a catalyst for the digital adoption of new proptech tools. The consensus is that this culture of innovation is here to stay.
“Covid-19 will be a turning point for the digitalization of offices, and this is not going backwards, but forward,” Pi Labs’ Butt concludes. “The millennials are the majority of the workforce now and, as the end users, they absolutely want to use tech tools in their workspace. As they advance their careers and get more influential positions, they will push for the change.”