Operational Real Estate in Practice
19 July 2021
The importance of data and relationships
While the spring webinar explored operational real estate from a conceptual level, our summer webinar focused more on the practicality of facilitating operational uses within real estate.
The key takeaway from the panel discussion is that data is becoming increasingly important and that maintaining good relationships between landlords, tenants and operators is now imperative.
Roger Madelin, CBE, Joint Head of Canada Water at British Land argued that occupiers are now asking for more and more information on an asset, with factors such as air flow and the ESG agenda becoming increasingly important. Property management is therefore becoming a much more collaborative operation than it was 25 years ago. Jessica Cunningham, who manages portfolios of alternative assets at L&G agreed and added that even in the more traditional commercial real estate sectors, landlords are now getting more involved in the operational side of things and that the relationship between landlords, occupiers, operators and clients has become much closer.
When the discussion turned to the data side of things, Dan Gildoni, CEO & Co-founder at Placense made the point that decisions are increasingly data driven. The data driven approach is not just limited to measuring air flow and electricity usage within a building though. Location and demographic data for example is crucial for retailers. This is not only important to analyse a assets’ current performance, but also to improve its future.
Focusing on office buildings, Faisal Butt, CEO, Founder & Chairman at Pi Labs added that flexibility is the key driver of change. While historically a developer would lease out an asset to an operator (such as WeWork or Regents) and let them deal with the operational part, there is now the need for a landlord to understand the end customer. He argued that more sophisticated landlords offer a more flexible product. Technological progress is imperative, with technologies digitalising operations of space booking, space optimisation, payments etc. making it easier for landlords to run flexible office space.
When asked whether there are any specific physical buildings that are more suited for being an operational asset, Mason Booth, Co-Owner at Thirdway Group pointed out that in theory every building could have potential. However, older buildings are generally less flexible than newer buildings due to regulations and listings. In an example highlighting the importance of an operational asset, Mason spoke about a landlord that has invested heavily in the repurposing of an office building, with the landlord thinking about what is important to the end user, i.e. the occupier of the building. The repurposing therefore focused on things like ESG, well-being, shower facilities, communal areas etc.
Roger also gave a great example supporting the fact that buildings are now more than just physical assets. Speaking about the British Land Campus at Canada Water, he highlighted how they have tried to create a community within a community, offering tenants to participate in wider networks, such as volunteering programs, sports etc. There is of course a much higher operational ability required to manage these programmes.
Oliver Kolodseike