Faster, ubiquitous connectivity, big data and artificial intelligence are just some of the technological advancements set to revolutionise real estate and investors must prepare their assets, portfolios and strategies for the digital disruption that lies ahead.
That’s the message in a new report from JLL, which explores the impact that technological innovation and its adoption into working and social life is having on workspace. Offices, in particular, face fresh demands to be flexible and facilitate collaboration.
According to the research, as much as 30 percent of a corporate portfolio will comprise flexible space by 2030 as tenants increasingly expect real estate to help them to attract and retain staff and enhance the productivity of their workforce.
Typically a topic reserved for the occupier world, real estate investors are beginning to wake up to the potential impact that new technology will have on the property world. The paper sets out ways in which investors can ride the wave of change in order to gain a competitive edge.
“Real estate, which is typically fixed and immovable, is traditionally slow to respond to change – but technology is not,” said Guy Grainger, CEO, EMEA, JLL. “Flexibility and adaptability are more key than ever.
Regardless of whether we’re talking to investors, corporate tenants or developers, people and technology are at the core of everything – it is time for the workspace to adapt to 21st century needs.”
Smart buildings and data collection aside, technology will reshape the structure of the office asset class.
According to the report, Grade A, top tier location space, offices designed to suit large corporates, will be reclassified as ‘platinum prime’ space. Beneath this, a growing cohort of flexible, modular assets, suited to start-ups, will be built to suit companies with fluctuating business cycles. Meanwhile, a new asset class will emerge, bridging the gap between institutional leasing and co-working.
James Brown, Head of Research, EMEA, JLL, added: “In our report, we’ve identified the ways in which these changes are giving occupiers, developers and investors strong cues about how their approaches to real estate will need to change practically in the future. New opportunities will emerge and those who are able to respond to change will reap the rewards.”
However, office demand is not expected to diminish at the hands of technology, the report says. While the notion of an office is being challenged, office use is rising and demand for workspace is set to increase, albeit in different ways.
Successful investment in this new asset class landscape will require different skills and disciplines as the ends of the spectrum require different strategies and management.