Megatrends are changing the Real Estate Market

Rajska-Wolinska Monika Colliers
Monika Rajska-Wolińska, Managing Partner of Colliers International in Poland

Digitisation and automation, flexibility, and changes in the nature of business processes caused by emerging technologies – these are only a few of the megatrends affecting the real estate market.

For many companies, the year 2020 has been the time of transformation and accelerated implementation of solutions which have become a priority due to the pandemic. This not only involves switching from the traditional working model to a more flexible one, but also taking a holistic look at organisations and the buildings they use. Employers, property owners and workplace strategy experts  are facing the challenge of meeting the new requirements. They need to rethink how to adjust office space to the changing occupiers’ needs and market megatrends.

The pandemic has only accelerated the changes that had already been observed before, concerning remote work, employee expectations related to greater flexibility on the part of employers, as well as the need to analyse the business model adopted by building owners and better adjusting it to tenants’ requirements.

Although in the short term many tenants have put off the decision to lease space, eventually these decisions will have to be made. Many companies are likely to adopt a hybrid model, combining traditional lease with the flexible component to address the highly unpredictable business cycles that we are observing today. Although such solutions entail additional costs, companies will be willing to incur them to enable themselves to quickly reorganize assets. Access to flexible space is becoming an essential element of companies’ real estate strategies. The future will be shaped by applications providing access to flexible space, such as Colliers Mobility Pass, which allows for booking space in more than 5000 coworking sites in 70 countries, including over 60 in Poland, located not only in big cities, but also in smaller ones like Żyrardów or Konstancin. This addresses the needs of workers, who increasingly often expect the cowork to be near their place of residence. Using the virtual platform provides both large and small businesses, as well as start-ups and freelancers, with access to on-demand offices.

These dynamic market changes that we are witnessing overlap with the following megatrends, which should also be considered by the real estate players who are developing their strategies for the years to come:

The development of technology changes the nature of business processes

Simple works and tasks are being automated, whereas artificial intelligence (AI) supports ever new sectors of the economy. As a result, the profile of employee sought by companies is also changing. Machines are not able to handle all aspects, therefore man is essential in areas where creativity or ability to react in unpredictable situations are required. Employees with such skills are and will be the most attractive to employers. This evolution of the employee profile is also redefining companies’ needs with regard to office space. Demand is rising for premises conducive to creativity, which are adjusted to team meetings and brainstorming, with work being done not only by the desk.

Digital transformation and new organisational models

More and more organisations are flattening their structures by switching to an agile matrix model, where rather than a traditional hierarchy, it is more important to focus on the user, project, end product and time to market as well as the speed of reaction to changing conditions. Increasingly more organizations are faced with this transformation, which affects their space preferences as well as expectations towards the property market.

Real estate as a service

The real estate as a service concept is not new, but it has gained in popularity due to the pandemic. So far the essence of a property was that it simply existed, having been built in a specific location. The service layer is now becoming more important, which can be built based on property data. It turns out that some companies, for example from the proptech or cowork sectors, are able to leverage the data on user needs and behaviour, made available by the building, much more effectively than property owners themselves. A building’s service layer, and monetization of the data it supplies, may turn out a much more future-proof business model than a property as such. This is the essence of the digital workplace, or the synergy effect between the on-premises environment (bricks), user needs (behaviour), and what the digital layer of a property gives us, as well as the technologies that we can implement in such properties (bytes). A holistic approach to all these aspects allows for collecting complete data needed to design a space adjusted to user needs. Applications such as Office App, which monitor the use of space by users, can help in collecting the said data. However, applications not only supply valuable data, but also streamline office management by providing, for instance, mobile access to the building, ability to navigate within it, reserve parking places, or register guests. The data collected this way is used to analyse the space leased by the given company, which helps them adjust to actual user needs.

Inside out design

So far office buildings have hardly ever been built using the inside out design model, i.e. designed inside out, where the primary focus is on who the building user is. Many products are developed this way and the real estate market will have to adopt this model, too. Thus it needs to be analysed who the users of the given building will be, what they need, how they live, what they like or dislike. Detailed user profiles should be created, which until now have seldom been developed in a thorough manner. Only such analysis allows for making informed decisions on functions, structure, size and other properties of the building.

The observed megatrends will particularly increase the use of new technology by organisations and property owners. Companies are discovering the potential of using mobile applications or virtual systems for analysing business needs and providing workplaces best suited to the current reality, i.e. focused on user comfort and safety, boosting creativity, and allowing for quick space reorganisation, if required.

– A comment by Monika Rajska-Wolińska, Managing Partner of Colliers International in Poland –