“The world is changing fast. Big will not beat small anymore. It will be fast beating slow.” –Rupert Murdoch
Technology has been changing commercial real estate since the 1980s and the speed at which it is changing tenant behavior has only increased over the years. Five years ago, when a tenant asked for space with connectivity, we would search for offices that would allow for open floor plans, impromptu meeting spaces, and areas that foster collaboration and communication. Gen X and Baby Boomers needed to learn to work with the new millennial generation. But what is the next step in the commercial real estate evolution?
Large corporations are constantly searching to differentiate themselves from their competitors. The use of technology to enhance the employee experience is on the rise. The Internet of Things (IOT) is becoming a larger part of the technology puzzle to enhance and motivate staff. IOT will be able identify patterns in workplace usage and staff interaction. These data points will, in turn, help design more comfortable workspace and automate redundant tasks. Security will be enhanced for the workforce. These pieces working in unison improve the workplace atmosphere for a more productive and happier employee base.
These new technologies under the IOT umbrella are going to be a huge strain on current digital infrastructure and impossible to implement without the a 5G mobile network. With global mobile data traffic to increase by eight times by the end of 2023, there is a need for more efficient technology, higher data rates, and spectrum utilization.
Corporations are becoming increasingly sensitive to the connectivity of their building because of the demands of these new business norms. So, the question is being asked more often: “Who will be the internet provider?” According to a survey by WiredScore of 150 leasing decision-makers, a building’s internet connection came second to location as a determining factor for new office space. Location, location, location has always been the mind set for real estate directors but, it may be changing to location and latency.
The A-rated buildings in desirable submarkets will be the first to take advantage of these new network realities because they are typically first adopters. The real battle will occur in the B and C buildings. Owners of B and C product that take advantage of new technology should achieve significant demand compared to their competition.
Also we’ll see new design changes developing in existing buildings. We’ve already seen floor plans open, allowing more collaboration as employees are released from their desk thanks to WiFi and cloud storage. Flexible office furnishings will become more common to allow a company to act on advanced workplace analytics and optimize their space planning regularly as their workforce changes.
We are in the early days of artificial intelligence but by 2023, AI will make an impact on productivity and work life. AI will automate the more mundane and repetitive aspects of people’s jobs, boosting productivity and real wages. Building owners must provide the connectivity essential to taking advantage of the efficiencies that AI and IOT create.
Jimmy Johnson was the first football coach in history to win a College National Championship and a Super Bowl. When he was building these teams, the mantra was, “Speed Kills.” Today, speed kills when it comes to the digital infrastructure of the building.
Dave Cochran is Executive Vice President at Colliers International.