Podcast S1: E1 – Moving Forward

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Welcome to CRE Roundup podcast where your host, Peter Holland meets with CRE thought leaders to discuss some of the biggest questions industry wide. CRE Roundup starts now. 

Peter Holland:

Hello, I’m Peter Holland with BenchCore, and I am very excited. We have a super opportunity today to have a thought leader conversation with Eldar Gizzatov from Basking company, and we can hear a little bit more about that in a minute here. We’ll certainly hear more about Eldar’s experience and the work that they’re doing. I think we all know the old Chinese curse “May you live in interesting times,” well we certainly do, and I think corporate real estate people have been challenged, more than ever, and we’re all looking for insights, actionable ideas, paths forward to meet some of the challenges that have been visited upon us and of course, it’s society at whole. Particularly the consequences of COVID-19 have cascaded through and down on to corporate real estate, and we’re looking for answers that are challenging and hopefully, we can help you find something for that. We’re looking forward to the conversation so, welcome, and share with us a little bit about why your background is so interesting.

Eldar Gizzatov:

So, yeah, thanks so much, Peter. So, first of all a couple of words about Basking and what we do. We are providing workplace occupancy analytics for corporate real estate users. So, we work with companies globally to help them to understand how their offices are used, how often they’ve visited, the space utilization rates, and all of these metrics can be provided in real-time. And so, obviously, these are of course challenging times, but it’s also an exciting opportunity for the industry to transition to a more data-driven way of working. I think it’s historical – what we are witnessing – the change is extraordinary in terms of how the industry has to adapt to the flexibility demands from the employees, employees have way more opportunities now to work the way they want to. So, yeah, lots of changes, lots of interesting trends, I think there’s a lot of things to unpack here.

Peter Holland:

Okay, well, I think you’re quite correct change and challenges lead to opportunity. For those who are willing to meet the moment and exploit it. It’s an extraordinary time so maybe that would be a good way to position today’s call is to think about moving forward and what kinds of technology, re-engineering processes, organizational structures, we’re all thinking about all these kinds of questions. But let’s just start with a couple of things almost on a macro level. As we all know, corporate real estate that has long aspired to have what has always been called the seat at the table, you know, bring their gravitas and their expertise be the maven within the company on corporate real estate. And, you know be respected, and be listened to. So, unlike ever before companies are deliberating these issues and they’re not being deliberated at the core of real estate. It’s the CEO, the CFO, it’s even the board. Right, so this is the chance. What are you seeing as these issues are being discussed by your clients; what are some observations, broad patterns or anomalies if even, but what are some things that you see from the 35,000-foot level if you will?

Eldar Gizzatov:

Well, I can talk about what we are seeing and what we’re talking about with our customers and prospects, and I think certainly, this drive for more flexibility is coming from the employees. So, companies need to adapt to these requests for more power for employees to decide on how to work, when to visit the office. And of course, this is coming from the work from home adoption that was forced that we are witnessing right now.

And so, I think the fact that companies need to adapt to flexibility is, of course, it’s a lot of work, right, it’s a lot of change. But it’s also an opportunity to be more effective and for real estate to have this seat at the table. Real estate leaders can deliver the cost savings that the CFOs are looking for. So, this is a huge opportunity. And then, going forward, flexibility creates a lot of uncertainty specifically when employees will come to the office and how are they going to use the space. And so, solving this challenge, adapting to this uncertainty, is a big task but it’s possible with new technologies.

These new requests, new needs, new demands are meeting the solutions exactly at the perfect time. We now have the technology to solve all these problems. Before, pre-COVID, we had this technology. But now that there’s demand from the market, we can deliver this solution to the industry and get the benefits for both the companies and for the employees. So, the trend, the flexibility, creates this uncertainty and is producing the benefits for both sides.

I think when we talk about corporate real estate now, we also need to think about the supply and demand side, right, because it used to be that the demand for office space was fixed. So, it was a 9-5 workday.  You knew exactly when employees were coming and when they were leaving. And you could plan your footprint accordingly. You could adjust to have maybe some flexibility but still, you have a lot of buffer pre-COVID. We all know that 40% of the space was underutilized. It was sitting empty, and companies were kind of able to afford this. But now it’s just right there, it’s an opportunity that you can see.

Peter Holland:

The whole thing is kind of blown open, if you will, and technology has certainly enabled it. It’s going to be very interesting to see if technology and the kinds of technology that’s available for the real estate world will accelerate now and even deliver more solutions than we know about today.

So, companies have recognized, but they’ve wrestled with, being able to deliver data-informed decisions and data-centric decisions. Yeah, that’s coming together. Talk a little bit about that data. And it’s interesting– has this identified gaps? Are there leaders and laggers?

Is there a bifurcation between the top tier companies that are wrestling with this, and coming up with solutions using data? Using, for example, RefineRE or BenchCore data and using Basking data or others, certainly there are other places to aggregate data and use it, but we’ll talk a little bit about these kinds of gaps.

Eldar Gizzatov:

So we’re seeing, also working together with RefineRE, we’re seeing that technology companies obviously are at the forefront of all the adoption. They were in it even before. Consulting – all data-driven verticals – we’re talking about Pharma – so companies that have to operate with data as part of the main product, or the main output, they were already in the process of adopting data-driven solutions for the real estate function. Verticals that are not there, they are lagging, for sure. There’s also a question of what kind of infrastructure you have to have the technology right then. Company culture is another big factor for this adoption; some companies are already used to being more remote and using the remote workplace technology – using Slack, Microsoft Teams – to actually solve business problems. A big part of this is also documenting business processes so the more you are using them, you’re adopting flexible workplace, the more you’re adopting remote workplace practices, the more you have to document things. You have to actually have some written policies or some onboarding practices that allow employees to easily access the data they need to work. This is going to be just the flywheel of technology adoption.

Peter Holland:

Yeah, that’s a good term, and each company is different, right? I’ve always said each company’s idiosyncratic and then it depends on culture– geography certainly can play a significant role. We all know there’s a vast difference between how our office might operate in Bangalore as compared to Austin, Texas so there are certain cultural norms.

And there’s also this is quite an imprimatur from a CEO. And we’ve seen a lot of this, so you see someone like Jamie Diamond, you see these leaders that have a large presence, almost by executive fiat, saying, people will be in the office, or people will work from home, or we’re going to be flexible and companies follow based on those on those beliefs.

I would suspect that corporate real estate leaders are being asked for data, and then being asked questions that they hadn’t ever prepared to answer. And there’s probably some scrambling going on. They’re looking for, I think in many cases, third parties help them come up with those solutions.

Eldar Gizzatov:

Yeah. Yeah, absolutely. I think when we talk about this drive for flexibility and transition to this state, we need to think about the ecosystem, the whole industry. It’s not just about occupiers. It’s also about landlords who need to help with this transition. It’s about advisors, it’s about software vendors, tech companies that need to enable this transition with solutions right. The whole ecosystem is now focused on moving to this flexible workplace world, enabling it with data. Enabling it with technical solutions.

Peter Holland:

Yeah, I like that notion of the ecosystem. I think that’s important, because it is, in fact, a complex organism. And there’s the external ecosystem, so there’s this universe of technology-enablement, and then you have these consultants, brokerages, integrators, and advisors. And then you have an internal ecosystem, comprised of human resources and information technology and corporate real estate and then can even involve something like a tax department, for example. I’ve heard of several instances where employees were working in state A, but they had previously worked in state B, and state A is interested in getting their share of the income tax. So the complexity has expanded exponentially.

I think I think there is something quite heartening about this, as corporate real estate leaders historically have been very transaction-based. A lot of them were promoted – similar to my case – because they were good at buying and selling buildings and good at negotiating leases and driving down costs, but it almost demands a renaissance person now.

Talk a little bit about that. Who are you seeing in some of these roles? Do you have any observations that would be interesting to people on the successful corporate real estate person and character?

Eldar Gizzatov:

Before we get this question, I think if we come back to the previous one where we talked about the gaps in terms of technology adoption. You can find a solution by working with the rest of the ecosystem and landlords. For occupiers, the obvious ally and partner is the landlord.

Landlords are now very active in terms of adopting new technology, so that they can offer it to the tenants. You look at RXR in New York, essentially helping tenants to get the technology they need to understand space utilization, to understand environmental conditions, in the offices they rent from RXR, but also looking further right outside of the property. And that’s just one example. We’re looking at landlords in Europe who are also developing technology for the tenants, and they invest in this quite a lot of funds. So, this is an opportunity for an occupier to leverage their position and get the help they need. So what I believe is that it’s going to jumpstart this adoption heavily.

Coming back to the question about the role or personality of a corporate real estate professional, I think it’s almost like, what we’re saying now is there’s this whole new type of role. The head of the workplace/workplace strategy, and I think this is reflecting the change. The focus is not on real estate that much. Real estate is an enabler of the workplace conditions. The productive environment that the company is looking to provide the employees.

And so, someone who has knowledge of the conditions that are required for productivity, someone who knows of course of the real estate practices, and someone who can create the strategy to deliver this. Strategic thinking is super important. RefineRE is helping with solving these issues. So we are helping on our end, but there’s a myriad of technical solutions that are out there on the market, to provide this help, but you need to make sense of it, you need to be able to read this data, and make some decisions based on that.

And of course, advisors will help, but they still need to decide.

Peter Holland:

The right data needs to be structured in a taxonomy. And then, in a manageable and deliverable and understandable form that’s the simplified and yields the outcomes that you would hope for.

Eldar Gizzatov:

That’s what RefineRE and us and the rest of the market is trying to help with, of course, but still, we need to need to make decisions based on that and you need to be able to wear the hat. That’s a big part of the game.

So coming back to the topic we discussed – supply and demand. The uncertainty of when the employees will come back to the office– it’s not just the hours, it’s also the seasons now, or the locations. So you’re working from home, maybe a couple of days a week, you will be able to choose when to come, how much time you’re going to spend in the office, or even just working by yourself, but then also you probably will change this over the seasons. During different seasons, you might want to spend less time outside or maybe more time in the office, so all these different friction points you now need to take into account, and you need to plan your footprint and your leases accordingly.

So once you have this right sizing done, initial cost savings are achieved. You have this sort of bare-bones or very efficient footprint, and you then need to make sure that every employee has access to a productive environment, and plan for it. So forecasting is huge going forward – you’re planning for and predicting the needs of the employee and making sure that you actually can provide those conditions to people.

Peter Holland:

So, I think a corporate real estate person needs to have an understanding of psychosocial motivation – maybe a crystal ball! Regrettably, most of them are rather cloudy – at least the ones I’ve ever had.

Eldar Gizzatov:

But, yeah, well, our goal is to make them more and more clear.

Peter Holland:

That’s right. But you’re, you’re quite correct. I mean, the issue is work enablement. So, a real estate leader one time was concerned with getting a 10-year deal in the Wall Street area for $70 a square foot with a $100 TI allowance and, you know, make sure of the terms and conditions. And then that lease was locked away in a drawer for 10 years or 20 years, as the case may be, and it’ll move on to the next deal. But again it’s how, where, and who is going to be doing work. What’s the key to productivity in a particular position using personas? So is somebody a collaborator, an enabler, a maven, an individual contributor, and on and on all these different kinds of jobs profiles.

So, it does take very close work with HR, and it also requires a new kind of HR, IT and, again, the corporate real estate person, and they need to come to the table with the facts, and know how to extract the value out of the facts to make the right decision.

Eldar Gizzatov:

This is a great point that they have personas, right. So it used to be that sort of every role would have a certain persona or a certain way of using the space in the office. But I think going forward what we’ll see is actually one role would combine all these personas, the majority of this personas will kind of fluctuate during the day.

You might want to come into the office and want to spend some time focused on your own tasks; you want to have a quiet environment for yourself. Then you switch into team mode; you are collaborating with your coworkers. It’s a different environment, and you need some different amenities for that. And then you might want to go outside for some recreational activity, so that you can come back more productive. So all of these changes are going to happen during the day, during the time you’re spending in the office, and those are, again, additional friction points that you need to keep in mind.

Peter Holland:

An employee might flow through the office at different times of the day doing different things and having different needs. But in order to manage that, you need to have some mechanism to know where people are, how long they’re there, perhaps what they’re doing.

Give us some real-life examples of responses that you see from companies with a great deal of complexity. What are some real-life examples of people kind of staring at complexity in the face and wrestling it down?

Eldar Gizzatov:

Well I think you see this response, you see these examples, in the way workplace experience Apps are done. There are a lot of solutions now on the market to help employees to get a room when needed, to have access to amenities in the office, what are the catering options, way-finding – there are a lot of applications now for that.

It’s great to see there’s a lot of competition in the market but, basically, when we talk to our clients or prospects –occupiers either have this project already in progress, or they already have the app working for employees, or they are planning to procure this product. So this is the driver, the end user is the driver.

And then on the other hand, using this kind of data to make decisions on the strategic level, this is obviously something that real estate executives are more focused on. So combining those two, I think that’s where you have to respond to these changes.

Peter Holland:

Right. If I could use the term paradigm – again overworked for a number of years – but employees can now decide the terms of where and how they work. There was an industrial model that a factory or a large office would be built in a particular place, and people would gravitate to that place, and find their employment there, often in a particular vertical. Employees are now saying – and companies are advertising – I think I saw this with Twitter, saying that, hey, if your company’s not offering you flexibility, we can do that. So come work with us, because employees want that choice and they become used to that choice. And the data then helps the company kind of manage all that.

It’s interesting to me to the irony that the application of technology actually enhances the human experience. And our emotional need to interact and connect with other people. Right, so the technology, rather than isolating and separating, is a tool to bring this complexity together in a seamless way that it can function well for the company and the employee both.

There’s been a lot of discussion about using the term hybrid. And how many people are going to work from home, and how many people want to be in collaboration space, and how many people are going to be at Starbucks, and how many people are coming to the office. But it’s actually much, much more complicated than that. That’s looking at this through a real estate “place” lens; It’s bigger than places.  

Eldar Gizzatov:

Yeah, I think, you know, going forward if we talk about the future, we might even see mobile offices. So you’re seeing all these moving houses (the house that you could take with you) that would be a perfect condition for leaving, but you can actually talk about the same technology for offices. So, location would be not permanent anymore, and you should be able to take your office with you whenever you go and just pick your location. Yeah, the same for several months, maybe. So, there’s a lot of opportunity, I think in the future for again using technology to add even more freedom, more flexibility.

Peter Holland:

Maybe we could expand on it and explore a little bit but, you know, there’s the famous line from Yogi Berra. He said it’s very difficult to do forecasting and he said, especially in the future. But it’s even difficult to describe today, right, it’s, it’s so fluid. Let’s really venture out onto a very dangerous limb.

20 years, 30 years, 40 years.

I get up in the morning and my feet hit the floor, I’ve got some sort of device, maybe implanted in my head, or glasses of some sort. What’s the workplace then in 20 years? Bearing in mind, we’re on a path of rapid acceleration and technology is beyond we can even probably contemplate, you can probably more so than I.

Eldar Gizzatov:

It’s a very hard task. I think the nuances will be probably very different from what we now can imagine, but in my opinion one of the maybe key criteria or key benefits that people will get in the workplace of the future, maybe 20 years from now, maybe even 10 years from now, is adaptability.

So, when, when you are coming to the building when you are visiting your office, you should expect an experience that is tailored to you, to your needs, and so there’s a balance of course with that you don’t want to give out too much data, right. You still want to have your privacy protected, but the environment should be able to adapt to your needs, you know, coming back again to our point about personas and how they are changing for the same role over space in one day, when in the future you’re coming in and you want to focus on your particular tasks, you work on individual tasks, the environment should actually just adapt itself.

And same for teamwork and so on. I think there will be a mix of virtual and physical environments, sort of, where you can probably use virtual tools, virtual cooperation, without even acknowledging that it is different from the physical world. I think for me the key word is adaptability and flexibility of course.

Peter Holland:

Yeah, of course it’s the flexible and adaptable that survive, and can prosper in really any environment, because we don’t know what the future will be, but we do know it will change.

Eldar Gizzatov:

Yes, so that’s, that’s a very good point. Adapting to climate change, you know, and still being able to work productively and whatever is around with what kind of environment is outside of the office, I think this will be a big function.

Peter Holland:

And that’s the first time that those words have come up in this conversation, but I don’t think we can’t diminish the significance of the need to address it and the role that the corporate office and workplace has on that issue in terms of our infrastructure – physical buildings and transportation are major drivers of that. That is one of the areas around which I think flexibility is a new imperative and becomes even more clear on that every day.

So, anyway, maybe now that we’ve tackled the future, probably this would be a good place to end the conversation. Though we could certainly continue for a long time, but any last words you’d like to share with us before we part company today?

Eldar Gizzatov:

I think so, this was a perfect point that we just brought up sustainability, climate change, and connection – the contribution that we can make by making real estate more efficient, making buildings better for our workplace goals but also for the world.

This is our mission really at Basking. All of our founders, we came together for this particular goal – to make buildings better in terms of sustainability, in office buildings in particular. So, we actually started with energy efficiency first.

So, using occupancy data to improve the energy consumption of the building. The goal was to make sure that if there is no one in the in the office, there should be minimal energy consumption. So, tying that to the occupancy level. And over time we also decided okay, we need to actually help to improve real estate costs. There are huge costs out there when you have an office that is not utilized when you’re paying for rent, you’re paying for all these utilities, and the people aren’t there. So adapting to the real time occupancies, it’s a big deal and it contributes to sustainability goals of course.

Peter Holland:

This is going to be a major influence on corporate decisions. Customers are demanding it, employees are demanding it –compliance and reporting. These two things are now in the annual reports.

Eldar Gizzatov:

Strategic goals right. That’s what RefineRE is delivering and that’s Basking is helping to deliver with our insights, but in the end it all ties to the corporate real estate strategy as well.

Peter Holland:

Well, thank you very much for your time today, and we’ll stay in touch. Well, we’ll do this again and 20 years and see how well we did with ours.

Eldar Gizzatov:

Yeah, thank you so much for having me.

Peter Holland:

All right, thanks. Have a good day. Bye bye.