Is technology driving a move towards more proactive portfolio planning?
The nature of property, with long decision gestation periods, needing significant capital expenditure and inflexible leasing arrangements, means portfolio planning is seldom done proactively.
It is the norm for portfolio decisions to be driven by events such as lease expiry dates, business mergers and sudden changes in business needs. But in this connected age, portfolio planning can now challenge traditional industry dogmas.
As smart buildings emerge with ubiquitous sensors and monitoring via the Internet of Things (IoT), multifunctional building systems are being integrated, interrogated and analysed, all linked directly to business operating systems.
‘Big data’ diagnostics is enabling the analysis of building efficiency, use patterns and occupier comfort, including space utilisation, indoor air quality, daylight measures, acoustic, water consumption and building services performance. Maintenance and servicing are optimised and managed remotely, but not based on outdated schedules. Rather, they meet occupier and service actual needs before breakdowns occur.
To be successful, accommodation portfolio planning should be based on defined key portfolio principles, which will drive decisions. These principles will vary and be defined differently for various businesses, but should form the basis for making portfolio decisions. But, in a new connected world, these principles need to be assessed from a different perspective.
Principle One – Operational Effectiveness
The starting point for accommodation decisions should always be the requirements to support the operational and locational needs of the business. But enabling technologies are rapidly changing all aspects of business requiring a new approach to that thinking.
In the future, all processing and transactional functions of businesses will be able to be done remotely, eliminating the need for face-to-face customer contact.
Similarly, smart connected workplaces will fundamentally change operational needs, accommodation decisions and, ultimately, portfolio leasing strategies. Future workplace portfolios will likely contain many varied accommodation options to support ever-changing business operational processes and models.
Principle Two – Financial Efficiencies
As in the past, value for money outcomes, based on total occupancy costs, will continue to be a key portfolio measure to eliminate accommodation waste. But financial efficiencies in future portfolio planning may no longer only focus on the lowest-cost model, driving down space utilisation rates and workspace footprints. Instead, they will likely focus on productivity, employee engagement and business risk management.
Traditionally, leasing transactions have been structured around large leased areas linked to long-term lease tenures, to achieve lowest rent levels. But as smart buildings evolve and new accommodation business models emerge that provide workplace-as-a-service (WPaaS), the entire value for money paradigm will need to be recalibrated to prioritise just-in-time portfolio responses.
Principle Three – Technology Enabled
Underlying the smart workplace concept is the IoT connecting a whole spectrum of technologies across the built environment. In all businesses, accommodation expenditure budgets will continue to be eroded as funds are diverted into technologies and systems to enable business operations.
As future workplace models evolve, properties and workplaces that are not technology- and IoT-enabled, and unable to meet future business needs, will rapidly be relegated to the obsolescence bundle. And, as the connectivity expectations of businesses grow, along with new and emerging technologies, the physical workplace will need to evolve into the business technology portals and employee engagement hubs.
Principle Four – Employee Empowerment
In the last decade, workplace designs have moved from being status-based to business environments that promote corporate branding, culture and values. Creating great places to work – that meet the expectations of employees – needs to focus on the facilities, amenities, enabling technologies and support services.
These accommodation models are key to attracting talent and improving employee retention, by engendering positive work attitudes, encouraging service delivery excellence and enhancing productivity.
The future will see employees empowered to determine their own working arrangement decisions, based on their planned activities for the day. These working arrangements may include: working at home, community co-working options or choices within activity-based working hubs. Ultimately, employees will have a spectrum of choices from WPaaS platforms.
The essence of success for any business will be providing the workplace model that is valued by the team members, in whatever form these may be engaged.
Principle Five – Creativity and Innovation
Uncertain futures and emerging disruptive business models are challenging all businesses. Enabling creativity and innovation is key to corporate survival. Social, cohesive and adaptive workplace solutions for real-time collaboration are the key to new ideas.
Studies have shown that real creativity seldom happens through planned processes. Informal and serendipitous contacts, across disciplines, tend to incubate innovative outcomes.
Within a business these formal and informal interactions and contacts most likely occur through co-locations across businesses.
Workplace designs enabling unplanned interactions between diverse work groups and external stakeholders support the creation of new ideas.