This is how COVID-19 will change offices forever, according to Pi Labs, a VC that invests in real estate tech firms
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The COVID-19 pandemic has hammered the commercial real estate sector, and forced companies to think about how they can use technology to improve both employees' productivity and their wellbeing.
A 2019 PwC survey found that nearly 90% of property investors believe that technology innovations in real estate will continue growing over the next five years — COVID-19 appears to have accelerated that growth. Pi Labs, a London-based venture capital firm investing in property tech startups, has written a report on the future of work and the workplace. Business Insider got an exclusive early copy, and interviewed Pi Labs' CEO and founder, Faisal Butt, to learn more about what the future holds for the commercial real estate sector. Visit Business Insider's homepage for more stories.
The COVID-19 pandemic has forced companies to rethink their office spaces. Firms want to adapt their space to maximize both employee productivity and wellbeing — and technology has a big part to play. A 2019 PwC study of more than 900 European property investors in 22 countries found that nearly 90% believe technological innovations in real estate will continue to grow over the next five years. COVID-19 has accelerated the digitization of the sector, and more companies are realizing the benefits of tech, said Faisal Butt, CEO and founder of Pi Labs, a European venture capital firm in Europe that invests in tech startups in the real estate sector. "Those that don't embrace innovation will be the ones that lose out," he said. Pi Labs' new report on the future of work, released today, was shared exclusively with Business Insider before publication. The report outlines the changes Pi Labs forecasts for coworking, automation, and the tenant experience. The future of the office is, clearly, far more complicated than just checking people's temperatures at the door — read through the best bits of the report, selected by Business Insider, below. Offices will be more sustainable to improve your wellbeing and productivity COVID-19 has made many people rethink their relationship with work. Home offices are also virtual social venues, gyms, and yoga studios, depending on the time of day. The concept of being at work has shifted, and commercial property owners will have to adapt, focusing more on the health and wellbeing of employees. Property owners and developers will prioritise tech to improve employees' wellbeing and productivity, Pi Labs' report said. A 2019 Deloitte's study found that 92% of 750 commercial real estate executives plan to maintain or increase investment in tech that affects how people use their office in the coming years — one example is a mobile app that lets people book meeting rooms. Investments will focus on office culture, employee focus, and learning, the report said. For example, the startup Demand Logic provides a cloud-based analytics platform that helps property managers monitor and improve the environmental conditions of their building, and eliminate complaints around ventilation and heating. Lighting, ventilation, and temperature are the three environmental factors that most influence staff productivity, according to the report. A surprising impact of the pandemic is the rise of the importance of air quality monitoring in office buildings, Butt said, "which previously was a fringe concept but now essential in providing a workplace that prioritises employee health and wellbeing." Green buildings and resource-efficient properties will cut costs while improving staff efficiency, Pi Labs said. These buildings can double cognitive function, it added. Only transparency, and an emphasis on employee health, will make people feel safe to return to the office, Butt told Business Insider.
The co-working comeback While companies are slowly returning to the office, employees still want to work at least part of their week from home. Firms will have to give employees more freedom, and their workforce may be scattered across different regions. Coworking, which offers shorter leases, might make a comeback, the report said. What used to be the most popular option for startups will become the normal for large corporates too, "because you just don't know when the next pandemic might arrive and you don't want to be tied into long term liabilities," Butt said. Your workplace will turn into a learning hub Pi Labs forecasts a growing focus on the relationship between employees and tech, especially when it comes to training. The adoption of new technologies, including automated services, such robots designed for cleaning, will minimize the need for human workers in some areas. Companies will need retrain their employees: Around ten million workers in the UK alone will have to develop new skills and change roles by 2030, the report said. Firms will emphasize soft skills in the workplace, such as communication and critical thinking. Tech startups are working on transforming offices into learning hubs through virtual and augmented reality (VR and AR). While these tools haven't yet reached maturity, a 2020 PwC study expects VR and AR to boost the global economy by $1.5 trillion over the next 10 years — $294 billion of that growth will come from their use in training. Augmented reality will, for example, enable retailers to better understand buyer behaviour, and train their staff accordingly. Automated property management on the rise To cut costs, companies should invest in tech, Butt said. For example, real estate companies might invest into technologies that allow them to automate property management. Tools that encourage collaboration could prove popular too — startup Aprao has developed a tool that makes development appraisals more transparent by giving developers and other stakeholders, such as investors, information about a proposal on a streamlined platform. Tech that helps connect companies with customers that they can't physically meet will also help, such as visualization tools. The Romanian startup Bright Spaces, for example, allows office owners to showcase their space for tenants before they visit. "Only those types of solutions will do well," Butt said. "If you're a real estate owner that's ignoring tech you'll be left behind and you can't teach or prove your business. If you're looking to be around, only investments in technology and digital innovation are going to give you staying power," especially after a global pandemic," he added.SEE ALSO: 3 ways that offices will change post-coronavirus, according to the co-CEOs of the largest architecture firm Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
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HEALTH TECH'S ROLE IN THE NEW OFFICE NORMAL: How digital health firms are helping US employers facilitate return-to-work programs amid the coronavirus pandemic
Summary List Placement The coronavirus pandemic has thrown the US economy into a state of flux,...Summary List Placement The coronavirus pandemic has thrown the US economy into a state of flux, forcing businesses into uncharted territory as they decide when and how to reopen. Before the pandemic, 39% of US office employees worked remotely—which nearly doubled to 77% during the pandemic, per a June PwC survey. Now, company leaders across the US are strategizing how to resume operations and restore normalcy by bringing their employees back into the office. In order to reopen brick-and-mortar offices, warehouses, and stores, it'll be of paramount importance for employers to navigate how to do so safely and instate routines that curb the spread of the coronavirus. Otherwise, employers risk creating sites of new outbreaks and being forced to shut their doors yet again. The pandemic could hike up employer medical spending—creating an even greater sense of urgency for products that help ensure workers are in good health. The pandemic could increase self-insured employers' medical spending by as much as 10% in 2021, per PwC's estimates. For context, this estimate was calculated under the assumption the wave of coronavirus cases erupting in the spring of 2020 would lead patients to defer care to 2021. So, investing in programs that will maintain the health and safety of workplaces will be top-of-mind for businesses looking to preemptively rein in medical spending now, considering it could tick up over the course of the year. Tech companies and digital health startups are rolling out software to facilitate the return-to-work transition for employees. Return-to-work methods have made headlines, like Amazon's use of temperature checkpoints in its warehouses. But another segment of software developers—digital health firms—are designing platforms that focus on monitoring employees' symptoms and coronavirus status, and passing that information onto their employers. In this report, Insider Intelligence outlines how tech giants and digital health companies are using their tech and clinical expertise to help US businesses with their reopening plans. We explore what the return-to-work health tech space looks like now—providing examples of the solutions on the market from both tech companies and fast-moving digital health companies, and unpacking the pros and cons of each. Finally, we shed light on some of the legal and privacy-related challenges that could hamper employers' implementation of tech-enabled return-to-work programs. The companies mentioned in this report are: Alphabet, Amazon, Apple, Castlight Health, Collective Health, Color, Dole, emocha, Facebook, Fitbit, Google, Microsoft, One Medical, RxMx, Salesforce, Sonde Health, UnitedHealth Group, UrbanSitters, and Verily. Here are some key takeaways from this report: Employers are strategizing how to reinstate normalcy in their operations amid the coronavirus pandemic—and tech developers are rolling out retirn-to-work programs that prioritize ensuring the health of employees. Some of the largest tech companies are throwing their hats into the workforce reentry space, leaning on their data analytics prowess and existing relationships with healthcare entities in their pursuit of return-to-work tie-ups. Digital health companies are relying on their specific areas of expertise—employee benefits, telehealth, lab testing, voice—to craft return-to-work programs that attract businesses across industries. Privacy hangups surrounding employee surveillance are still inhibiting employers from investing in and implementing return-to-work tech, and the changing legal landscape may also make it difficult to to implement workforce reentry programs, especially those than lean heavily on contact tracing. In full, the report: Provides a snapshot of the tech-focused return-to-work market. Outlines ways in which prominent tech companies and digital health startups are pivoting to roll out workforce reentry solutions. Highlights the pros and cons of implementing return-to-work solutions. Identifies the legal and privacy-related barriers that exist—and will likely persist—to investing in tech-focused return-to-work solutions. Interested in getting the full report? Here's how you can gain access: Join other Insider Intelligence clients who receive this report, along with thousands of other Digital Health forecasts, briefings, charts, and research reports to their inboxes. >> Become a Client Purchase the individual report from our store. >> Buy The Report Here Are you a current Insider Intelligence client? Log in and read the report here.Join the conversation about this story »
From iconic city headquarters to WeWork deals, here's how financial giants are thinking about the future of their real estate (WFC)
Some financial firms are evaluating their post-pandemic office needs. Wells Fargo is not renewing its lease...Some financial firms are evaluating their post-pandemic office needs. Wells Fargo is not renewing its lease in a 750-person WeWork space in Charlotte, N.C. Citi meanwhile has signed a lease for a roughly 100-person WeWork space that's not in a major city. UBS is pushing ahead with working with WeWork remodelling a large space in New Jersey, now incorporating a social distancing-geared design. Charlie Morris, head of Avison Young's US Flexible Office Solutions practice, said he's seen financial services remain "active" in the flex-office market, and that his firm's consulting with a "very large" player on committing a large percentage of space to flex-office. Visit Business Insider's homepage for more stories. Big financial firms now have had the experience of operating largely remotely for the first extended period of its kind. Many of these companies' plans for fully returning employees to buildings are up in the air — particularly in the US — as the coronavirus pandemic's path changes by the day. Some are taking this opportunity to reevaluate their office needs. But there's no industry-wide consensus yet on how it will shake out. Of the 400 chief human resource officers, chief information officers, and chief operating officers across US-headquartered banks, insurers, and capital markets firms polled in an Accenture survey published on Tuesday, 51% expected to keep their real-estate footprints, and 42% expected reductions. Here's a look at some of the biggest financial firms' real estate and flex-office plans: Wells Fargo is leaving a 750-person Charlotte WeWork space In Charlotte, N.C., a big financial-services hub, Wells Fargo has chosen not to renew its lease in a prominent WeWork location in the city, according to a person with direct knowledge of the matter. The bank, headquartered in San Francisco with a large presence in Charlotte, had a 24-month lease for the 750-person space at 128 South Tryon Street starting in September 2019, according to this person. A clause in Wells Fargo and WeWork's contract provided the bank the option to exit the lease after one year, this source said. WeWork has touted the seven-floor, 130,000-square feet location inside the First Citizens Bank Plaza building as its largest office in the Southeast US when it opened, the Charlotte Business Journal reported. A spokesperson for Wells Fargo declined to comment. A spokesperson for WeWork also declined to comment. Wells Fargo, meanwhile, is planning to keep more than 200,000 employees working from home until at least September, according to a second-quarter earnings call transcript on the investment research platform Sentieo. For Wells Fargo, reducing expenses was a key objective for Chief Executive Charlie Scharf even before the pandemic hit. On the earnings call with analysts on July 14, Scharf said he found some $10 billion in expenses Wells Fargo would need to cut. He said he expected the bank to start taking action in the second half of 2020, and that could mean consolidating branches, field offices, and corporate sites. It's likely the bank will have to house fewer employees, regardless. Wells executives are drafting plans that could cut tens of thousands of jobs starting this year, Bloomberg News reported in early July. The bank reported some 263,000 global employees as of March. TIAA has moved out of a temporary Midtown Manhattan WeWork space it rented while its headquarters are being renovated The $1.1 trillion manager TIAA moved into four of WeWork's five floors at 575 Lexington Avenue in Manhattan as temporary space while its nearby headquarters undergoes renovations. TIAA didn't renew its WeWork lease and moved out as originally planned in June. Employees will work remotely until renovations wrap up. In 2018, WeWork leased five floors at the location totaling 117,000 square feet. According to July marketing materials from WeWork viewed by Business Insider, the coworking giant is currently looking to fill one 20,070-square-foot full-floor space on the 16th floor, as well as 12,000-square-foot and 10,000-square-foot partial spaces on the 15th floor at 575 Lexington. TIAA's real-estate subsidiary, Nuveen, was WeWork's second-biggest US landlord last year, based on CoStar Group data, Business Insider reported in August. Nuveen leased more than 600,000 square feet of space to WeWork in the US as of last June, per CoStar, which declined to provide more recent figures. Nuveen does not own 575 Lexington Avenue. That building's trio of private owners put the property up for sale earlier this year, The Real Deal reported in January. Others are adding flex space, and more deals could be in the future Citi and Mastercard are among the companies that have signed new leases with WeWork recently, according to a July 12 report in the Financial Times. The lease agreement Citi signed with WeWork is for a small office intended for some 100 people, and is not in a major metropolitan US area, a person familiar with the matter told Business Insider. A spokesperson for Mastercard said the company could not comment on specific real-estate deals. WeWork Chairman Marcelo Claure told the Financial Times that the office company was on track to be cash-flow positive in 2021, thanks to aggressive cost cutting and strong in-demand from companies seeking flexible-office arrangements because of the pandemic. Charlie Morris, head of Avison Young's US Flexible Office Solutions practice, said that he's seen financial services remain "active" in the flexible-office market, and that for some firms, the pandemic has been an accelerator. He said that his firm has been consulting with "one very large financial-services firm" on committing a large percentage of its office space into flexible-office in the future. The plan pre-dated coronavirus, but he said that the firm is "definitely involved more so post-COVID." Read more: WeWork is leasing a big new office in Jersey City to house the headquarters of a planned spin-off from pharma giant Merck UBS say it's thinking about flexibility UBS Chief Executive Sergio Ermotti told analysts on a Tuesday earnings call that the Swiss bank has already been looking at its global real-estate footprint. "There is an acceleration that more and more you will have a situation in which people don't have necessarily their own desks, but they have a space in which they need to share. And that creates a lot of flexibility in the way we manage our real-estate footprint," he said. Last month, the firm's chief operating officer, Sabine Keller-Busse, told Bloomberg News that she could envision about one-third of UBS's workforce of some 70,000 people permanently working remotely. Ermotti largely reiterated that outlook on Tuesday. UBS, with North American regional headquarters in Midtown Manhattan, is working physical-distancing design plans into a previously instated renovation program in conjunction with WeWork for 100,000 square feet of UBS's Weehawken, N.J. office, according to a person familiar with the matter. Morgan Stanley looks to keep its presence in big cities For some firms, the prestige and appeal of big cities could be hard to let go. "I think headquarters will always be in these iconic cities, and the symbol of that — it's kind of the Mecca of the finance industry," said Jocelyn Kung, the founder and CEO of organization development consulting group the Kung Group, referring to New York City. "I would think that symbol will never go away." "But the way that work happens and transactions occur more and more through electronic transfer and remote work — that is not just in the finance industry, but all over it's happening," she said. On a call with analysts last week, Morgan Stanley CEO James Gorman said having 90% of the bank's total workforce working remotely has given management a chance to rethink office strategy — but shot down the notion the New York-headquartered bank would meaningfully cut back in big cities. "We're committed to the major cities in this world where we have our headquarters: here in New York, where I am today with [finance chief Jon Pruzan] although socially distanced; London; Frankfurt, which we've moved and consolidated, is our European headquarters; Tokyo and Hong Kong. That doesn't change. Morgan Stanley will remain a major player in the commercial real-estate market globally," he said. In wealth management, Morgan Stanley's force of some 15,400 financial advisers have been gradually returning to offices in some areas of the US where local mandates allow, a person familiar with the matter said. The wealth business had already been trimming branches — it had 584 through June 30, down from 591 in March. But that was planned pre-pandemic, this person said, and those offices could wind up with even smaller footprints in the future. Read more: Facebook is eyeing offices in cities like Dallas, Atlanta, and Denver to act as 'hubs' to support 50% of its workers staying remote — and it's a move that could upend Silicon Valley and NYC real estate A startup that uses AI to scan Wall Street chats is flagging more people for cursing and complaining — and it could be a sign of bigger compliance issues while people work from home Wall Street is starting to return to the office — but not everyone is heading back. Here's which finance jobs are the most likely to remain virtual.SEE ALSO: LEAKED DOCUMENTS: WeWork is looking to fill 2 million square feet of vacancies in New York City, its biggest market. Here's what's sitting empty. SEE ALSO: Wall Street's disaster playbook never included work-from-home trading. Insiders explain how banks rapidly adjusted during one of the most chaotic markets in history. SEE ALSO: IBM is ditching a big WeWork office in NYC, revealing the risks of the popular flex-space model as the pandemic prompts Blue Chip companies to rethink real estate Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
The flex office space will never be the same. Here's how companies like Convene and Industrious are getting creative to win over remote workers.
Flexible office providers are adapting their businesses to meet the different demands of their clients as...Flexible office providers are adapting their businesses to meet the different demands of their clients as offices across the country begin to reopen. Serendipity Labs has launched a subscription service that is targeted at big companies that are looking for individual private office space close to employees' homes. Convene is launching a digital conference tool that will facilitate both all-digital and hybrid digital and in-person conferences as the virus has led to cancellations of large events. The pandemic has also spurred flex office players to create an industry council to share best practices. Visit Business Insider's homepage for more stories. Coronavirus, and the massive remote work expansion that followed it, has massively destabilized the office. While it is unclear what the long-term effects will be, companies are reimagining how their real estate footprint responds to the challenges of social distancing in a pre-vaccine world, and what that will look like in the longer term. For flex office providers, this could be a major opportunity to snap up customers who don't want to sign long-term leases while the world is so uncertain. The pandemic has put the flex office industry at an inflection point. The coronavirus pandemic rocked the sector as the startups and entrepreneurs that it counted on as clients have decided to either stop using their workspaces or just stopped paying rent. Big players like Convene and Industrious announced layoffs in March and April as America worked from home, and even as the hardest-hit cities reopen, the rise of remote work risks continues to be an existential threat to the business. Now, flex office providers are becoming even more flexible in an attempt to align more closely with their customers' needs during this period of immense uncertainty. "For now, companies are listening to their employees and everyone wants something different – so rather than a future that favors either office or remote-centered work, I believe flexibility will be the real long-term shift we see," Michelle Killoran, a real estate investor at OMERS Ventures, told Business Insider. Serendipity Labs, a nationwide flex office provider that has a majority of its spaces in suburban and smaller cities, like Kansas City and Nashville, has launched a subscription service aimed at employers who want to supplement their staffs' home office with another flexible workspace. Convene, which offers flexible offices as well as meeting and event spaces has quietly launched digital conferencing tools and workplace consulting services to serve a wider range of clients. Companies are also looking to highlight how they can provide an even safer workplace experience during the pre-vaccine period, with enterprise-focused flex provider Industrious helping to launch an industry group focused on cleanliness and hygiene. Subscriptions and suburban office space The buzziest terms in the office world are "distributed work" and the "hub and spoke" model, ideas that look to find a middle ground between one central office and the fully-remote workspaces. By providing a variety of working locations, firms hope to see higher employee satisfaction and more resiliency during crises like the pandemic. The strategy gives workers options to work closer to their home, whether in the outskirts of a city itself or in the suburbs. While large coworking spaces in an urban center may come to mind when discussing the flex industry, many companies already operate flex centers outside of the central business district. Office Evolution, a flex provider that focuses on suburban markets and smaller cities has seen an increase in demand for private office space, according to CEO Mark Hemmeter. Hemmeter said that most demand so far has come from small businesses and freelance workers, but that he expects larger corporations to start renting more space as employees push their employers to offer a workplace somewhere between the downtown office and the employees' home. Read more: The coronavirus is a 'nuclear bomb' for companies like WeWork. 10 real-estate insiders lay out the future of flex-office, and how employers are preparing now. "Where we're going to see is the driver of the individual versus the employer that is going to really change the landscape of real estate strategy in the future," Charlie Morris, the leader of Avison Young's US Flexible Office Solutions, told Business Insider. Serendipity Labs operates both suburban and urban locations. CEO John Arenas told Business Insider that inquiries for suburban locations are up to 90% of pre-COVID levels, while urban locations are only at 40% of pre-COVID levels. He said that 35% of demand is coming from companies reevaluating their office space after the pandemic. The company has launched a temporary subscription program that allows companies to provide individual workspace for employees close to where they live. The plan is fungible between employees and locations and has a rolling start date. Unlike coworking companies, the space is a private, enclosed office but offers coworking-like flexibility on use and location. The company also offers by-day desk rentals to support those who only occasionally need to leave the house for work. "We knew that large company clients, it makes less economic sense for them to be in a traditional lease for a secondary market and suburb, but they also have to react to and support a more mobile and remote workforce," Arenas told Business Insider about the origins of the plan. Breather, a flex office and meeting space company, has always had just-in-time and subscription booking models. CEO Bryan Murphy told Business Insider that this model has attracted a lot of interest. "The number of leads, phone calls coming in looking for flexible has doubled in the last thirty days," Murphy said. "There are no traditional leases being done right now." Flexible business models and a flexible industry Others in the industry are exploring digital means of keeping clients. Convene, which provides office space but largely focuses on events and meetings, has launched a digital conference tool. The tool, which CEO Ryan Simonetti described to Business Insider as "the digital twin to Convene's onsite experience," will facilitate both entirely online conferences and "hybrid" events, that combine a smaller in-person meeting with a digital stream of the events. Convene employees will stand in as consultants who can help to prepare and test the technology before the meeting and provide support for any tech hiccups along the way. The company will also offer comprehensive post-event data that analyzes the attendees. Convene CEO Ryan Simonetti said that the company's funnel of confirmed events at the last half of the year makes it seem like "we're going back to normal in September," but that larger events are also still being affected. The digital conferencing tool allows for conferences to have smaller in-person events for local attendees while also reaching a larger, farther away audience. Read more: WeWork is bringing corporate staff back to New York offices in 3 waves as the city enters the next stage of reopening. Here are the details the coworking giant just gave workers. Flex companies also starting to interact with each other for the first time to create industry standards, which they hope will make clients more comfortable about returning to their spaces. Industrious has led the formation of a Workplace Operator Readiness Council, which is sharing best practices for cleanliness and preventing disease transmission across 25 international operators, such as IWG, CBRE's Hana, Convene, and Serendipity Labs. Industrious CEO Jamie Hodari told Business Insider that the council was created because flex companies, who tout their ability to create the best places to work, need to actually share best practices in order to deliver a quality, and safe experience to their customers. "We need to be in the 98th and 99th percentile of American businesses in how we approach the return to work," Hodari said. In the spirit of flexibility, Hodari hopes that the council will eventually evolve beyond sharing best practices for hygiene, to operating as an industry-wide council that promotes standards across companies. Read more: Leaked Knotel financials reveal that the WeWork rival had huge pre-pandemic losses and now has more unpaid bills than cash. It's a grim sign for the flex-office space. Death of the office talk is 'ludicrous,' says Brookfield CEO Bruce Flatt. Here's where the real estate giant is seeing big opportunities. Leaked WeWork document reveals a huge reorg under way for people who manage its buildings. Here's how the new structure works — and the complex process for staff to save their jobs. SEE ALSO: WeWork is bringing corporate staff back to New York offices in 3 waves as the city enters the next stage of reopening. Here are the details the coworking giant just gave workers. SEE ALSO: The coronavirus is a 'nuclear bomb' for companies like WeWork. 10 real-estate insiders lay out the future of flex-office, and how employers are preparing now. Join the conversation about this story » NOW WATCH: Here's what it's like to travel during the coronavirus outbreak