In this edition of our Illuminations series, we detail how the smartest companies and investors are using their real estate to drive real growth.
The businesses thriving in today’s market have focused on making ‘change’ a core competency within their organizations. At a practical level, that means increasing operational agility and seeking out new centers for advantage.
One seemingly unlikely place these leaders have carved out such an advantage (and sizable financial gains) is their buildings and spaces.
The pressing question for business leaders is – how can we deliver on strategy in the face of unpredictable disruption?
First, is a mindset shift. Businesses have moved beyond treating real estate as simply a balance sheet item. They’re now viewing it as an active and strategic tool that can be used to create long-term value.
Next, they adopt an always-on approach to improvement, ensuring they’re using real estate assets in a way that drives the biggest competitive advantage.
Nearly every person that works for – or does business with – your organization encounters and interacts with your real estate on a consistent basis.
Your spaces shape your reputation among customers, employees, shareholders and stakeholders.
As forward-thinking businesses have discovered, using “real estate” as a static asset on your balance sheet vastly underutilizes its potential. Used correctly, your company’s buildings, offices and other workplaces can foster culture improvements and unlock the potential of everyone who steps inside.
Businesses traditionally expect their people to adapt to the workspaces provided, but businesses that seize a talent advantage understand that the workplace landscape has changed, and the employee–employer relationship has changed with it.
To win the war for today’s talent, businesses are reversing this thinking. They’re identifying the needs of employees and creating “destination” spaces that cater to those needs.
By doing so, businesses are able to use real estate assets as brand communication channels. Their office spaces, laboratories and manufacturing hubs are seen as ways to showcase their culture, their deep understanding of employees and the equitable relationships they forge with them.
One practical way businesses are achieving this is by combining central locations with satellite facilities to offer employees unrivaled flexibility and work-life balance.
Once inside those spaces, employees are treated to thoughtfully created experiences. For example, some leaders are fusing traditional approaches to workspace design with the expertise of psychologists and sociologists to gain an even deeper appreciation of how spaces impact employee behavior.
As we discovered in our latest global corporate real estate trends report, 67% of people globally value a workplace in a vibrant location, with work-life balance now outranking salary as the top retention driver at 65%. In this study, employees showed that support and compliance rise when the workplace feels worth the commute.
Strategic real estate investment has proven to be one of the most resilient growth levers available – in spite of difficult market conditions.
By equipping teams with the right AI tools, businesses are able to mobilize data and make smarter real estate decisions.
For example, AI can help businesses identify inefficiencies in their buildings, leases or operating models. Armed with this insight, they can take a more data-driven approach to:
The net-result has been driving substantial long-term returns at a time when it’s never been more important for businesses to do so.
The ability to get more insight from data is also helping businesses deliver the ‘street-to-seat’ experiences that employees increasingly expect.
The street-to-seat approach goes beyond thinking about the working experience offered within the four walls of the office, lab or warehouse. Instead, this approach considers end-to- end experiences across both public spaces and workplaces.
For example: A business might opt for a mixed-use development within a city center for its head office. This would not only provide employees with a modern workspace with sweeping views – it would also give them immediate access to supermarkets, wellness facilities and a vibrant social hub.
Finding the optimal locations for these experiences, designing fulfilling user journeys, and creating them in the most cost-effective way requires businesses to analyze vast amounts of data. This includes data on employee preferences, behavior patterns, as well as broader urbanization data about how people interact with their cities.
AI provides businesses with the perfect tool to bring together these diverse datasets and turn them into actionable insights – further strengthening data-informed decision making.
With as much as $1.5 trillion in commercial real estate loans expected to mature this year, now is the time to make smarter CRE decisions and manage capital more effectively.
AI has brought positive disruption to CRE. For example, using machine learning to predict and prevent building maintenance. But there’s a danger in letting the pace of change outpace strategy.
According to our latest Global Real Estate Technology Survey, while 87% of companies are increasing their real estate technology budgets because of AI, over 60% remain unprepared to grow their AI programs beyond test projects. A fragmented approach will limit the value and impact you can gain with these powerful technologies.
For example, every day, your buildings generate (or have the potential to generate) millions of valuable data points. These cover how people interact with your spaces, their movement patterns, the energy they consume and the factors that impact their productivity.
With a coherent approach to AI, you’re able to synthesize these data points to create usable and meaningful insight. This insight will enable you to make the most informed choices about where to make improvements.
The big caveat to creating advantage with AI is getting on top of your data quality. Incomplete datasets skew AI outputs and in the worst cases, introduce bias.
To drive the most value from AI, it’s vital you establish a foundation of complete, current, consistent and correct data.
We make it easy for your business to get your data ready for AI without a lengthy tech overhaul. As a strategic partner, we also help you understand how to deploy AI for maximum impact.
Want to explore more about how to best use AI in your CRE strategy? Jump into our AI deep dive here.
If you want your real estate to hold its value and be ready for what comes next, you need to think about sustainability in two simple ways:
1. Reducing your carbon footprint
2. Creating more resilient properties
These two approaches work together to protect your investments for the long haul. Economist Impact’s research Radical retrofit supported by JLL provides six bold yet practical ways to adapt real estate for a resilient future.
The best plans look beyond today’s needs and think about how your investments can help your business weather future storms – both literally and figuratively.
A key part of this is looking at how vulnerable your buildings are to floods, fires or severe storms. Buyers and tenants are already starting to avoid places that seem risky in terms of extreme weather. Instead, they’re choosing buildings and locations that are better prepared to handle whatever Mother Nature throws their way.
At its core – this comes down to cost.
Building owners face insurance premiums rising much faster than the traditional 2-3% annual increase, driven by escalating climate events. These costs cut into profits and lower property values, making climate protection a key factor in investment decisions.
By focusing on decarbonization efforts, such as improving energy efficiency, you can drive significant improvements in surprisingly short timeframes.
For example, a London-based workspace reduced its electricity consumption by 31% in just five months with JLL’s smart building platform. The move ultimately delivered a 13.8 tonnes reduction in monthly CO2 carbon emissions and more than $15,000 in cost savings per month.
Transitioning to more efficient operating models presents a huge opportunity for real estate decision-makers. Especially as 90% of buildings in the world’s most developed cities are over 10 years old and fall short of today’s energy standards.
When you connect your buildings to your business goals, you can make smarter choices about your spaces, invest in what really matters and even negotiate better leases.
This means being more intentional in your real estate decisions. Companies that have started seeing their buildings as strategic tools are already seeing great benefits.
Over the next 12 months, finding high-quality office space will become increasingly challenging and expensive. Whether you’re a company searching for new space or a property owner making strategic decisions, delaying action could have real consequences. You may face higher costs, fewer desirable options and missed opportunities that won’t return.
The key is acting sooner rather than later, before the market becomes even more competitive.
For the businesses willing to take action now, your real estate assets can actually help drive growth and give you an edge over the competition.
Illuminations shines a light on the innovative ways that buildings and the spaces around us can help solve our biggest business challenges.