Q&A: PropTech Perspectives – The Impact of COVID-19 on Real Estate

Q&A: PropTech Perspectives – The Impact of COVID-19 on Real Estate

The coronavirus pandemic is upending commercial real estate in many ways — but like any crisis, it’s also inspiring forward-looking thinking.

A recent online panel discussion between real estate professionals in the U.S., the United Kingdom and France highlighted short-term tactics developed to cope with COVID-19 that could become long-term strategies for office, retail and industrial.

The “PropTech Perspectives” panel was hosted and moderated by Dror Poleg, a former real estate and technology executive who is based in Brooklyn, New York. Panelists were Antony Slumbers, a software development and technology strategist in commercial real estate who is based in the U.K.; Susan Freeman, a partner in the real estate department of London-based law firm Mishcon de Reya; Ronen Journo, senior vice president-enterprise at WeWork, who works in Paris and London; and Elie Finegold, a Dallas-based real estate and technology entrepreneur.

This Q&A has been edited for length and clarity.

Q: Have you seen any temporary initiatives or new initiatives that are likely to become permanent or adopted everywhere?

Elie Finegold: We’ve seen a massive shift to delivery, both in the restaurant sector and in retail in general. I think the long-term impact is that the people who have been shopping online will continue to shop online. But there’s a whole class of people who have not been shopping online, at least for groceries and other basics. I think there’s going to be a big uptick in online shopping, because there’s a whole class of people that have been forced to shop online and they’re going to stay with it.

I also see the acceleration of autonomous robots. Long term, it’s going to create a giant opportunity for last-mile and what I call “street-to-suite” logistics, which is moving products from the front door of a building and into individual apartments and offices.

Ronen Journo: We’ve adopted “social distancing” as a new term in our life. Another term is “essential” – what jobs or services are viewed by the government as essential or nonessential? So as you walk the streets of Paris, the grocery stores are booming, the bakeries are running all day and pharmacies have long lines. Being dubbed essential could be quite an important thing.

Antony Slumbers: I think this is also going to be about the wider supply chain, though, in terms of the robustness of deliveries. Lots of decisions will need to be made about whether we reshore things and have more diverse supply chains. Retail has got to get its supply chains right, but it’s also got to consolidate its systems. You’ve got this omnichannel idea, but you end up with retailers who have one system to run their stores and another to run their online sales. These things need to come together.

This pandemic is going to emphasize the difference between the retailers who have really synchronized their online and offline systems and think as a one-system retailer and those brick-and-mortar retailers who have an online option but don’t really pay a lot of attention to it. There’s a lot of technical, devil-in-the-details stuff that’s going to be forced into the retail market very quickly. We will still want retail stores, but we’re going to want a really good human experience. Otherwise, why bother? I also think you’re going to see a bifurcation of the really good digital stuff and the really good human-centric stuff. We need both.

Dror Poleg: One of the interesting things is not what people are buying but who is actually selling it to them. The Amazons and Walmarts of the world are hiring like crazy – something like 250,000 people between them in March. They’re really taking advantage of their ability to be fully integrated, to make sure their supplies come in, to tie in their online and offline sales, and to automate some of the store experience to prevent their employees from being exposed to the virus. Whether people buy more online or less online after this crisis, the big winners so far are those giants that are able to make the most of it. Many smaller businesses are running out of oxygen.

Susan Freeman: This is accentuating things that are already happening. One thing that may be going into reverse is the online retail brands that were beginning to come offline. … Could this mark a comeback for drive-in theaters? At the moment, it would be very positive.

Q: What kind of changes will we see in offices?

Ronen Journo: The biggest change we’ll see is how offices are planned and designed. We saw that with the emergence of coworking, space as a service and flex, where the new operators looked at office space and these very expensive assets and said, “What do people really need when they congregate?” People often come together because they want to connect. They want to collaborate or just bump into each other or socialize. The emergence of coworking is really turning the whole design of the office upside down. We’re going to dedicate a far greater proportion of the office to collaborative spaces, to places that feel like home and are more informal, as opposed to desks. I think that’s going to be the first turning point. People are going to question why they commute when they can do what they need to do at home…. We will see companies begin to offload space, and we will see people working from multiple places – not just from home.

To attract people to a building, you’re going to have to make the experience a lot richer and more convenient. You’ve got to enable people to bring their private life and their professional life much closer together. Placemaking developed in the last decade. I think it’s going to continue, and I think it’s going to bring closer the relationship between occupiers, landlords and operators. Looking at all the amenities in the place beyond a restaurant or a gym.

I think large corporations will move faster to secure agility in their portfolios. They will need a lot more flexibility in the way they commit to space in cities. I think we’re going to see people question the purpose of the office. Not just workers but employers as well.

Susan Freeman: I think that WELL buildings and certified buildings with proper air filtration are something that people are going to be much more aware of. … There will also be a lot more attention to cleanliness and the need to be a lot more careful about high-touch surfaces in buildings. There are going to be some interesting new technologies around hologram keypads so that people don’t have to touch elevator buttons.

Dror Poleg: When I look at offices, I see a bifurcation. Companies will need offices to build culture or to train people or to allow them to interact for specific tasks. At the same time, employees don’t have to be in the office all day long. We’re going to see both things happening at the same time. That means companies will need to attract people to come to the office, and you have to offer them something they don’t have at home. I also think that an underrated reason that people go to work is to keep boundaries between their home lives and other aspects of their lives.

Visit the NAIOP Response: COVID-19 page for critical resources and knowledge to support you now.