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The state of innovation in real estate

​​​​​​​​​04 September 2014

The state of innovation in real estate

What will disrupt our industry in the coming years? As the World Economic Forum prepares to gather in Tianjin to discuss science, technology and innovation in all areas of business, JLL asks what it means to be innovative in real estate.

The state of innovation in real estate Photo courtesy of Google Inc.

Innovation is the business buzzword of the decade, reinforced by brands such as Google and Apple. For technology companies, the products of innovation are obvious – electronic devices, software and apps – but when it comes to real estate, the connection isn’t as clear.

As JLL’s leadership team prepare for the World Economic Forum’s annual meeting of the New Champions in Tianjin, China next week, we ask for their thoughts on what it means to be innovative in real estate.

Problem solving

“If you categorise innovation, for us, it’s about solving client problems, it doesn’t have to be the next iPad,” says Jeremy Sheldon, Managing Director, Markets, JLL Asia Pacific. He will join 1,500 delegates at next week’s meeting to find out how technology is shaping other industries.

“We’re about trying to be greener and greener and technology and materials are critical to that,” he adds.

Last year alone, JLL helped clients reduce 913,000 metric tonnes of carbon dioxide – the equivalent of removing 190,000 cars from the road – through smarter technology in buildings.

But, while there have been various innovations in the built environment over the last 50 years, it’s not happening at the same rate as other sectors, says Jeremy.

In real estate, being innovative is often as simple as thinking about space differently.

“The problem with traditional real estate is it’s fixed and long term and costly and if we don’t think about it differently that can be a barrier to organizational change,” says Su Lim, Head of Workplace Strategy, JLL, Singapore.

Reducing waste

As an example, Su explains how an Australian university and a cinema formed a partnership whereby the theatre is used to host student lectures during the day, resulting in use intensification of the space: “A lot of innovation comes in the form of problem solving like this,” says Su.

“Corporates are wasting a lot of space and they want to reduce that wastage. In the non-corporate world it’s been done, look at Airbnb, now we can start to do the same.”

Whether it’s sensor technology that can map how often an office space is used or more unconventional problem solving such as the cinema, Jeremy reiterates Su’s point that the changing nature of the way we work is forcing the real estate industry to innovate.

“From an occupied space and cost perspective, the actual workspace is becoming so much more important,” adds Jeremy. “We can’t continue to occupy buildings in the same way as before, just look at the "Google" effect, which demonstrates how workspace affects everything from desk allocation, collaboration space all the way through to the quality of the talent you can attract.”

Lessons from Tianjin

“At a meeting like the WEF you go to hear ideas from global economics, through in-country, from political to business issues, and so you always hear new interesting ideas,” says Jeremy. ”The nature of the closed-door meetings is people are prepared to be candid and you can often apply these lessons to your own industry.”

Since 2007, the WEF meeting of the New Champions has brought together the enterprises shaping the future of business and society. More than 1,500 leaders from business and government will discuss what it means to 'create value through innovation' and, although that varies from industry to industry, delegates share a common motivation for attending such a meeting: to challenge their thinking.

As a third time attendee, he’s hoping that the forum will highlight the next wave of industry ‘disruption’.

“Everyone is talking about disruptive technologies. If we look at the film to digital example, Kodak didn’t make the change and the result is a lesson to all of us. We need to look at how industry technology changes affect real estate. I don’t know what all of these changes will be yet but that’s what I’m interested in finding out.”