ULI drives innovation in real estate by analyzing market demand, policy trends, and investment patterns while identifying opportunities, risks, and creative responses to the forces of change. Is the real estate industry prepared to respond to the needs that companies in the innovation economy will require? Technology, Real Estate, and the Innovation Economy, a report published by ULI Europe in FY 2016, says the industry must fully grasp its own “innovation imperative” if it is to stay ahead of the curve.
The innovation economy—powered by technology that evolves at lightning speed and a global, highly creative talent pool—has disrupted every facet of people’s day-to-day lives. Companies at various stages in the innovation ecosystem and the growing number of millennials in the workforce are demanding greater flexibility, technological sophistication, and bespoke amenities from the workplace. Cutting-edge companies such as Airbnb and WeWork are redefining traditional owner/occupier relationships by applying principles of the sharing economy.
As creators and designers of the workplace, the real estate industry is on the cusp of change. Tech-driven entrepreneurs want nimbler, more collaborative, and creative solutions from those who design, build, and operate their workplaces, according to Technology, Real Estate, and the Innovation Economy.
Produced in partnership with the Oslo Metropolitan Area (OMA), the report contends that the real estate industry needs to recalibrate to reflect this new normal. The industry must not only build new spaces tailored to the innovation economy, but also rethink outdated business models—for example, long-term lease arrangements that may well serve traditional corporate tenants, but not startups that have flexible space requirements.
“To put it very simply, real estate providers must become part of the innovation economy if they want to serve it,” ULI Europe CEO Lisette van Doorn and Erling Fossen, OMA’s managing director, explain in the report. “They must become part of the emerging norms, disciplines, and culture of its occupiers.”
The report’s findings are drawn from 12 case studies of developments in Europe and North America that are already embracing real estate’s new role. A joint ULI/OMA workshop held in Oslo in May 2015 yielded insights. Public and private sector stakeholders gathered to discuss the role that innovation and knowledge-based industries play in diversifying the Norwegian economy, which is heavily dependent on oil and gas exports.
“Real estate needs to become a service industry, rather than an asset industry,” the report notes. “If it is to generate returns in the future, real estate operators have to offer a range of other services, including funding, coaching, [and] networking” platforms to support an entire innovation ecosystem within an office, a building, or a campus.
The report’s main takeaway: The real estate industry needs to shift from merely owning and managing physical assets to offering more hands-on stewardship to clients through services as coaching, networking, and even financing. By adopting a service-provider mind-set, aligning long-term interests with the needs of innovation companies, and offering flexible, tailor-made solutions, the real estate industry can secure its own relevance—and indeed truly thrive—in the economy of today and the future.